09/04/2013 - 10:11

Has Qantas signed its own death warrant by “merging” with Emirates?

09/04/2013 - 10:11


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Has Qantas signed its own death warrant by “merging” with Emirates?

No farmer would ever invite a fox into his hen-house, but a close look over the past few days at the strategic link forged by the one-time Australian flag-carrier, Qantas Airways, with Dubai-based Emirates Airlines, reveals a “fox and hen” situation which can only lead to the obvious outcome.

Whether Qantas even realises that it is playing the part of Mrs Hen is doubtful, but there’s no doubt that managements at Emirates knows how to play the role of Mr Fox, and that is to kill Qantas, or at least to weaken it to the point where it would welcome a takeover bid.

That possibility was certainly not one mentioned when the controversial deal between the two airlines was announced last year, or more recently by aviation writers singing the praises of the new destinations allegedly served by Qantas, but actually served by Emirates with Qantas tagging along.

When first revealed the so-called “non-equity merger” was promoted as means of ensuring the survival of the international arm of Qantas which has struggled to maintain market share in an increasingly competitive market with most rivals operating off a lower cost base, especially for labour and fuel.

Even two weeks ago Qantas chief executive, Alan Joyce, was delighted to report a six-fold increase in ticket sales for travellers booking combined Qantas/Emirates flights into Europe, one of the key aims of the revenue-sharing alliance which goes far beyond traditional code-sharing.

In theory, that whopping increase in bookings is unquestionably good news, but there are reasons to wonder whether the six-fold increase was nothing more than a catch-up after months of uncertainty and whether much has really changed for Australian-based customers who could generally reach the European destinations of their choosing by switching carriers in Singapore or Bangkok.

The proof of the Qantas/Emirates arrangement is in the experience it offers customers and when any airline is reduced to its core value, service is all that matters in capturing and retaining customer loyalty.

Price, punctuality, safety, and choice of destinations are certainly important but most buyers of a service can sniff out the differences between something that is reasonable and something that is better.

Unfortunately for Qantas it has jumped into bed with a “partner” which has significant advantages, including the cheaper cost structure mentioned earlier, and what seems to be a greater focus on providing customers with a more satisfying experience.

None of this is intended to be unfair criticism of Qantas but, over the weekend, I was able to directly compare what both airlines have to offer on a trip to London which started in an Emirates Boeing 777 and switched to a Qantas Airbus 380 at Dubai.

The first difference was noted at Perth airport where the quality of what’s provided to business travellers could be judged by having the freedom to wander into the respective lounges which sit alongside each other.

The gap between the Qantas Club and the Emirates Lounge was vast, and a point to what lay ahead was in the wine list. Qantas offered a Seppelt Salinger bubbly for that farewell drink. Emirates offered Veuve Clicquot or, for whisky lovers, a single-malt Glenmorangie.

On board, and that part of the trip was far from lounge luxury, at the tail end of both aircraft, there was still a discernible difference between staff attitude and attention to the requests of customers, in-flight entertainment and punctuality – which means the Emirates leg was on time, the Qantas leg was not, and included a misleading text message about a three hour delay in Dubai which was later reversed but only after messing up passenger pick-up arrangements in London.

On paper, and given the cost and competition pressures being experienced by Qantas and perhaps the Emirates deal is the best it could do.

The problem, which will take time to emerge but will grow by word-of-mouth rather than through any slick marketing is that lifetime Qantas customers, who have stuck with their local leader, are being introduced to a better airline – by Qantas itself!

Try as you might it is hard to imagine any other business which would invite its best customers to try the services of a rival because once that happens a logical question has to be asked: are other international airlines as good as Emirates and has it been a mistake to stick with Qantas?

The answer is that sticking with Qantas was not a mistake. It has been the best on offer for most Australians.

Where the mistake lies is in Qantas opening the eyes of its own customers to what rivals have to offer.

The deal has, quite simply, invited the Emirates Fox into the Qantas hen-house and the fox is going to have a jolly good time.


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