QF Ek Green Light
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QF Ek Green Light
QANTAS' partnership with Emirates is set to receive approval from the competition watchdog.
In a draft decision handed down on Thursday, The Australian Competition and Consumer Commission (ACCC) said it would authorise an alliance between the two airlines for a period of five years.
"The ACCC considers that the alliance is likely to result in material, although not substantial, benefits to Australian consumers," ACCC Chairman Rod Sims said in a statement.
Qantas and Emirates had been seeking a 10-year approval from the ACCC, but Mr Sims said he had concerns about potential fare increases on flights between Australia and New Zealand.
The tie-up between Qantas and Emirates will involve a sharing of schedules, pricing and marketing on routes between Australia and Europe, the Middle East, North Africa, Asia and across the Tasman.
Mr Sims said it will lessen competition on some international routes, but competition from other airlines would mitigate that impact.
However, Qantas and Emirates could reduce or limit capacity on routes between Australia and New Zealand under their partnership, which could result in higher airfares, he said.
"Given the dynamic nature of the aviation industry, the limited extent of public benefits and the significant role of the trans-Tasman capacity condition in the ACCC's decision, the ACCC considers it appropriate to review this authorisation earlier than the ten years requested by Qantas and Emirates," Mr Sims said.
Approval from the ACCC provides Qantas and Emirates immunity from court action for conduct that raises concerns about competition.
Qantas and Emirates are seeking a final decision from the ACCC before the end of March 2013.
Qantas and Emirates deal gets green light | News.com.au
In a draft decision handed down on Thursday, The Australian Competition and Consumer Commission (ACCC) said it would authorise an alliance between the two airlines for a period of five years.
"The ACCC considers that the alliance is likely to result in material, although not substantial, benefits to Australian consumers," ACCC Chairman Rod Sims said in a statement.
Qantas and Emirates had been seeking a 10-year approval from the ACCC, but Mr Sims said he had concerns about potential fare increases on flights between Australia and New Zealand.
The tie-up between Qantas and Emirates will involve a sharing of schedules, pricing and marketing on routes between Australia and Europe, the Middle East, North Africa, Asia and across the Tasman.
Mr Sims said it will lessen competition on some international routes, but competition from other airlines would mitigate that impact.
However, Qantas and Emirates could reduce or limit capacity on routes between Australia and New Zealand under their partnership, which could result in higher airfares, he said.
"Given the dynamic nature of the aviation industry, the limited extent of public benefits and the significant role of the trans-Tasman capacity condition in the ACCC's decision, the ACCC considers it appropriate to review this authorisation earlier than the ten years requested by Qantas and Emirates," Mr Sims said.
Approval from the ACCC provides Qantas and Emirates immunity from court action for conduct that raises concerns about competition.
Qantas and Emirates are seeking a final decision from the ACCC before the end of March 2013.
Qantas and Emirates deal gets green light | News.com.au
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ACCC does not provide immunity from prosecution for anit-competitive breaches - it lessens the propensity for litigation
The safe 'draft' call by ACCC to approve for 5 years is the aviation approval equivalent of a good behaviour bond - nice to see the regulator more concerned over the interests of the NZ market rather than home.
IASC now needs to be a little more articulate with route approvals and backdoor codeshar/franchise alliances
AT
The safe 'draft' call by ACCC to approve for 5 years is the aviation approval equivalent of a good behaviour bond - nice to see the regulator more concerned over the interests of the NZ market rather than home.
IASC now needs to be a little more articulate with route approvals and backdoor codeshar/franchise alliances
AT
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ACCC chairman Rod Sims has a busy end to the year - ABC News (Australian Broadcasting Corporation)
Interesting interview from Rod Sims ACCC re today's decision for Qantas.
ABC SKY-combo
Interesting interview from Rod Sims ACCC re today's decision for Qantas.
ABC SKY-combo
Last edited by TIMA9X; 20th Dec 2012 at 09:21. Reason: updated with video
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Some thoughtful stuff from Ben. I read this while watching some tool on TV carrying on about how good it is for Qantas. Fckuk me.
And then
There is a bit about how Qantas isn't happy with all of the decision and wants to change it refusing to let it reduce capacity to New Zealand in cahoots with Emirates.
And more.
The whole blast is here:
Qantas survival less important than competition: ACCC | Plane Talking
Benefits of Qantas-Emirates deal ‘not great’ says ACCC, which reminds the airline industry it is there to preserve competition, not Qantas
The ACCC has made a very significant decision in proposing to conditionally approve the Qantas Emirates business partnership in saying that a smaller Qantas can be outweighed by the competitive response of other foreign carriers.
