Emirates, the world’s largest airline by international passenger traffic, has agreed to a revenue-sharing pact with Qantas Airways Ltd. (Sydney: QAN), Australia's largest airline and the oldest continually operated airline in the world, leaving Emirates' former partner British Airways out in the cold.
Dubai-based Emirates and Sydney-based Qantas will collaborate on ticket prices, sales, frequent-flier programs and flight scheduling under the agreement, pending regulator approval. No financial investments will occur between the companies.
The union with Emirates will give Qantas an additional 60 flight destinations in the Middle East, according to Bloomberg. Qantas will begin direct flights from Melbourne and Sydney into Dubai. It also plans to increase connections through Singapore by 25 percent.
Emirates is set to end a 17-year pact with British Airlines in March as a result of the new deal. Willie Walsh, CEO of International Consolidated Airlines Group (London: IAG), the parent of British Airlines, downplayed the break.
“This is a small part of our overall network and this move fits in with changes in our global strategy,” Walsh said in a statement. “Asia has become a key market focus for IAG, and we’re talking to a number of airlines about alternative options.”
Emirates was created in 1985 with support from Dubai's ruling dynasty Al Maktoum. Qantas was founded in 1920 as Queensland and Northern Territory Aerial Services Limited, beginning international flights in 1935. It has survived despite the airline industry's rampant consolidation due to low margins and high oil costs over the past two decades.
IAG shares rose 4.18 British pence, or 2.99 percent, to 143.88 pence at Tuesday's close. Qantas was up 6.67 percent to 1.20 Australian dollars at close.