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Qatar and British Airways – strange bedfellows

Qatar and British Airways – strange bedfellows

Ok, so they are already members of the same alliance, OneWorld, which kind of makes this even creepier.

Since 2016 British Airways and Qatar Airways have operated a Joint Business Agreement (JBA) which allows them to coordinate their London-Doha, Edinburgh-Doha and Manchester-Doha flights, as well as another 80 routes.

British Airways and Qatar have lodged an application with the Australian Competition and Consumer Commission (ACCC) for a ‘codeshare and interline arrangements’ usually known as a ‘Joint Venture‘. This would include the ability to coordinate schedules, pricing, sales and marketing, frequent flyer programs and lounge access across their networks but predominantly in France, Germany, Spain and the United Kingdom. And they want to be able to do this as soon as possible – February 2020, with the approval spreading to 2025.

Who will benefit

Initially, I thought the answer was Qatar, given that they have services to Adelaide, Canberra, Melbourne, Perth and Sydney, and a rumoured service to Brisbane in the future. But now, I’m not so sure, given the ‘key routes’ they are highlighting, which include Edinburgh, Manchester and London – all in the UK:

  • Adelaide – London and Manchester
  • Canberra – London
  • Melbourne – Edinburgh, London and Manchester
  • Perth – Edinburgh, London and Manchester

These are not the only destinations they are talking about. Other European cities include: Cardiff, Basel, Belfast, Bilbao, Glasgow, Hamburg, Hannover, Ibiza, Inverness, Leeds, Luxembourg, Lyon, Marseille, Newcastle, Palma de Mallorca, Stuttgart and Toulouse. In all, they are applying to Joint Venture on 104 ‘B&B routes‘. I think this stands for ‘beyond and behind’ their respective hubs.

British Airways only flies one service a day from London to Sydney via Singapore – so it is the lesser of the partners at the Australian end of the Joint Venture.

So Qatar and British Airways have one Australian destination in common, – Sydney – which is probably why they specifically exclude it from the Joint Venture – arguing that it is already hotly contested by multiple airlines (Cathay Pacific, Emirates, Etihad, Qantas and Singapore Airlines).

British Airways meal – mmmm!

Benefits

Well, the benefits they are touting in their application include the following – all of which I remain firmly cynical about:

  • Lower fares
  • joint loyalty benefits – reciprocal earn and burn
  • Status recognition
  • Lounge access

All the above benefits are currently available to both these airlines as part of their membership of OneWorld. But the agreement promises they would ramp them up compared to other OneWorld partners.

The submission also argues that the Joint Venture will make the service the two partners offer more competitive and that in turn will increase competition. It’s a neat argument, but I would need to see a bit of competitor and financial modelling to make me believe it.

They use similar logic when arguing that the Joint Venture will result in lower fares. The argument goes, that because the agreement will allow them to lower average per-passenger costs, they will be able to lower fares, which will make them more competitive, which will be a benefit to travellers:

‘The Parties expect the Proposed Conduct will allow them to generate efficiencies across the B&B Routes, leading to lower average per-passenger costs and, in turn, lower fares as strong competition from other major airlines and alliances means cost efficiencies will be passed on.’

Joint proposal to ACCC

OK, so make that a guarantee, and I’m in. Otherwise, its just talk.

2PAXfly Takeout

I’m not sure I can see the benefits to passengers here. I can certainly see the benefits to the Joint Venture partners, by widening the destinations and services they can jointly market and allowing them to collaborate (and share costs) on everything else.

I’m thinking anti-competitive?

If you want to make your view known to the ACCC, you only have until 31 January 2020 so you better read the notes for interested parties and the Application.

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