Qantas to Quit Europe Routes If Regulators Reject Emirates Deal
To convince regulators to approve its newly signed agreement with Emirates, Qantas in a submission filed on Monday with the Australian Competition and Consumer Commission (ACCC), said it would quits its European trips if the regulators reject the deal.
The air carrier warned that a red light from ACCC would result in the immediate axing of Qantas's one of two remaining daily flights to London and lead the company to contract its operations to other ports where it could make profit, but these airports would exclude Europe.
"In the absence of the authorisation, it is likely in the medium to long term Qantas will retreat to a 'virtual network,'" The Australian quoted the Qantas submission.
"Under such a scenario Australians will lose the benefit of Qantas operating a strong locally based international network airline. This is not in the national interest," the air carrier said.
Qantas is banking on its Emirates deal, slated to start in April 2013 involving codesharing with the Middle East carrier in more than 70 destinations in Europe, North Africa, Middle East and Asia, to improve its international operations.
On Monday, Qantas Chief Executive Alan Joyce even forecast that its international operations would reach breakeven point as early as 2015 due to the Emirates agreement.
While Qantas previously argued in past campaigns against Emirates that its international operations have "embedded structural cost advantages" in comparison with other international carriers, now it is claiming that the deal would offer it favourable tax regimes, lower labour costs and government funded infrastructure.
At the same time, Mr Joyce allayed fears of ticket prices going up because of the tie-up with Emirates since it would result in more competition in the Australian market.
"We think that Qantas and Emirates getting together will be good for competition because it is making our competitors raise their game and be more competitive against his alliance," The Herald Sun quoted Mr Joyce, who pointed out that there are 28 carriers that operate on the kangaroo route to Europe.
Despite the positive response of the market to the 10-year deal announced on Thursday which resulted in Qantas shares going up 12 per cent on Friday, on the same day ratings agency Standard and Poor's reduced the airline's corporate credit rating to only one notch above junk status.