Taken to its logical extension, the ACCC’s chairman Rod Sims is indicating in his statement and interviews today that the survival of Qantas is less important than the benefits of continued strong competition to consumers and the tourism industry.
It is also a clear reminder that the ACCC isn’t a Qantas preservation authority, but a competition and consumer authority constructed and empowered to maintain competition and compliance with the trade laws, and not to save national icons that fall on hard times through mismanagement or misfortune.
Taken to its logical extension, the ACCC’s chairman Rod Sims is indicating in his statement and interviews today that the survival of Qantas is less important than the benefits of continued strong competition to consumers and the tourism industry.
It is also a clear reminder that the ACCC isn’t a Qantas preservation authority, but a competition and consumer authority constructed and empowered to maintain competition and compliance with the trade laws, and not to save national icons that fall on hard times through mismanagement or misfortune.
The decision also means that from April, when the Qantas-Emirates partnership starts, Qantas will exit the Perth, Adelaide and Brisbane to Europe routes in favour of trying to punt its customers into code-shared seats it will be allowed to sell on Emirates jets.
In QLD, SA and WA the Qantas slogan-You’re the reason we fly, might fairly become Qantas-we’re the reason you fly Emirates.
In QLD, SA and WA the Qantas slogan-You’re the reason we fly, might fairly become Qantas-we’re the reason you fly Emirates.
And more.
The deal fits in with the clear concern by Qantas management to reduce its exposure to the risks and capital expenditure needs of being a significant international full service carrier.
It makes Qantas smaller. The Minister for Infrastructure and Transport, Anthony Albanese, has issued a statement in which he says the ACCC decision “also provides Qantas the opportunity to invest in additional aircraft capacity and international services, especially to meet the growth in Asia but also its broader international network.”
He is either trying to be funny, or has been seriously mislead by his advisors.
It makes Qantas smaller. The Minister for Infrastructure and Transport, Anthony Albanese, has issued a statement in which he says the ACCC decision “also provides Qantas the opportunity to invest in additional aircraft capacity and international services, especially to meet the growth in Asia but also its broader international network.”
He is either trying to be funny, or has been seriously mislead by his advisors.
Qantas survival less important than competition: ACCC | Plane Talking
I think it's quite obvious now that Qantas's focus is not Europe. It is Asia, Qantas will be feeding more aircraft into Asian ports and connecting with the Jetstar franchises all over the region in the years upcoming. Europe has been relegated to 2 flights a day. There is not further growth slated for Europe in traffic growth in the next 50 years, its mature.
Singapore and Hong Kong are the hubs for feeding onto Jetstar Asia out of Singapore and perhaps a new big player in Hong Kong, as well as Jetstar Hong Kong. Jetstar Japan. Jetstar Pacific. etc
Capital light, but able to treat it as their own airline. That's the big plan overall, in my opinion. Just wait for the J class seats up the front to appear and satisfy that segment of the market once all the franchises have matured in size and operation.
Singapore and Hong Kong are the hubs for feeding onto Jetstar Asia out of Singapore and perhaps a new big player in Hong Kong, as well as Jetstar Hong Kong. Jetstar Japan. Jetstar Pacific. etc
Capital light, but able to treat it as their own airline. That's the big plan overall, in my opinion. Just wait for the J class seats up the front to appear and satisfy that segment of the market once all the franchises have matured in size and operation.
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Just wait for the J class seats up the front to appear and satisfy that segment of the market once all the franchises have matured in size and operation.
No Stalin UB, that would be the last thing they want.
QF is very parochial to Australia, they want a global airline brand which is why they came up with J*, a name which can be multinational. At least internationally, there is no incentive to change the name to QANTAS.
Seasons Greetings to all, safe flying.
Mud
QF is very parochial to Australia, they want a global airline brand which is why they came up with J*, a name which can be multinational. At least internationally, there is no incentive to change the name to QANTAS.
Seasons Greetings to all, safe flying.
Mud
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Mud skipper & busdriver007, correct. This renders the Qantas Sales act moot - utilizing the subsidiary franchise model and Qantas as a domestic (Sales Act irrelevant), & perhaps Australia <---> Asia. Asian Jetstar franchises will be stand-alone "tradable units", perhaps even listed on various regional exchanges.
What does this do? Allows QF HOLD Co as a virtual airline. It allows partnerships with wealthy Asians to stump up capital, and in doing so, gain access to the Jetstar IP "intellectual secret sauce" & a turnkey operation (pilots/management/network systems etc). This reduces QF capital requirements.
