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Wed 22 Jan 2014 09:04 AM

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Qantas enters cruise market in bid to boost profits

Emirates' Australian partner looks to tap into new revenue source

Qantas enters cruise market in bid to boost profits

Qantas Airways has entered the burgeoning cruise market in a bid to boost profits as doubts emerge about whether regulatory reform to allow more foreign investment into the airline will pass the Australian Parliament.

From Tuesday, Qantas customers will be able to book over 10,000 cruise itineraries through Qantas.com and earn frequent flyer points under a partnership with booking site Cruise Guru, Melbourne’s Herald Sun newspaper reported.

Named Qantas Cruises, the partnership offers the airline, which is currently in the middle of an operational review following mounting losses, an entry point into a lucrative sector which has experienced double-digit growth for each of the last eight years.

Australian-owned Cruise Guru, which offers berths on 162 ships across 17 different cruise lines, will benefit with access to a new source of customers.

However, Qantas passengers will not be able to book flights and cruises together.

Cruise Guru managing director Justin Montgomery told the Herald that he hoped it would provide a convenient portal for passengers wanting to fly to-and-from popular cruise destinations such as Miamai, Barcelona, Southampton, New York, Hong Kong and Shangai served by Qantas or its Oneworld alliance or code-share partners, such as British Airways, American Airlines, Cathay Pacific and Dubai’s Emirates.

"I see the opportunity without a doubt," Mr Montgomery said. "Qantas and its alliance partners do cover the world."

It comes as The Australian newspaper reported that Qantas was struggling to gain political support for an overhaul of the foreign investment cap on the national carrier.

According to the report, key players in the Senate are lining up against changes to existing laws, with only a small prospect of a shift in position when the numbers in Federal Parliament’s Upper House change in July.

The Australian Labor Party and the Greens currently control the Senate, but that will change in July when a new Senate takes shape with members from the Palmer United Party, the Australian Motoring Enthusiast Party and others.

Reforms to the ownership regime are seen as the most likely change to be supported in federal cabinet after Australian Prime Minister Tony Abbott last year backed the idea of reducing the regulatory burden on the airline.

However, Emirates president Tim Clark told Australian newspaper The West Australian, last month that he would not buy into the airline.

The airlines joined forces in an historical aviation deal in March but despite Emirates being one of the strongest airlines in the world, the alliance has failed to boost Qantas’ performance.

The Australian carrier, which moved its overseas base to Dubai as part of the alliance, has forecast a half-year loss of $300m and in December announced 1000 jobs would be axed, leading Standard& Poor's to downgrade its credit status to "junk”.

Clark said he "would watch [the situation] carefully" but Emirates did not have the "bottomless pit of cash" Virgin Australia's partner Etihad Airways had.

"So no, equity is not on the table,'' Clark said.

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