Virgin Blue has been given the all-clear to launch ten weekly flights to North America by November, after Australia and the United States signed an Open Skies Agreement.
The deal will now allow Virgin offshoot V Australia and another Australia or US carrier unrestricted access on the route.
The agreement will remove a cap which restricted airlines from both countries flying four weekly flights in their first year of operation on the route.
“The United States is Australia’s third largest aviation market and this agreement removes restrictions on Australian and US airlines starting services and routes between the two countries and beyond to third countries,” Mr Albanese an Australian government minister, said in a media release.
Mr Albanese argued the deal will help stimulate the tourism market, which has suffered due the lack of available seats on the capacity constrained route. But the deal will keep Air Canada and Singapore Airlines, who have expressed a desire to fly between Sydney and Los Angeles, off the route. So far, no US carriers have expressed a desire to join United on the route.
“Over time this will lead to greater choice through increased competition and provide significant employment opportunities for Australians in the aviation and tourism industries,” Mr Albanese said.
Qantas welcomed the decision despite lobbying hard in the past to keep foreign carriers such as Singapore Airlines off the highly lucrative route.
“We welcome the outcome. It brings new opportunities for growth and competition,” said Qantas chief executive Geoff Dixon.
“Importantly, 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.
It is suspected Qantas supported the Open Skies deal on the hope it will bar Singapore Air’s attempts to get on the route for good. The logic being Qantas would prefer to have less experience competitor like V Australia.
The Howard Government barred Singapore Air from the route two years ago to give Virgin Blue time to launch an airline on the US route, arguing it would be good for Australian jobs.
Key Features of the Agreement:
• Allow carriers unlimited number of services between any city in the two countries and beyond to other countries;
• Facilitate V-Australia’s plans to launch services on the route from late-08, subject to regulatory approvals. It will also make it easier for US carriers, or new Australian carriers, to enter the route, further building competition, and for Qantas and Jetstar to securely plan for future growth;
• Allow cargo only services to exercise seventh freedom rights, operating from the other country to a third country, without the need to pass through that carrier’s home country;
• Provide new opportunities for Australian carriers to transport US government travellers on certain categories of flights after Oct-08.
Current services:
• The Qantas Group operates 48 services per week to the US. Qantas currently operates 43 weekly passenger services between Australia and Los Angeles, San Francisco and New York.
• Qantas code-shares to a number of US points with American Airlines (AA), while AA markets seats on Qantas’ trans Pacific and selected Australian and NZ domestic services. Qantas also code-shares with Alaskan Air, Air Pacific and Air Tahiti Nui.
• Jetstar operates five services per week to Honolulu. V-Australia has announced it intends to commence operations between Australia and the United States from late-08, subject to regulatory approvals.
• United Airlines currently operates 14 services per week; 7 services on a LA–Sydney–Melbourne and 7 services per week between San Francisco-Sydney. Three additional services per week operated over the Dec–Jan holiday period between LA and Sydney. Hawaiian Airlines operates three services per week between Honolulu and Sydney.
Qantas makes an estimated 20 per cent of its overall profits from the route and is set to increase its domination of the route.
It plans to increase its flights to 51 a week , meaning it will control 80 per cent of the direct flights.
Qantas deployment of the A380 superjumbo on the US route later this year is set to further aid its ability to offer more seats. United Airlines is presently Qantas’s only competitor on flights between Australia and the US with 14 flights a week.
V Australia will intitially only have a marginal impact, given it plans to have 10 weekly flights on smaller Boeing 777 jets.