QF HOLD Co could own shares in these franchises, and thus benefit from essentially holding a derivative & thus leveraged play over these franchises. It could also charge management franchise fees, supply pilots & other services to its captive franchisee's.
It also allows massive arbitrage in the accounting, labour & regulatory arena's as well as opportunities for transfer pricing and tax minimisation. In short, it will eliminate virtually all limiting restrictions on the airline, thus allowing it to cherry-pick every the lowest common denominator jurisdiction for each component of its business systems - It will be the ultimate in "regulatory lite". Shares in the franchises could be listed on the most "favorable" exchanges (read accounting oversight).
Asian operators tied to their home country will not have the same advantages.
Thus, this move to Asia for the international side of the business allows it to gain a leveraged derivative play on lax oversight & regulatory arbitrage, with OPM (Other Peoples Money).
Oh, making money? Just keep growing quickly enough & you only have to forecast a profit somewhere in the future due to start-up costs. Its the perfect set-up for a manager. Remember Bruce's Buchanan statement about operating 400 aircraft in Asia by 2020?
What does this do? Allows QF HOLD Co as a virtual airline. It allows partnerships with wealthy Asians to stump up capital, and in doing so, gain access to the Jetstar IP "intellectual secret sauce" & a turnkey operation (pilots/management/network systems etc). This reduces QF capital requirements.
QF HOLD Co could own shares in these franchises, and thus benefit from essentially holding a derivative & thus leveraged play over these franchises. It could also charge management franchise fees, supply pilots & other services to its captive franchisee's.
It also allows massive arbitrage in the accounting, labour & regulatory arena's as well as opportunities for transfer pricing and tax minimisation. In short, it will eliminate virtually all limiting restrictions on the airline, thus allowing it to cherry-pick every the lowest common denominator jurisdiction for each component of its business systems - It will be the ultimate in "regulatory lite". Shares in the franchises could be listed on the most "favorable" exchanges (read accounting oversight).
Asian operators tied to their home country will not have the same advantages.
Thus, this move to Asia for the international side of the business allows it to gain a leveraged derivative play on lax oversight & regulatory arbitrage, with OPM (Other Peoples Money).
Oh, making money? Just keep growing quickly enough & you only have to forecast a profit somewhere in the future due to start-up costs. Its the perfect set-up for a manager. Remember Bruce's Buchanan statement about operating 400 aircraft in Asia by 2020?
Last edited by TheWholeEnchilada; 20th Dec 2012 at 21:01.
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Flying Kangaroo leaps into a shaky alliance - Barry Jackson
Flying Kangaroo leaps into a shaky alliance
The new Emirates-Qantas tie-up, granted qualified approval by the Australian Competition and Consumer Commission on Thursday, marks the end of a long and glorious era for the Flying Kangaroo.
While noting that the alliance is “like to result in some public detriments through its effect on competition”, the ACCC has nevertheless given the plan an important initial green light, while noting that it wants to check things again in five years – instead of the 10-year period proposed.
Ten years, of course, is a long time in modern commercial aviation.
If you has told someone 10 years ago that the mighty Qantas would be relegated to junior partner in a tie-up with an Arab airline, they would have found it hard to believe.
Yet many analysts are now tipping further shrinkage in Qantas's network, as Emirates steps in to fill the gap.
So what to make of it?
Qantas CEO Alan Joyce says there is no other choice – Qantas is struggling and needs this tie-up to survive.
Yet it is impossible to test Mr Joyce's claim because of the opaque and mysterious way the airline has been managed in recent times.
For example, in February 2011, Mr Joyce declared an underlying profit of $165 million for the half year. The result was 175 per cent above the prior year's corresponding period.
At the time Mr Joyce boasted that: "Qantas improved yield by 9 per cent, and increased capacity by 3.3 per cent, demonstrating a strong revenue recovery across both the international and domestic divisions. The result was achieved despite the significant operational and financial challenges of the A380 disruptions and northern hemisphere snowstorms.”
Yet just a few short months later, in June 2011, this sunny picture had apparently descended rapidly into an emergency.
Mr Joyce was now lamenting that: "Qantas International is forecast to generate a loss before interest and tax of approximately $200 million … with a weaker result expected next year. Qantas International is the group's weakest business – it achieved required returns only three times in the past 15 years. Clearly the situation is not sustainable."
To fall so rapidly would require a $25 million a month minimum loss. Yet the company did not report the profit downgrade until June 6, 2011. Most airline boards keep track of airline performance on a daily basis or the very least every week. How could such a staggering fall be left unnoticed and what could cause it?
A surge in fuel prices? In fact, the price of fuel stayed steady during this period.
