Qantas may have just started the airline equivalent of a ‘holy war’ in the Middle East.

Of course no-one in Qantas would be as tactless as a Crikey blog in so describing today’s announcement of a code share with Etihad Airways. The official term is that the deal is ‘strategic’ which in itself is quite an understatement.

A code share means that Qantas is putting its QF code on Etihad flights, which use the EY prefix. That means you get to earn Qantas points on those flights, and to be blunt, Etihad is as new and roomy and well outfitted in all classes as you can find on any flight out of Australia.

EY with a QF flight number on your bookings is Qantas as you will only find it on its brand new A380s.

In the UAE, Etihad is owned by Abu Dhabi, which is where the money is. Emirates, which is owned by Dubai, is where most of the debt is.

The rivalry between Etihad, with cashed up royal owners, and Emirates, with indebted royal owners, is as fierce as any in the airline game.

In the Australian context, Emirates is a partner in Virgin Blue’s Velocity frequent flier program. Emirates is a big thorn in the side for Qantas, having made Dubai an extremely effective alternative to the pathetically miserable business of changing flights in London to fly backwards to parts of Europe on British Airways than can be reached at least half a day sooner by using its Middle Eastern hub.

But by code sharing with Etihad, which is Emirates ambitious spare-no-expense competitor, Qantas does even more than gain really convenient connections to Jordan (Amman) Lebanon (Beirut) and Bahrain. It taps into the geographical convenience of a hub in Abu Dhabi that is being run as a growing UAE rival to Dubai, a mere 99 kilometres away at the other end of one of the more exciting autobahn boy racer experiences the world has to offer.

Could this be the long awaited sign that a Qantas management is going to circumvent where possible the Heathrow horrors? Let’s be optimistic about this. While other connections at Abu Dhabi are not designated as code shares with Qantas, meaning no QF frequent flier points on connecting flights other than those announced this morning, travel agents thrive on putting together attractive combination fares that save time and money.

For Virgin Blue this development may also be an incentive to form more code sharing and points sharing alliances with carriers with clout on the Australia-Europe routes.

For the Lebanese and Jordanian communities, the Qantas code share with Etihad gives them QF points and a reason to reconsider flying there via Bangkok or Singapore on Singapore Airlines or Thai International.

One of the clearly stated aims of Qantas in recent years has been to reclaim the loss of market share to the Asian carriers and there efficient hubs. Using a new and very well resourced UAE carrier might well achieve part of those goals, and without any need to invest any of its own aircraft in the process.

It is clear that a Qantas deal with an Arab airline isn’t going to go down well in British Airways, the airline that couldn’t flog itself to either Qantas or Spanish carrier Iberia.

An empire is crumbling.

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