New deal for Etihad strengthens Aussie ties

Etihad and Qantas finally concluded a deal on Friday that challenges Emirates recent dominance of the routes to the Australia-Pacific region.

The Abu Dhabi carrier has signed a partnership agreement with the Australian national carrier to provide interlining facilities with the Australian low-cost Jetstar regional airline.

The Sydney Morning Herald reported on Sunday that the Etihad partnership will generate new revenue for cash-strapped Qantas, which will use Jetstar aircraft to take Etihad passengers to Australia's top holiday destinations. They include the resorts on the Whitsunday Islands, the Gold Coast and Tasmania.

The newspaper said that Qantas and Jetstar management along with senior executives from Etihad spent more than a year massaging the deal, which will help Qantas muscle up against growing competition from Emirates and an increasing number of international carriers.

The new deal, which was signed off late on Friday, comes just four weeks after Qantas and Etihad celebrated what they described as a win-win arrangement where both carriers agreed to share passengers between Australia and Etihad's operational base at Abu Dhabi.

From Wednesday (April 22) Etihad passengers will be able to fly to Australia and not have to book tickets or carry their baggage between air terminals before boarding Jetstar flights to destinations not serviced by Qantas domestic flights.

Jetstar passengers will enjoy similar privileges with Etihad and will be able to claim and redeem Qantas travel points, depending on the type of ticket they choose.

Etihad began its Melbourne services earlier this month using this A340-600

Qantas chief executive Alan Joyce appeared on Australian television channel ABC on Sunday evening and spoke about the airline’s current financial woes. Last week it slashed jobs and announced delays to orders of Boeing 787 and Airbus A380 aircraft.

Qantas international has experienced a 20-30% decline in premium traffic and even though "in economy the volumes are actually holding, it is the yields that are the problem," Joyce said.

"We are getting less in terms of airfares because there's a lot of discounting in the marketplace," he says, adding, "in the last few weeks we've had some very low discounting into Europe and North America".