Qantas: Emirates stages dramatic cameo appearance
While the story may seem a teaser, Emirates didn’t raise the prospect of a new commercial alliance with Qantas for fun.
And it wouldn’t have caused much rejoicing at Virgin Australia, no pun intended.
Just as Qantas is larger than Virgin Australia, Emirates is larger, way larger, than Etihad.
And with Virgin Australia in a commercial alliance with Etihad, which may be smaller than Emirates, but appears far less exposed to debt, if exposed at all, than its larger, flashier neighbor up the road in Dubai, there is a certain tension between the two rival UAE carriers that couldn’t fail to be acutely well understood in both Qantas and Virgin Australia.
If Alan Joyce at Qantas wants to bury John Borghetti at Virgin Australia for making him look tragic when it comes to staff engagement and customer focus, a deal with Emirates would appear to offer ‘certainty’ as well as some hope of making serious money for the Qantas management and its investors.
It just means ending the current Qantas fixation with a late 80s mindset when it comes to the sort of alliances it has with British Airways, which is terribly London centric, or American, which may not be safe to mention within Qantas while the once great US carrier struggles to find the way forward from an ugly bankruptcy.
When Borghetti was at Qantas, and had lost out to Joyce as a replacement for Geoff Dixon as CEO in 2008, he had been rebuffed in his argument that a strong alliance with Etihad over its Abu Dhabi hub would be a potent answer to Emirates’ success with world hub Dubai.
Having just flown to Toulouse via Dubai and Paris, it is fair to say Abu Dhabi would be an even more potent answer this week. Dubai is like an up market overflowing refugee camp after a few years frenetic growth since last visit, and that is as true inside the gigantic Emirates premier lounge city complex, as it is on the outside with thousands of other passengers sleeping and eating rough in an airport the Dubai authorities have, as Emirates president Tim Clark has said on several occasions, been way too slow to augment with a new airport.
Dubai is what Sydney will be like in several more years of unaddressed growth, but that is to stray off topic. (I would really like my interlined luggage to turn up immediately in TLS so I don’t have to sit around in the buff waiting for the one set of clothes to dry in the hotel bathroom.)
An Emirates link up with Qantas could open, one hopes in a meaningfully smart deal, the doorway on the fabulous market potentials of most of Africa, all of Asia, all of eastern Europe, and the secondary, not-in-Paris, not-in-Frankfurt, not-in-god forsaken London Heathrow markets that are in their scope far more lucrative than those major, congested city airports.
An Emirates link with Qantas would see the perpetually complaining Australian carrier forced to concede the merits of large scale use of the Boeing 777, as well as the A380, for both of which Emirates is by far the largest user on the planet. The A380 hoovers up hundreds more passengers per flight into the Emirates fold from those carriers that do not offer what is the most comfortable jet in any class in the sky while 777s and for that matter A330s give it in their class the most fuel efficient range/payload combinations for routes which it intends growing to into A380 routes.
In short an Emirates link with Qantas would end a lot of sub standard management practices and sacred cow beliefs at Qantas if in fact it was structured in a way that saw it influential in how Qantas conducts its operations.
Then again, the rivalries and economic dynamics of the UAE could do what outsiders might see as astonishing things to the relationships between its big and little flag carriers as well. And Dubai is already playing a low cost but high service standard card with its all 737-800 Flydubai operation. This isn’t a part of the world where airline investments stay stuck in any sort of rut for very long.
Thus an Emirates/Qantas alliance could be incredibly valuable to Qantas, and exceedingly challenging to Virgin Australia.
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This could be Alan’s only best moment although I suspect it too good to be true. And this….
