Air fares to the US are expected to fall after Washington and Canberra yesterday signed a long-awaited deal that makes it easier to break open Qantas and United Airlines’s near duopoly on flights across the Pacific.
The landmark “open skies” agreement, signed yesterday, will give Australian and US airlines unlimited access to each other’s markets. It removes government interference on flights between the two countries and paves the way for extra competition, including Virgin Blue’s new carrier, V.Australia, which plans to begin a full schedule of 10 weekly services later this year.
Tourism authorities also expect it to boost the number of visitors from the US by making it easier for airlines to match demand.
Transport Minister Anthony Albanese said the agreement could shake up the international market in the same way new carriers had shaken up the domestic market.
“Today we have an agreement which is good fo jobs in Australia, it’s good for our economy and it signifies the strength of the relationship between Australia and the US,” Mr Albanese said. “This agreement will be good for competition and it could … lower airfares.”
Qantas, which flies 48 services a week to US destinations, and United Airlines currently dominate non-stop routes to the US mainland.
The new agreement allows an unlimited number of services between any city in either nation and beyond to other countries. New airlines had previously been forced to file for special dispensation to fly more than four services between Australia and the US.
It removes restrictions on capacity and pricing and provides opportunities for increased code-sharing between US and Australian carriers.
It also for the first time allows charter flights between the two nations and lets cargo-only traffic operate from the other country to a third nation without the need to transit in their home country.
While the deal makes it easier for US airlines to fly to Australia, it is unclear whether any will be able to do so. Few have the long-range aircraft needed to service Australia non-stop and the US aviation industry is expected to suffer in the coming year because of the economic slowdown.
But both major Australian airlines see opportunity and yesterday welcomed the deal, which was also applauded by the tourism and travel industry.
The airlines expect to benefit from the removal of code-sharing and other restrictions as well as new access to some US government travel previously denied.
Virgin Blue chief executive Brett Godfrey said the agreement marked a great day for competition and he hoped other governments would follow suit. “It should start the unshackling of a lot of the bilateral agreements throughout the world,” he said.
V.Australia is expected to get approval today to sell tickets on its Pacific routes, although it will not do so until later this year, and will announce its US destinations next month.
Qantas chief executive Geoff Dixon said the deal brought new opportunities for growth and competition. “It will assist the further development of Australia’s aviation industry, as well as help increase trade and tourism with a major economic partner,” he said. Qantas shares fell 12c to $4.63 in a weaker market.
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February 19, 2008 at 5:02 am