How the Qantas-Emirates deal works

Qantas is entering a partnership with Emirates that will see all flights to Europe go via Dubai. Picture: AFP Source: AFP

QANTAS passengers will begin flying to Europe via Dubai on Sunday after the airline got the eleventh hour go ahead to proceed with its partnership with Middle Eastern airline Emirates.

But the approval came with a condition that the two airlines maintain at least their current levels of capacity on the four routes they fly between Australia and New Zealand so competition is reduced.

Despite approving the deal the competition regulator rejected a claim by Qantas that its international arm was in "terminal decline" and needed to form the deal because it was unable to compete without it.

Mr Joyce has previously said that the deal with Emirates was "critical".

The airline began selling tickets on the new routes in early January after being given interim approval by the Australian Competition and Consumer Commission.

Qantas CEO Alan Joyce said customers were already responding very strongly with a "significant increase" in bookings.

The move means Qantas passengers will get "one-stop" access via Dubai to 33 European destinations including Paris, Rome, Amsterdam, Munich and Barcelona, as well as destinations in the Middle East and North Africa.

Subject to approval in New Zealand, the ability to cooperate on the Trans-Tasman routes also creates the potential for the two airlines to market Australia and New Zealand to their global networks.

ACCC chairman Rod Sims said Air New Zealand and Virgin Australia already had a partnership on the route so when Qantas and Emirates combine there will only be three players instead of four.

"We thought that was going to cause competition problems so we have required them to maintain capacity," he said.

Mr Sims said prices to Europe were likely to remain the same because there was already so much competition between international airlines flying from Australia.

"Any attempt by them to put up prices will see them lose customers to other airlines," he said.

"We don't think this will bring prices down, but we don't think it will see them go up either."

Before the five-year partnership, approved after a six-month review process, Qantas passengers flew to London via Singapore under the Australian carrier's longstanding partnership with British Airways.

That deal has ended under the new arrangement, with the British carrier forming a codeshare agreement with Hong Kong-based Cathay Pacific instead.

Under the new deal Qantas Frequent Flyer members and Emirates Skywards members will be able to earn points or miles on all flights on the joint network worldwide.

They will also be eligible for lounge access with both airlines, except in the Americas, New Zealand and South Africa.

Qantas is also boosting its baggage allowance for economy passengers to 30kg and removing rules about the number of bags on international flights to everywhere except America to bring it into line with Emirates.

The airline's first flight to the United Arab Emirates under the new deal leaves Sydney Airport at 5pm on Sunday with Qantas CEO Alan Joyce, Transport Minister Anthony Albanese and a number of celebrities on board.

Qantas' share of the international travel market has fallen by 16 per cent over the past ten years as competition increases, according to Bureau of Infrastructure, Transport and Regional Economics figures.

Qantas carried 18 per cent of international passengers to and from Australia last year, Singapore Airlines carried nine per cent and Emirates and Air New Zealand carried 8 per cent each.

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