The wine and champagne were flowing, and smooth-talking MC Eddie McGuire said he felt ”like my daughter is marrying my best friend”.
Beaming Qantas chief Alan Joyce – who makes it a rule not to drink during the week – looked like a man who in other circumstances would have knocked back a magnum.
A-listers Miranda Kerr and Orlando Bloom rubbed shoulders with fringe celebrities and an apron-clad Neil Perry presided in the kitchen.
It was Thursday night at the harbourside cocktail bar in the Park Hyatt, and Joyce was finally relaxing after four months of frenetic negotiation to lock in a 10-year alliance with Emirates, a pact he hopes will pull Qantas’s international operations out of their $450 million loss-making nose-dive.
Joyce declared it ”the best day of my career – and the best day I think that Qantas will experience for a very long time”.
Emirates’s dapper president , Tim Clark, also reached for the superlatives, calling the new commercial partnership ”the most formidable marketing relationship that the world has seen for a very long time”. Both spoke enthusiastically about the ”buzz” among staff and customers and Joyce told the Herald that Qantas’s major shareholders were ”overjoyed”.
Feedback from Canberra had been strongly positive – a welcome change from the frosty relations triggered when the airline grounded its fleet during last year’s industrial dispute. ”I haven’t heard a bad word about this,” Joyce said jubilantly. ”You know that this is meant to be when you hear everybody being as supportive as they are.”
But as the initial euphoria started wearing off yesterday, there were questions trickling in from sceptics on the sidelines.
Which of the two airlines, the independent senator Nick Xenophon wanted to know, would ultimately stand to get the best of the deal? Would Emirates slowly cannibalise Qantas on international routes and the ”kangaroo” morph into a ”joey”? Captain Richard Woodward, from the Australian and International Pilots Association, said pilots were ”positive” on initial inspection of the deal – but wondered whether Qantas would eventually ”shrink to become a regional feeder” for the relentlessly growing Emirates. And then there was John Singleton calling for Joyce to be replaced as chief executive because Qantas was in the grip of a ”crisis of management”.
The broad outlines of the deal seem simple enough though the devil will, as always, be in the detail, with the arrangement not due to start until April 1 (an ”auspicious” day, Clark reassured Thursday night’s guests) and the regulators yet to run a ruler over it.
In essence, Qantas shifts its hub for European flights from Singapore to Dubai, ditches its Frankfurt run and cuts loose its partnership with British Airways and code-sharing arrangements with Air France and Cathay Pacific in favour of a deeper alliance with Emirates.
The two airlines have agreed to ”treat each other’s customers as our own”, with reciprocal levels of service, meshing of frequent flyer programs and ”integrated network collaboration with coordinated pricing, sales and scheduling”.
The attempt to match each other’s level of service means Qantas will now, like Emirates, offer chauffeur-driven pick-up and delivery for business and first-class passengers on flights more than 12 hours long.
Joyce says Qantas’s signature Kangaroo route to London would remain, just flying through Dubai instead of Singapore, and that Qantas customers would get better access to 30 additional European destinations (on Emirates planes), via one stop in Dubai instead of two through Singapore and London.
The Deutsche Bank analyst Cameron McDonald said the plan addressed Qantas’s ”lack of network reach” into Europe and gives Emirates access to Qantas’s corporate travellers in Australia as a ”feeder”.
Macquarie Equities gave the move the thumbs-up, saying it allowed Qantas to join forces into Europe with the airline that had been ”arguably its greatest competitor on the route”. It also improved Qantas’s ability to shuffle its Asian services so they were better timed for ”premium” travellers, Macquarie argued, forecasting the deal could give Qantas an additional $130 million a year from 2014.
But does getting into bed with one of its chief competitors really hold the key to growth?
”Qantas is expanding operations into Dubai but pulling out of other routes,” Woodward said. ”Once your competitors fill a gap in this industry, you struggle to regrow to take them on.”
A longtime former industry executive told the Herald he believed the deal was a ”Band-Aid” solution on the European route that would not deliver anywhere near the benefits claimed by Qantas. ”Over time, the Emirates brand will swamp the Qantas brand, unless they go to extraordinary lengths to try and avoid that,” he said.
He also questioned the wisdom of operating the European route via the Dubai hub, saying ”every time there is turbulence politically in the region, there is the risk you could end up in trouble”.
Joyce is adamant his latest formula is the recipe for growth not shrinkage. ”We get the benefits of Emirates feeding to us … to support our London operations and making them viable,” he said.
He is still hoping that once Qantas gets its new 787s in 2016 (an acquisition already deferred by two years) there will be more Qantas ”metal” flying into Western Europe.
Consumers, he said, could expect a bonanza when the deal lifts off next year because ”the competition at the start will react to this and I think it will be hugely competitive”.
But it remains to be seen if this is a new beginning for Qantas’s international operations, or, as some observers fear, a temporary fix.
This story Administrator ready to work first appeared on Nanjing Night Net.