Cleared for takeoff but ACCC dismisses Qantas 'decline' claim The competition watchdog has rejected a central argument of Qantas management that its international operations face "terminal decline" without an alliance with Emirates. The Australian Competition and Consumer Commission said it did not "accept or rely on Qantas' claim" that its international operations were in terminal decline and unable to compete effectively or turn a profit. "The ACCC has rejected Qantas' claims that in the future without the proposed conduct, it will cease all international services and operate a virtual network in the medium to long term," it said. The performance of Qantas's international operations have long been a point of contention in the war of words between Qantas boss Alan Joyce and trade unions and the federal independent senator Nick Xenophon. In its report granting approval, the regulator accepted Qantas was likely to cut services to Europe with or without the Emirates alliance but said "in all other areas" of its international operations any disadvantages were likely to be offset by its grip on the domestic market and the loyalty of frequent flyers and corporates. The ACCC considered that Qantas did not have the same advantage as airlines in the Middle East and Asia, such as lower labour costs. "However, the ACCC does not accept that the extent of the labour cost disadvantage are of the degree described by [Qantas and Emirates] or in the Oxford Economics report," it said. It also did not place any weight on Qantas' claims of "structural disadvantage" due to government ownership and different tax treatment for other international airlines. "The ACCC considers that the net effect of these factors on Qantas is unclear and therefore has not placed any weight on these claims," it said. The regulator pointed out that Qantas' international operations had a number of structural advantages on routes to and from Australia. The most significant advantage was its "substantial domestic network," which gave it a "significant advantage over foreign carriers." The ACCC did accept that without the Emirates alliance, Qantas was "likely to rationalise" its operations on routes to Europe. The regulator has taken the view that irrespective of the alliance, Qantas would ditch its Sydney-Frankfurt services, and may cease one of two daily flights from Dubai to London in the short term. But the regulator emphasised that "in all other areas of Qantas' international operations the ACCC considers that any structural disadvantages are likely to be largely or entirely offset by Qantas' strength in Australian domestic aviation and Qantas' customer loyalty through corporate contracts and frequent flyers." It also did not accept that Qantas' services to Asia were in "terminal decline." Despite rejecting the claims about the performance of the international operations, the regulator has approved the Emirates tie up after concluding that it was "satisfied that the alliance is likely to result in material, but not substantial, public benefits."