A huge drop in passengers? In fact, the load factor – the percentage of seats filled – went up and remains around 82 per cent.
You would think that an outsider could analyse the loss by simply examining Qantas's books, yet because of Australia's accounting standards this is impossible to do properly, because Qantas International has not been defined as a segment for accounting purposes.
Understanding any loss in this area, therefore, is simply a matter of taking Mr Joyce's word for it.
That means that how much Qantas "needs" this Emirates tie-up is completely debatable.
Certainly, looking at it in from a national interest point of view it looks tough to justify.
Those I speak to in Asia are always amazed at how Australia is allowing Qantas to shrink.
A viable aviation industry is part of our national infrastructure. Qantas has proven its unique value time-and-time again throughout our history: evacuating Australians after the bombing of Darwin, the Vietnam War, Cyclone Tracy and the Bali bombings. With this sort of consistent record over our history, do we really think a strong national carrier will not again be needed in times of emergency?
Meanwhile, the economic importance of our national carrier was made clear when Mr Joyce grounded the airline last year. The move was estimated to cost the economy $250 million.
Qantas pilots have long-argued that the best way forward for Qantas is to take the German approach to operating in a high-cost environment: focus on offering a premium product where people are getting superior quality for the extra amount they pay. Instead, Qantas management have opted for a pre-GFC, American-style approach – racing to the bottom on costs and deploying complex, high-wire financial manoeuvres.
It's tough to see how tying a huge part of national infrastructure to the continued fortunes of a Middle Eastern government-owned airline is anything other than a gamble.
Yet Mr Joyce is in the captain's seat, and we have no choice but to take his word that it's a good one.
Captain Barry Jackson is president of the Australian and International Pilots Association
Read more: Flying Kangaroo leaps into a shaky alliance
The new Emirates-Qantas tie-up, granted qualified approval by the Australian Competition and Consumer Commission on Thursday, marks the end of a long and glorious era for the Flying Kangaroo.
While noting that the alliance is “like to result in some public detriments through its effect on competition”, the ACCC has nevertheless given the plan an important initial green light, while noting that it wants to check things again in five years – instead of the 10-year period proposed.
Ten years, of course, is a long time in modern commercial aviation.
If you has told someone 10 years ago that the mighty Qantas would be relegated to junior partner in a tie-up with an Arab airline, they would have found it hard to believe.
Yet many analysts are now tipping further shrinkage in Qantas's network, as Emirates steps in to fill the gap.
So what to make of it?
Qantas CEO Alan Joyce says there is no other choice – Qantas is struggling and needs this tie-up to survive.
Yet it is impossible to test Mr Joyce's claim because of the opaque and mysterious way the airline has been managed in recent times.
For example, in February 2011, Mr Joyce declared an underlying profit of $165 million for the half year. The result was 175 per cent above the prior year's corresponding period.
At the time Mr Joyce boasted that: "Qantas improved yield by 9 per cent, and increased capacity by 3.3 per cent, demonstrating a strong revenue recovery across both the international and domestic divisions. The result was achieved despite the significant operational and financial challenges of the A380 disruptions and northern hemisphere snowstorms.”
Yet just a few short months later, in June 2011, this sunny picture had apparently descended rapidly into an emergency.
Mr Joyce was now lamenting that: "Qantas International is forecast to generate a loss before interest and tax of approximately $200 million … with a weaker result expected next year. Qantas International is the group's weakest business – it achieved required returns only three times in the past 15 years. Clearly the situation is not sustainable."
To fall so rapidly would require a $25 million a month minimum loss. Yet the company did not report the profit downgrade until June 6, 2011. Most airline boards keep track of airline performance on a daily basis or the very least every week. How could such a staggering fall be left unnoticed and what could cause it?
A surge in fuel prices? In fact, the price of fuel stayed steady during this period.
A huge drop in passengers? In fact, the load factor – the percentage of seats filled – went up and remains around 82 per cent.
You would think that an outsider could analyse the loss by simply examining Qantas's books, yet because of Australia's accounting standards this is impossible to do properly, because Qantas International has not been defined as a segment for accounting purposes.
Understanding any loss in this area, therefore, is simply a matter of taking Mr Joyce's word for it.
That means that how much Qantas "needs" this Emirates tie-up is completely debatable.
Certainly, looking at it in from a national interest point of view it looks tough to justify.
Those I speak to in Asia are always amazed at how Australia is allowing Qantas to shrink.
