Qantas deal a short-term winner but long-term outlook problematic
September 06, 2012 1:05PM
QANTAS will face a tough battle to win Australian Competition and Consumer Commission (ACCC) approval of its Emirates joint venture, which will control over 50 per cent of traffic between Australia and Europe and effectively take one competitor out of the market.
ACCC chief Rod Sims told The Australian that it was early days yet in the regulator’s consideration but “obviously we will look very closely at any deal which sees Emirates fares move closer to the higher Qantas fares”.
Tim,
That actually is a very interesting statement from the ACCC chief. Note he does not appear interested in the competition aspects of the deal. Only that the little Aussie battlers, out there in the Labor heartland, can still get cheap fares to Europe. A much easier thing to reassure the regulator about, I would think. As in "of course this new alliance will actually lower Qantas' cost base and allow us to be more competitive, hence
lowering our fares". [Well, maybe, fingers crossed].
AJ's blustering all this year can now be seen in a new light. Talking up the supposed losses in longhaul, which have magically risen from $100M, to $240M to $420M to whatever number you want to pluck, has been solely to soften up the ACCC to make the case that this deal must go ahead.
Similarly, the 'falling overseas market share' argument is also all about priming the ACCC case, to make it easier to argue that Qantas
must have this alliance, or very bad things will happen to politician's perks. The 'longhaul is a basket case' spruiking is all about that, nothing more.
Given the
PR spin that will now gush forth, sounding just like the above [watch the weekend papers] , it will be a done deal. Olivia's no doubt already onto it. Get that rubber stamp ready.