Australia's ACCC grants Qantas-Emirates partnership interim authorisation

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Australia's competition watchdog has given the proposed partnership between Qantas Airways and Emirates interim authorisation, albeit with one condition.

While the Australian Competition and Consumer Commission's (ACCC) nod allows the airlines to cooperate on passenger and freight operations, it comes with the condition that the airlines do not extend the partnership to services between Australia and New Zealand.

Qantas and Emirates first announced their plans to form a wide-ranging partnership to cooperate across their network in September 2012. With this interim authorisation, they can start preparing for the proposed implementation of their alliance, which is due to take effect from 1 April.

This preparatory work includes those related to joint sales and pricing strategy, joint marketing, system integration and testing, customer handling, and scheduling and capacity coordination.

In its draft determination in December 2012, the ACCC's preliminary view was that "the public benefits resulting from the alliance are likely to outweigh the public detriment" in regions where Qantas and Emirates offer overlapping services.

"In most regions, this detriment is likely to be mitigated by a number of factors, including continued competition from a number of established airlines," adds the ACCC.

On trans-Tasman services, the ACCC says that there are concerns about the potential impact of the alliance on overlapping routes 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," says the commission.

The ACCC said in December 2012 that it plans to give the proposed alliance authorisation for five years. It plans to make a final decision on the proposal in March.