A viable aviation industry is part of our national infrastructure. Qantas has proven its unique value time-and-time again throughout our history: evacuating Australians after the bombing of Darwin, the Vietnam War, Cyclone Tracy and the Bali bombings. With this sort of consistent record over our history, do we really think a strong national carrier will not again be needed in times of emergency?
Meanwhile, the economic importance of our national carrier was made clear when Mr Joyce grounded the airline last year. The move was estimated to cost the economy $250 million.
Qantas pilots have long-argued that the best way forward for Qantas is to take the German approach to operating in a high-cost environment: focus on offering a premium product where people are getting superior quality for the extra amount they pay. Instead, Qantas management have opted for a pre-GFC, American-style approach – racing to the bottom on costs and deploying complex, high-wire financial manoeuvres.
It's tough to see how tying a huge part of national infrastructure to the continued fortunes of a Middle Eastern government-owned airline is anything other than a gamble.
Yet Mr Joyce is in the captain's seat, and we have no choice but to take his word that it's a good one.
Captain Barry Jackson is president of the Australian and International Pilots Association
Read more: Flying Kangaroo leaps into a shaky alliance
Last edited by TIMA9X; 21st Dec 2012 at 15:28.
For example, in February 2011, Mr Joyce declared an underlying profit of $165 million for the half year. The result was 175 per cent above the prior year's corresponding period.
Yet just a few short months later, in June 2011, this sunny picture had apparently descended rapidly into an emergency.
You would think that an outsider could analyse the loss by simply examining Qantas's books, yet because of Australia's accounting standards this is impossible to do properly, because Qantas International has not been defined as a segment for accounting purposes.
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This has shades of the artificial $300mil profit that Rod Eddington generated at Ansett, before News Corp sold its remaining share to Air New Zealand....
No Stalin UB, that would be the last thing they want.
QF is very parochial to Australia, they want a global airline brand which is why they came up with J*, a name which can be multinational. At least internationally, there is no incentive to change the name to QANTAS.
Seasons Greetings to all, safe flying.
Mud
QF is very parochial to Australia, they want a global airline brand which is why they came up with J*, a name which can be multinational. At least internationally, there is no incentive to change the name to QANTAS.
Seasons Greetings to all, safe flying.
Mud
I do agree tho with your sentiments if the satis quo remains and tunnel revision remains re Jetstar then you wouldn't bother branding it in QF colours. Qf's destiny is now in the hands of others so let's see what our new masters want.
Merry Christmas to all and lets hope next year can only get better!!
Last edited by Stalins ugly Brother; 22nd Dec 2012 at 15:16.
Emirates won't deal with J* eh?
Cookies must be enabled. | The Australian
As for Bazza's opinion piece...
Too little too late.
Cookies must be enabled. | The Australian
Emirates vice-president for route planning Anand Lakshminarayanan told a conference in Singapore that the Dubai-based carrier saw "a lot of potential" in a tie-up with Jetstar in addition to the alliance with Qantas.
Too little too late.
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I do agree tho with your sentiments if the satis quo remains and tunnel revision remains re Jetstar then you wouldn't bother branding it in QF colours. Qf's destiny is now in the hands of others so let's see what our new masters want.
jingle bells...
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Too little Too late
All of the financial stuff was raised at the time - I even put a piece on Pprune.
Barry has been saying this for a while.
However the "powers" that be have decided the path this was going to take. Whether we like it or not the financial markets have swallowed the story hook, line and sinker.
The future will say unequivocally that it was obvious, if only people had spoken up - it is obvious, we have spoken up and the future will be that the few will get richer at our expense....
Barry has been saying this for a while.
However the "powers" that be have decided the path this was going to take. Whether we like it or not the financial markets have swallowed the story hook, line and sinker.
The future will say unequivocally that it was obvious, if only people had spoken up - it is obvious, we have spoken up and the future will be that the few will get richer at our expense....
You do touch on a point bus driver wrt to Mr swan. ......but what about loss of tax revenues? Unfortunately, the penny will never drop with the clowns in Canberra either. Qantas's position of outsource everything that's not nailed down, preferably to an overseas provider, will also add to the dint in the tax revenue can that the pollies in Canberra receive. However, until the chairmans lounge is outsourced, they simply won't give a toss. Somebody else's problem.
Just like US debt.
Just like US debt.
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Qantas's position of outsource everything that's not nailed down, preferably to an overseas provider,will also add to the dint in the tax revenue can that the pollies in Canberra receive.
I compiled the news highlights for 2012 regarding the big announcements by Qantas and Virgin during the year, gives a good insight in where things are headed in 2013 for our industry.
My thoughts go out to all who are working over the festive season, Merry Christmas and a Happy and Safe New Year to you all.
tima9x