Qantas Airways, Australia's largest carrier, won provisional approval from the nation's antitrust regulator to cooperate with Emirates Airline as it seeks to turn around unprofitable international operations.
The agreement will be approved for five years, rather than the 10 the carriers sought, the Australian Competition & Consumer Commission (ACCC), said in a statement. Sydney-based Qantas said the venture is due to start in April.
The alliance will let Qantas sell tickets to 60 new one-stop destinations in Europe, the Middle East and Africa via Emirates' Dubai hub, and help it overhaul Asian schedules. The Australian carrier sought the tie-up after losing market share on international routes to Middle East and Asian rivals offering a wider range of connections and more convenient flight times.
"This is very positive for Qantas," David Fraser, an analyst at Nomura Holdings, said. "If they can get anywhere close to where the market is forecasting by 2014 they'll be doing significantly better than they are today."
Under the planned Qantas-Emirates accord, the two carriers intend to coordinate pricing, sales and scheduling, as well as aligning frequent-flier programmes so passengers can earn points on both carriers' flights.
Emirates will gain access to Qantas' Australia and New Zealand network under the deal while the Australian carrier will be able to sell tickets on Emirates' planes from Dubai.
Alignment of computer systems, loyalty-programme benefits and an operational base for Qantas in the Gulf state were already being set up, the companies said in a joint statement today.
The carriers will have to retain a minimum number of seats on four routes between Australia and New Zealand they both operate and increase capacity at a specified rate, the regulator said in a separate statement.
Maintaining competition on the so-called trans-Tasman routes between the two countries drove the ACCC's initial blocking of a 2010 alliance between Qantas's main competitor Virgin Australia and Air New Zealand. The partnership ultimately went ahead after the regulator set terms to ensure the carriers didn't push up prices by limiting seat numbers.
* Bloomberg News