EU-Australia open skies may boost flagging airline interest- June 19, 2008

Australian Transport Minister Anthony Albanese will meet with EU officials next month to finalize an open skies agreement, the impact of which remains uncertain.

Last week, European transport ministers approved a mandate for the European Commission “to negotiate an EU-wide open skies air services agreement with Australia,” Albanese told Australian parliament this week. The agreement will cover only Australian and European carriers, although only British Airways operates to Australia on its own.

Over the past few decades, KLM, UTA French Airlines, Alitalia, Lufthansa, Olympic Airlines, Jat Airways and Lauda Air have withdrawn from the Australian market as they gave way to lower-cost, more regional carriers like Singapore Airlines, Malaysia Airlines, Cathay Pacific Airways and more recently Emirates.

LH currently codeshares into Australia with SIA, AF with Qantas, KLM with MAS and Finnair with CX. While Europe is Australia’s largest travel market with 4.5 million passengers annually, the majority travel on carriers other than Qantas and BA. QF serves only London Heathrow and Frankfurt, having withdrawn from Paris Charles de Gaulle, Rome Fiumicino, Athens and Amsterdam in large part because its only long-range equipment, the 416-seat 747-400, is too big to fly anywhere but FRA or LHR.

However, the agreement will benefit Qantas subsidiary Jetstar Airways’ plans to launch European services, which will operate through Singapore or Bangkok and compete with Asian airlines offering similar products such as AirAsia X.

Qantas is unlikely to take advantage of any open skies agreement until it takes delivery of the 270-seat 787-9 in 2012. That aircraft is far better suited to the size of the markets that open skies would offer but it still must make a fuel stop somewhere like Singapore, thus competing with SIA.

More and more, the majority of Australia-Europe traffic will be carried by Asian and Middle Eastern carriers. Emirates plans to double its capacity into the country over the next four years. It now offers Australians one-stop travel to 25 European destinations and plans to add several new ones each year.

by Geoffrey Thomas

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