Regulatory Battle Begins

The first round of submissions on the Qantas-Emirates partnership application have come in, and they give a pretty good snapshot of where the battle-lines will be drawn.

Airlines, unions and state and federal government agencies have all filed responses to Australia’s Competition and Consumer Commission (ACCC). This is only a preliminary skirmish over the Qantas/Emirates request for interim authority to begin limited discussions, so there are many more steps before the application itself is decided. But the opening salvoes give a fair indication of what is to come.

Just to recap, Qantas and Emirates want regulatory relief to cooperate closely on routes between Australia and Europe via Dubai, and between Australia and New Zealand. The ACCC’s final ruling on this is expected in about six months, so in the meantime, Qantas and Emirates have asked for interim approval to lay some of the groundwork.

Links to the application and submissions can be found here. The deadline for submissions on the interim request was Sept. 21, and the ACCC says a ruling on this will come in October. The parties all stress they will be making further filings on the merits of the partnership application itself. These submissions on the full application are due Oct. 1.

The other major airline competitors in Australian markets oppose the interim request, although this would not be a surprise to anyone. That’s how the game is played in these cases.

Singapore Airlines says in its submission that the case is complex enough that the full six months will be needed to decide its merits, and interim authorization may cause competitive harm that could not be undone should the full application be denied.

Alliance partners Air New Zealand and Virgin Australia have a double-barreled argument – firstly, that interim approval is not necessary if Qantas and Emirates only want to hold limited discussions while ring-fencing any commercially sensitive information. However, they also stress that approval should be denied if the applicants want talks to go beyond this, because it would be detrimental to competition. Like Singapore, they argue that once Qantas and Emirates have swapped commercially sensitive information, it can’t be reversed.

Qantas unions have also weighed in. The Australian Licensed Aircraft Engineers Association urges the ACCC to deny interim authorization, but goes much further in slamming the partnership proposal itself and particularly the accuracy of some of its assertions. There is some interesting discussion about whether Qantas is exaggerating the financial plight of its international division, which is used by the airline as an argument in favor of a partnership with Emirates. The Transport Workers Union submission is very similar in its main arguments.

The government of the state of Victoria filed a submission through its tourism agency, urging the ACCC to approve the partnership. It cites the benefits of improved connections to Europe through Dubai, and it also notes that the deal will allow Qantas to improve services between Victoria (Melbourne) and Asian destinations.

Another notable submission was from the federal government’s transportation department. While it stresses that its full opinion will be coming soon, it supports the interim authorization request.

This docket will be interesting to keep an eye on, as there will be a lot more arguments and counter-arguments over a partnership proposal that will have major consequences for some important aviation markets.

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