When Qantas Airways (QF) announced a new 10-year alliance with Emirates (EK) (TTG Asia e-Daily, September 6, 2012), no one was surprised, as the two airlines had been in talks since mid this year.
What was surprising was QF’s move to end the joint service agreement (JSA) it had with British Airways (BA) for almost two decades.
QF needed to stop the bleeding in its international operations, while EK wanted to grow its footprint in Australia.
Most significantly, the new alliance, which will kick in April 2013, subject to regulatory approval, will bring about a realignment of the famous Kangaroo Route.
QF first flew from Sydney to London via Singapore on December 1, 1947 and, after straying to Bangkok and Hong Kong for several years, re-established Singapore as its mid-point hub on the Kangaroo Route in August 2011. So did British Airways, which upgraded the aircraft used on its London-Singapore-Sydney route from a Boeing 777-200ER to a B747-400.
For point-to-point travellers between Sydney and London, not much will change beyond the scenery at the transit airport. Passengers who currently fly from Brisbane, Adelaide and Perth to Singapore to connect to QF’s London-bound A380s will now either have to backtrack to Sydney or Melbourne if they wish to travel exclusively on QF-operated flights (resulting in a two-stop itinerary instead of a single stop in Singapore), or travel exclusively on EK if they prefer a single stop itinerary.
QF has also confirmed its withdrawal from the Frankfurt route that currently operates daily with a stop in Singapore.
Australian travel consultants believe the alliance will positively impact many of their clients travelling to Europe.
Sydney-based Mary Rossi Travel’s Claudia Rossi Hudson said: “Our clients can go to places other than Singapore or Frankfurt…It’s a one-stop flight to many more destinations in Europe with more flexibility: you can change flights at Dubai and QF customers can decide to fly to Spain or Italy.”
Graham Chisholm of Brisbane-based Milton Travel & Cruise believed the partnership would be good for clients, but lamented the end of the Frankfurt flights. “A lot of people flying from Brisbane to Europe often stop over in Singapore on the return flight, and travellers like a good stopover, such as Singapore or Dubai,” Chisholm said.
‘Constructive’
Standard & Poor’s editorial director Shukor Yusof, described the new alliance as “constructive” for QF and EK in the long run.
“From EK’s perspective, it is purely to get a larger foothold into Australia as well as siphon off those passengers that would otherwise be hopping onto Singapore Airlines (SQ) or other European carriers,” said Shukor.
“This alliance is tipped in EK’s favour because Dubai, its home base, will get a higher profile.”
Singapore Changi Airport will lose four QF A380 and two B747-400 movements each day, but as QF is expected to focus on more flights between Australia and Asia through Singapore and Hong Kong, the airport’s passenger throughput may not suffer too drastically.
Centre of Asia Pacific Aviation (CAPA) chief analyst and South-east Asia chief representative, Brendan Sobie, said: “The potential upside for Changi is the Australia-Singapore flights are going to be retimed so they connect with more Jetstar Asia Airways’ flights to connecting destinations in Asia.
“QF’s Australia-Singapore flights have predominately arrived late in the evening in Singapore, when flights to Europe depart but when options for connecting with Asia are limited. Changi will become an even more important hub in the growing Australia-Asia market although it will lose its lustre as a hub for kangaroo traffic, continuing a trend that has been going on for the last decade as Middle East hubs (and carriers) emerge.”
The same cannot be said, however, for groundhandling agent, SATS. It is conceivable that QF may send its groundhandling needs to DNATA, partly-owned by EK and the second ground-handling agent in Singapore.
Chairman of Australia-wide House of Travel group, Barry Mayo, believed a non-loss making and financially stronger QF international network had to benefit passengers.
“Nothing less than this EK partnership or an equivalent partnership with a hub airline having Europe penetration, such as SQ, could achieve the results QF needs,” Mayo said.
“Many passengers do not want to travel via London to the extent they have done in the past and prefer more convenient access to continental Europe and even regional Britain via Dubai, Singapore or Bangkok.
“Qantas has claimed its partnership with EK will enable it to delink its Singapore, Bangkok and Hong Kong flights to UK/Europe and provide more customer- friendly schedules to these ports with better connections to other points in Asia, which presumably means linking into Jetstar Asia.”
Speculation
Meanwhile, BA said there was no impact to its current flights into and out of Singapore and Sydney. Speculation is rife however, that it may take its Sydney-bound passengers to Hong Kong and let Cathay Pacific Airways fly them to Australia. Similar speculation involves Kuala Lumpur and soon-to-join-Oneworld Malaysia Airlines (MAS), but this will require BA to launch flights to Kuala Lumpur.
CEO of the International Aviation Group (IAG), BA’s parent company, Willie Walsh, reiterated that “Asia has become a key market focus for IAG and we’re talking to a number of airlines about alternative options for us”.
Will Horton, CAPA’s senior analyst-North Asia, noted: “BA is clearly impacted by the ending of the JSA, but it’s of the view that Australia is no longer the key market it once was. It also has been considering other scenarios to reach Australia.
“It is a dynamic time at BA with possible new partners in the mix, new types of aircraft arriving and additional slots being obtained from its acquisition of bmi. These will influence its thinking on the future of its Sydney service.”
Shukor said: “BA remains a strong entity, financially and competitively. It has an extensive international network and a good track record of cutting costs and (maintaining) operational efficiency. Its revenue concentration on premium leaves BA more vulnerable to some of its competitors, especially the Gulf carriers. Operations in Asia-Pacific will likely be reassessed if the EK-QF deal goes through.”
Other partners ditched by QF include Cathay (resulting in the end of codeshare services between Hong Kong and Rome) and Air France, which has a successful codeshare to carry QF’s passengers between Singapore and Paris. QF’s Paris-bound passengers – and indeed most heading to other European capitals and secondary cities – will now most likely travel on EK.
The QF-EK alliance will open all of EK’s destinations in Europe, the Middle East and Africa to QF via the Dubai hub. QF currently routes passengers heading to continental Europe via Heathrow Airport in London or Frankfurt Main Airport. Over the past decade, Heathrow has become increasingly unpopular.
While passengers in premium classes will certainly not begrudge travelling in EK’s well-appointed premium cabins – which from April 2013 will include a chauffeur service if the flight duration is longer than 12 hours – economy passengers getting off at Dubai and connecting onto EK’s B777s heading to Europe, the Middle East and Africa may not be elated about squeezing into a narrower seat. EK’s B777s have 10 seats in each row in economy, compared to nine seats in most airlines. Also, depending on where they are heading, those getting off QF’s London-bound flights in Dubai will have various lengths of transit times.
It remains to be seen if QF passengers in Singapore booked on its non-stop flights to London will be persuaded to accept a new itinerary on EK with a stopover in Dubai. Or if QF’s customers bound for destinations beyond Dubai will agree to fly on its London-bound flight to Dubai to connect onto EK’s services (giving QF a bigger share of the revenue) or fly all the way from Australia to Dubai and beyond on EK, a move which will bring less revenue to QF.
The alliance also throws various other questions, for instance, what changes will happen at BA, which has previously indicated that its Australian services were sustainable only because of the JSA?
Will EK leverage on QF’s unused traffic rights into Germany to launch new services? EK has met with strong resistance from Lufthansa as it tries to increase its footprint in Germany. Will EK operate across the Pacific from Australia to North and South America, thereby ensuring its networks embrace the entire globe?
Only time will tell.
This article was first published in TTG Asia, October 5, 2012 on page 6. To read more, please view our digital edition or click here to subscribe.
Additional reporting from Warren Beaumont
