Interview: China-Australia FTA to create one of biggest airline partnerships: Qantas CEO

The head of Australia's largest airline said its partnership with China Eastern would become its largest global partnership, once the China-Australia Free Trade Agreement is enacted.

Speaking on Xinhua's Talk to China Program, Qantas Chief Executive Alan Joyce has said with the rapid growth of China's middle class, the groups recently approved partnership with China Eastern and opportunities afforded in the China-Australia Free Trade Agreement (FTA) will allow the airline to expand into the Chinese market. "We can benefit out of tourism, out of economic activity,"Joyce said.

In August, The Australian Competition and Consumer Commission ( ACCC) approved the partnership between China Eastern and Qantas, which both airlines are set to capitalize on.

Joyce said both airlines will work together to develop and increase capacity in the Australia-Shanghai market, starting with Brisbane, and hoping to grow by 21 percent as a result of benefits of the China-Australia FTA. "Both brands will use their domestic networks to enhance the operation to Shanghai,"Joyce said. "Qantas and China Eastern will use their brands and their distribution to enhance the services from Shanghai, but, Qantas will be selling the rest of China and the rest of Australia on that network to allow people more easy access."

Easy access into Australia is what's needed with the potential boost in Chinese tourists into Australia, second in numbers behind New Zealand, but most on expenditure, Joyce predicts. "In China, they say France is the number one destination the Chinese want to travel to and Australia is number two. That's huge potential in terms of tourism,"Joyce said. "We have over 750,000 Chinese tourists coming here,"and the number is growing at 11 percent year on year, according to the Qantas chief executive.

With 5 billion Australian dollars in expenditure, Joyce predicts that will double to 9 to 10 billion Australian dollars by the year 2020. "That's why we're very keen on the Free Trade Agreement,"he said.

"The FTA helps with everything -- tourism, with manufacturing, with trade in agriculture. It can improve the economic activity between the two countries -- which is already very big -- and has the potential to grow even further."

Joyce said the partnership with China Eastern has the potential to be airline's largest, ahead of the Qantas-Emirates partnership that services Europe and the Qantas-American Airlines relationship that services the Americas, historically speaking, Australia's largest market. "With China growing the way it's growing, the opportunities of the FTA.. we're pretty excited about it,"Joyce said. "As the free trade agreement encourages more trade, we will grow and grow more rapidly into the Chinese market."

Joyce said even before the China-Australia FTA, the economic relationship was still significant with two-way trade amounting to 160 billion Australian dollars annually and nearly 40 billion Australian dollars of Chinese investment into Australia.

Joyce, however, is not worried about China's investment into Australia following a slowing economic growth and the Aussie dollar's significant drop on Wednesday that saw the unit below 70 U.S. cents.

According to the Australian Bureau of Statistics, the local economy grew by only 0.2 percent in the June quarter for an overall 2.0 percent in the 12-months to June, weaker than the 0.5 percent economists had predicted.

Despite the mining construction slowdown, Australia's diverse economy is experiencing good growth in other sectors, Joyce said, adding that Qantas'domestic business is an example of Australia' s economy. "We made nearly 600 million dollars in the domestic operation between our two brands,"Joyce said. "So that gives you an indication of how healthy the underlying economy still is."

However, Joyce himself was forced to overhaul Qantas in 2014 following a 2.8 billion Australian dollar loss in 2013/14 Australian financial year, creating one of the most significant financial turnarounds in Australian corporate history. "We're half way through the restructure, and it has delivered some very good results to date,"Joyce said.

In the 2014/15 Australian financial year, Qantas made an underlying profit of 975 million Australian dollars, for a turnaround of 1.6 billion Australian dollars.

In the process, Joyce has had to shed 5,000 jobs, 4,000 of which have been lost so far.

Joyce commended the 30,000 Qantas staff and their increased engagement through the process that has seen the airline's fleet become the"youngest it's ever been"and more focused on customer service. "A profitable business that is expanding, and a business that the customers love to travel with, it's thanks to our people that the transformation is working well so far," Joyce said. Endi