Qantas mulls ditching BA- and Singapore hub.

It's not only the UK's Conservative-Liberal Democratic coalition that's in trouble. In the airline world the nth generation Qantas/BA pool/alliance/joint services agreement lokks in trouble from Qantas' admission that it has  been talking to Emirates about a linkup which would see them ditching the one with BA and the use of Singapore as its Australia/Europe hub in favour of one with the Gulf giant and a new Dubai hub.

Geographically this would make sense,- at least for struggling Qantas. Politically it would make sense for Emirates by short circuiting a feeling in Australia that maybe the extensive traffic rights given to the new Gulf carriers has knocked their national icon out of the long haul business to Europe.

The geography of the "Kangaroo Route" is such that Qantas is strong in taking business out of the major Australian cities direct to an onward hubbing point ,- historically Singapore about 6 hours distant,- but is weak in then gathering in more and taking it all onward to multiple further destinations. Up against Singapore Airlines with their intra Asian frequencies and vastly superior service, Qantas draws little feed traffic into Singapore and the flow through from Australia simply can not provide enough business for profitable onward 12 hour sectors  from an Asian hubbing point to more than a handful of European destinations. The future use and economics of 787s might provide a bit of an answer but not enough of one. In addition to this problem, Singapore-Europe flights overfly very considerable markets between the Gulf area and Western Europe.

The geographical logic therefore says that Qantas, who have to be one stop only from its European destinations, should shift its hub to somewhere beyond Asia and from which passengers can seamlessly connect to pretty much anywhere east and north and even south of the Gulf. Bingo. Dubai. Abu Dhabi is already in cahoots with Virgin Australia and Doha somehow just isn't as attractive and is not an incremental tourist destination in its own right.

Apart from giving it some political insurance against any Australian protectionism , what does the deal offer Emirates? With 72 weekly flights into 4  Australian cities and Adelaide to be added soon, the company has a big stake in the country and will want to protect itself against that being constrained or reduced. It's something Australia in reality can't now afford to do but logic doesn't always prevail when things get tough for erstwhile national carriers. That's why alliance and brand-busting averse Emirates might buy the idea, but might equally well not. Up to now the airline has been determined to be master of its own destiny and it may well decide to reject the Antipodean suitor and carry on very successfully ploughing its own furrow with its own brand and style intact. While BA and Qantas styles are broadly similar and both very much "legacy" that would not be the case in a Qantas/Emirates tieup.

News of the discussions will not have gone down so well in IAG or BA's (separate) headquarters at Heathrow. Expressions like "betrayal" and "stab in the back" may be amongst the more polite coming out of these buildings. In committing to the Joint Services Agreement with Qantas in 1995 BA surrendered its independence in Australia, Singapore and Bangkok and has been marginalised in these places ever since.Until recently its services to Singapore and Bangkok were simply transit calls en route to Australia . Even now the 4 daily joint BA/Qantas flights from Singapore to London all leave late at night so as to maximise connectivity from Qantas's  flights from multiple Australian points . They all depart within an hour so no real attempt is made to compete for the local market with Singapore Airlines choice of 4 flights well spaced through the day.

For Qantas the Joint Services Agreement and its end may both give a feeling of strategic satisfaction. Right back to the 1930s the relationships between the two companies have seen a mix of love and hate and often mutual suspicion. For many post World War 2 years BOAC, then BA and the British Goverment were seen as arrogant and trying unsuccesfully to push Qantas into buying British aircraft which didn't meet their needs at the right time. Pressure to buy Britannias and Comet 4s were ignored in favour of Super Constellations , Electras and Boeing 707s, and possibly Electras apart, rightly too. Despite a number of pool partnership relationships most of the management and staff of both companies saw the other as their main rival to and from all points served between London, Europe, Asia and Australasia. The "Kangaroo Route" became ever more expensive to operate particularly  for airlines based at either end. High staff costs resulting from expensive traditional type union agreements were way above those achieved by the Asian airlines who, led by Malaysia-Singapore Airlines in June 1971, broke the long standing cartel on the route. They also achieved service and catering standards never consistently matched by the legacy carriers. Nor, thanks to enforced long layovers at one end of the route or the other could Europe or Australia based operators get the aircraft utlilisation achieved by the Asian and now the Gulf airlines. Whatever they did with the schedule they were always left with around 12 hours of dead time when they couldn't do anything else with the airrcaft. The answer for BA, short of total withdrawal which could now happen ,was to shrink their Kangaroo route operation until it is now left with just one daily service of its own to just one city, Sydney. Qantas could claim that by closely embracing its main competitor it has first anaesthetised and then strangled it.  The agreement has left BA with a weakened brand and no organisation of its own in Australasia and South East Asia. That makes a possible end to the Joint Service Agreement looks like several-nil to the Australians. No wonder the air might be a bit blue around Heathrow.  One thing is for sure. If Qantas were switch their relationship to Emirates they would find themselves talking to a very streetwise and clever partner who knows who needs who most. Emirates would be fair and do what they say they will do and be very focused and businesslike. The Dubai people will though know and understand all the history and there would be no chance of a similar pushover this time. If the switch does not go ahead BA may have received the jolt they need to thoroughly review the Qantas relationship and weight the benefits of every aspect of it. They now know that their partner isn't in it for love.