EMIRATES-QANTAS PACT SHOWS GULF CARRIERS SHAKING UP ORDER

Photo : Brendon Thorne/Bloomberg

Qantas Airways Ltd. (QAN)’s decision to drop a 17-year pact with British Airways in favor of a deal with Dubai-based Emirates reveals the potential for fast-growing Gulf carriers to shatter the established airline order.

The 10-year accord, announced yesterday, will lead Qantas to scrap its revenue-sharing pact with British Airways to gain access to 70 Emirates destinations. While the Australian carrier will carry on code-sharing with BA, the move puts in doubt the standing of the Oneworld global alliance the pair helped forge.

Emirates, Qatar Airways Ltd. and Etihad Airways are exploiting the Gulf’s position at the heart of inter-continental flight paths to build hubs served by waves of departures using the world’s biggest wide-body planes. That’s won them a higher share of lucrative long-haul traffic and is pressuring earnings at network operators including British Airways and Qantas.

“Things are changing,” Emirates president Tim Clark told reporters in Sydney. “The international airline community needs to align itself to what is going on in the 21st century, not what was going on in the back end of the 20th century.”

07/09/2012  :  Chris Jasper and David Fickling / Bloomberg Business Week.

FULL NEWS / PERMALINK