COMMENT: Emirates and Qantas deal a lesson in humility.
Analyst Saj Ahmad looks at the deal between Emirates and Qantas, decides who are the winners and losers and gives his personal take on the old adage of he who laughs last, laughs longest.
In announcing their new partnership, behind the smiles, investors at Qantas will be wondering a few things.
First question is "why do this deal now" and secondly, in aligning itself with the biggest and fastest growing airline in the world, why did Qantas not solidify its earlier codeshare deal with Etihad?
Whichever way you look at this wide-ranging deal between the Dubai-based leviathan and the Kangaroo airline that is struggling to stand, let alone hop, Emirates has come out on top.
Not only will it be able to plunder, and at will, the key leisure and high yield business traffic from the likes of Melbourne and Sydney away from Singapore, Hong Kong and other Asian cities directly to Dubai, it has also in that same swoop utterly damaged the business case for Jetstar to launch services to Europe too.
Qantas has for years been surviving on a blend of good luck and Jetstar keeping it afloat. Qantas' share price, like its traffic yields have been on a perennial if not terminal decline. The pact with Emirates will not stop that. It may even make it worse, especially once customers who have not flown with the Arab airline get to see just how far apart the two are in terms of product, quality, value for money and crucially - the network to the world via the one-stop hub in Dubai through Emirates' dedicated Terminal 3 building. Certainly from my experience, it is the best airport terminal in the world to not just fly to, but also transit through.
But let us not gloss over this pact as being a deal of divinity.
Even before Qantas' current CEO Alan Joyce took up the reins, the Australian carrier has been one of many that had criticised Emirates and other Arab airlines with a slew of allegations and falsehoods that were never once substantiated.
Perhaps Mr Joyce and Qantas will now be pleased that their fleet of A380s will get "free" or subsidised fuel at Dubai International Airport, as they claimed Emirates does.
Or perhaps it's the discounted or nil-rate landing fees that compelled him to sign up with the proverbial "enemy"?
Whatever the reasons, what is crystal clear is not just the sheer hypocrisy and idiocy of Qantas' huge u-turn in embracing a foe as its ally, but crucially, this deal does nothing that bolsters their financial position vis a vis the strength that Emirates gains. This is nothing short of capitulation by the Aussie airline and they should hang their heads in shame - not because they had no choice but to do this deal, but because of the incessant lies they uttered against Emirates.
Emirates has indeed grown and succeeded as a result of Dubai and UAE Governmental policies.
In free market economics, Emirates has demonstrated to good effect how to make the most of open skies deals, the best way to utilise Government backed airport infrastructure to pull in traffic from across the globe and also invest heavily in swathes of Airbus A380s, A350s and Boeing 777s to keep its fleet young, efficient and attractive while being able to leverage their performance envelope to open up new markets.
And what has Qantas done?
It has spent more time bad-mouthing Arab airlines, spent countless sums of money lobbying the Australian Government to curb and reduce competition, particularly in the direction of Singapore Airlines, that has long sought to open up services across the Pacific, than it has looking at its failed business model.
And to top it off, it has cancelled 35 Boeing 787-9s. An airplane that will enter service by the spring of 2014 and would have helped Qantas to not only decrease its fuel bills and open up new markets, it would have allowed the retirement of the gas guzzling 767s and A330s that the airline operates.
So as it is, Qantas is stuck with just 12 A380s for its international services while its 747-400 is phased out. Not exactly a smart move when you consider the frenetic rate at which Emirates is inducting A380s and 777-300ERs. Qantas' cancellation of the 787-9s is bizarre - reckless even. And this short-sightedness will come back to haunt them, Even if they wanted to revive those orders tomorrow, those 35 787-9 slots have all been taken.
Considering the words that Qantas has in the past used against Boeing for delays to the 787, they could have simply deferred the deliveries instead of cancelling them - but in the end, Qantas is strapped for cash and terminated the order to get its deposits back to help keep its loss making international business alive.
Emirates has shown Qantas how to do things the hard way. Had Qantas management been smart enough to see the relentless growth that Arab airlines have, they would have perhaps avoided confrontation a decade ago and partnered up with these carriers instead of running their mouths off about subsidies and other such nonsense.
But no, verbatim is easier to spew than it is to deal with reckless unions and elements of an airline unhappy at structural change - so the outdated model remained along with the status quo while Emirates beefed up its presence in the Australian market at the expense of Qantas' ineptitude and hopeless dithering.
As it is, a weakened Qantas has come with its begging bowl to Emirates. Emirates bosses must be ecstatic at the pitiful ease with which they have effectively forced Qantas into this deal.
And the third party left wounded by this, British Airways, is now forced to look to an uncertain future and how it will serve Australia profitably.
While the termination of the "Kangaroo-Route" between British Airways and Qantas will not necessarily lead to the demise of the oneworld alliance, there is little evidence to suggest that Qantas' pact with Emirates will ever get the Arab airline closer to joining.
Clearly, if British Airways were smart, they should also look to partner with Emirates too.
Media reports of British Airways entertaining Qatar Airways sound desperate. Not just because Etihad is aligned with Virgin Australia and Emirates with Qantas - but Qatar Airways has little need to entertain the UK flag carrier, which is mired in trying to establish the much vaunted synergies between itself and a poorly performing Iberia.
Qatar Airways can indeed call the shots here if British Airways comes knocking. They do not "need" the headache that British Airways brings.
British Airways has many options it can bring to fruition. The easiest one would be to work with Qantas and Emirates via Dubai and strengthen the proposition all three airlines have while giving some potency to the oneworld alliance in contrast to the Star Alliance and Skyteam Alliance for connections between the northern and southern hemispheres.
If British Airways is serious about not wanting to become an embarrassment in the way that Qantas has become, it will need to do something.
Qantas has been given a very harsh lesson in competition by Emirates. British Airways and every other critic of Arab airlines should shut up, sit up and take note.