British Airways and Qantas have been flirting with each other for many years, but it has taken an economic crisis for the two airlines to finally come together. Although BA began courting Qantas 15 years ago, when it bought a 25 per cent stake in the Australian carrier, the two never managed to move their relationship towards a marriage.

Financial pressures forced BA to sell its stake, but the two have remained friends, cooperating on the Heathrow to Sydney route. The balance of power between them has shifted over the years, with Qantas growing rapidly to the point where its revenues and valuation now outstrip that of BA.

High fuel costs this year, combined with a slump in demand caused by the economic downturn, have resulted in severe profit downgrades for nearly all carriers. To protect their profitability, airlines are trying to get larger by seeking mergers.

The combination of BA and Qantas will result in opportunities for cost-cutting and will provide logistical benefits in areas such as aircraft and cabin crew scheduling. Passengers will notice little difference initially, particularly between London and Sydney where the carriers already in effect share aircraft.

In the longer term, BA and Qantas hope that they will be able to offer a more effective network so that passengers do not have to transfer to other airlines to reach their destinations. This will improve revenue while making life tough for competitors.

BA is also in talks with Iberia, the Spanish airline, and American Airlines, and it is becoming clear that the British are hoping to create the first global airline. What is uncertain is whether BA can persuade regulators that its polygamous relationship is a good idea.

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