Transtasman bar to Qantas alliance

Qantas has been barred from preparing for a transtasman alliance with Emirates due to concerns the deal would lead to inflated airfares between Australia and New Zealand.

The Australian competition regulator yesterday granted interim approval for Qantas and Emirates to begin preparing for an alliance which would see the airlines cooperate on long-haul passenger and freight operations across their networks.

The interim decision allows for preparatory work only, with the Australian Competition and Consumer Commission (ACCC) expected to make a final decision on an alliance in March.

In a statement, the ACCC said the public benefits of the alliance, due to start in April if approved, were likely to outweigh concerns with the impact on competition.

But the regulator also blocked the airlines from preparing for a partnership on flights between Australia and New Zealand.

"The ACCC is concerned that the alliance may have an increased ability and incentive to reduce or limit growth in its capacity in order to raise airfares.

"Therefore, the ACCC is granting interim authorisation on the condition that the applicants do not engage in the conduct for which authorisation is sought in relation to services between Australia and New Zealand."

Qantas said the decision reflected the fact that New Zealand law did not provide for interim authorisation.

Chief executive Alan Joyce said the alliance would enable the two airlines to coordinate more closely and allow customers to book travel on most parts of the combined Qantas and Emirates network.

"This decision means we can determine pricing, capacity and scheduling with Emirates, in addition to the more logistical aspects of the partnership that we have been working through already," he said.

"For consumers, interim authorisation means we can provide details on fares and allow people to book one-stop destinations on most parts of the combined Emirates and Qantas network."

Fares on the combined network were expected to be announced in coming weeks once pricing discussions had taken place.

The services would remain subject to regulatory approval.

- Matthew Backhouse of APNZ

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