(I would really like my interlined luggage to turn up immediately in TLS so I don’t have to sit around in the buff waiting for the one set of clothes to dry in the hotel bathroom.) Far too much detail Ben…;)
by discus on May 22, 2012 at 8:08 pm
Hair dryers in the room, if you’re in a half-good hotel, do more than dry hair!!
by Ken Borough on May 22, 2012 at 10:22 pm
I am a bit confused about why you think an Emirates link would be so much better than Virgin’s link with Etihad. Size has hardly ever been a very good selling point, customer-wise; just look at the Americans (whose carriers only remained large because of huge domestic captive trade and dumb Americans knowing no better when they travel o/s–that and it often being mandated, indeed I have been mandated to fly American when being invited by a US gov entity NIH). And BA used to boast about being the biggest international airline. It was in exactly that background (BA and various awful American airlines on the transatlantic route) that Virgin Atlantic arose and made a success of it, and a success in the face of much scepticism then astonishment from BA, then panicked dirty-tricks from BA.
On the other hand I am a contrarian and by definition most people are not (some one is still apparently flying Qantas).
by michael r james on May 22, 2012 at 11:36 pm
Au contraire. As a matter of personal opinion, I thought Abu Dhabi this week would have been a better experience than Dubai, although this isn’t a criticism of Emirates, but of a consequence of its success not being matched by the supporting infrastructure which is something the airline has also drawn attention too.
by Ben Sandilands on May 22, 2012 at 11:46 pm
I recently flew Etihad to the Middle East for the first time – I was forced to as Emirates was booked out. The difference is Business Class product was astounding – flying Etihad was like going back about 5 – 8 years, seats lay flat but uncomfortable, service so so – and working was nigh on impossible as the seat configuration does not allow it. Emirates have really lifted their game in the last few years – QF feeding into Dubai could be what the Flying Kangaroo need.
by blackburnpseph on May 23, 2012 at 10:53 am
On middle east airlines, just flew Qatar Jakarta to Houston (via Dohar) and I found their business class product very good, especially the revamped B777 which made the 16.5 hrs to Houston seem like only 6 hours:)
by TomM on May 23, 2012 at 2:11 pm
QF would need a 747ER for that distance (Syd to Dubai) but with Dallas being the only place that needs them at the moment then (Melb to LA gone to A380s), then feeding an Emirates hub to Continental Europe may make sense, but the questions is will the BA agreement get in the way.
by patrick kilby on May 23, 2012 at 3:54 pm
Sorry, it must be me but I just can’t quite get a clear fix on what you are trying to say.
Anyway, the problems of growth as seen in the state of the airport at Dubai is one glimpse of the tip of the iceberg of the smoke-and-mirrors of the finance behind these operations. While Dubai (unlike Sydney AC) can blame the sheer pace of the growth for their inability to keep up, it may also be a freeze on spending that the GFC brought on. Remember that Dubai did some kind of deals with Abu Dhabi (ie. sheik to sheik) to bail them out of their $80 billion dollar black hole. One outcome was the that world’s tallest building, formerly Burj Dubai, changed names to Burj Khalifa (the name of Abu Dhabi’s leader). As you pointed out Etihad’s finances are much more solid, no doubt because it has been run on more conservative principles than the growth-at-any-cost of Dubai. The paradox behind all this is that Dubai has gone for the bold huge vision partly because they have less oil and are trying to create something to replace it as its oil income decreases.
Again, I know I look at these things too differently to the herd but one just wonders for how long will Asians and those heading to Asia, want to pass thru UAE? I know I want to do it at least once (like I did Las Vegas once) but given the very high cost of staying there and the very restricted set of things to see and do (gape at the garishness and all within air-con artificiality) I just can’t see it becoming the Singapore or HK transit destination. Those bizoids (posting above) have entirely different drivers, and I suppose the economics of airlines vis a vis business class being the profitable end, might say something different?
by michael r james on May 23, 2012 at 5:28 pm
Partnering and using the Dubai hub does have the advantage of providing two flight access to European cities and avoiding Heathrow,but as Michael said, who wants to go and stopover in UAE. Singapore and Malaysia airlines (and Thai too) provide similar access to Europe through their hubs in SIN, KUL and BKK, but make it easier to fill their flights from Asia to OZ and NZ with passengers who want to fly to or through their hubs in Asia.
Will QF and EK agree on sharing the Dubai – Australia sector amicably if a large component of the Australia – Europe traffic still goes through Asian hub cities?
by nonscenic on May 24, 2012 at 2:27 pm