Emirates dumps on Tasman code-share
By Steve Creedy, The Australian | Apr. 15, 2006
Qantas and Air New Zealand are wrong to suggest Emirates is capacity dumping and should not use its services to New Zealand as an excuse to join forces on the Tasman, the Dubai-based carrier says.
The two Australasian carriers have pointed to increased competition on the Tasman by Pacific Blue and overseas carriers as a reason for allowing them to enter into a code-sharing agreement that would jointly give them 75 per cent of the market.
Both airlines this week again singled out Emirates, alleging that capacity dumping by the carrier on the Tasman was contributing to an oversupply of seats causing losses on the route.
Air NZ said the situation would worsen if the Dubai carrier introduced double-decker Airbus A380s on the route.
But a spokesman for Emirates said it appeared Qantas was running an old line against Emirates to build political support for its proposal. "The capacity-dumping argument being run by (Qantas CFO Peter) Gregg, and others, does not stack-up," the spokesman said.
"The aircraft type used on the route is a function of the originating service from Dubai. Commercial realities underpin Emirates' business and route planning - for instance, last year, Emirates withdrew its Melbourne-Christchurch service as the route was no longer commercially viable."
The spokesman pointed to the most recent Bureau of Transport & Regional Economics study which showed Emirates' passenger loads on the routes were improving, with inbound load factors at 48.2 per cent and outbound at 57.3 per cent.
The Air NZ-Qantas alliance is subject to approval by regulators and has already sparked worries about price increases and seat availability among consumer and travel groups. Virgin Blue chief executive Brett Godfrey also labelled the deal anti-competitive.
If approved, the carriers would work together on network, schedule, pricing and marketing initiatives across the Tasman. But they said fares would remain low, their customers would have more flights to choose from and the seven airline groups still flying the route would make it one of the most competitive in the world.
While the airlines claimed the savings they expected to reap from the deal were commercially sensitive, market estimates put it in the tens of millions.
Macquarie Equities analyst Paul Huxford estimated that Qantas would save $35 million and Air New Zealand $NZ40 million ($34 million) as a result of the code-share. Qantas shares fell 4c on Thursday to close at $3.45.