British Airways has indicated in a submission to the Australian Competition and Consumer Commission (ACCC) that it is considering quitting from the London-Australia route, more popularly called the Kangaroo route. The London-based air carrier cited Qantas recent preference for Emirates as its alliance partner as reason behind its change of plan.

BA and Qantas have a 17-year alliance wherein the Australian flag carrier flies daily between Sydney and the Heathrow Airport in London. However, the daily air service may soon end if the Australian regulator would approve the Qantas-Emirates agreement which would establish Dubai as the hub for Qantas's European flights in lieu of Singapore.

"BA considers that it is increasingly challenging for an international airline to operate services on long-haul routes between the United Kingdom/Europe and Australia in the absence of such an alliance due to persistent excess capacity and the nature of the substantial fixed cost involved in their operation," The Sydney Morning Herald quoted BA's submission.

BA said the Emirates, Qantas and Jetstar alliance would give Emirates more leverage on the trans-Tasman routes and reduce British Airways's ability to provide competing services into and out of New Zealand. BA said it relied on its existing revenue-sharing deal with Qantas to have better flight scheduling and more efficient use of aircraft time.

Besides ending its alliance with BA, Qantas is also pulling out of its code-share arrangements with Air France and Cathay Pacific. It will also give up its landing slots in Singapore. Rival Virgin Australia took advantage of this development to enter into partnerships with BA, Air France and Cathay Pacific.

However, the moves are risky on the part of financially challenged Qantas which admitted it has no alternative plans if the ACCC rejects its agreement with Emirates. Besides the ACCC, regulators in New Zealand and Singapore must also approve the deal.

Qantas Chief Executive Alan Joyce said in its counterfactual to the ACCC that if the regulator rejects the 10-year deal with Emirates, it would lack a viable European operation and competition will be lost from Europe.

Due to opposition from its competitors, Qantas and Emirates withdrew from ACCC their application for interim approval of the agreement. The rivals claimed the interim authorisation is unnecessary or anti-competitive.

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