AussieBert
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Qantas seen benefitting from United woes
10 December, 2002 17:16 GMT+08:00
By Sophie Hares
SYDNEY (Reuters) - United Airlines' bankruptcy filing may prove a short-term boon for trans-Pacific competitor Qantas Airways Ltd, but could add uncertainty to its planned tie-up with Air New Zealand, Australian analysts said on Tuesday.
Struggling to reorganise under U.S. bankruptcy court protection, UAL Corp's United UAL could emerge as a leaner, more efficient trans-Pacific competitor to Qantas, which controls over 55 percent of Australia-United States air traffic.
But if United, the world's second biggest carrier, was forced to slash profitable trans-Pacific services or failed to emerge from bankruptcy protection, analysts say Qantas could find it harder to convince anti-monopolies officials of the benefits to travellers of its plan to buy 22.5 percent of rival Air NZ AIR .
"They'll be a much stronger fighting force assuming they do come out of Chapter 11," Peter Harbison, managing director of Centre for Asia Pacific Aviation, said of United Airlines.
"They have two choices with a profitable route like this one, they keep it because it's profitable or they sell it because it's profitable."
Star Alliance member United carries around 32 percent of passengers between the United States and Australia, with Air NZ AIR transporting less than 10 percent and Air Canada AC under five percent.
Qantas shares outperformed on Tuesday, adding two cents or 0.5 percent to end at A$3.75 in a wider market down 1.1 percent.
COMPETITION CONCERNS
Analysts say oneworld member Qantas may grab more passengers in the near term if travellers shy away from flying on United between Australia and the U.S.
But cash-strapped United, which has stressed it would be "business as usual" for customers worldwide, was likely to trim fares in a bid to maintain market share
"Qantas may well have a bit of a windfall out of this as people try and switch, then things will no doubt settle down," said an aviation analyst who declined to be named.
Qantas said it was too early to comment on the impact of the United bankruptcy filing on its business.
"United Airlines said they will continue operations to and from Australia so they will continue to be a strong competitor," said Qantas spokesman Michael Sharp.
United, which expects to lose $20-22 million a day through December after grappling with high costs and low fares, is now certain to shrink.
Should United disappear from the tran-Pacific routes, a combined Qantas and Air NZ would wield almost total control of the trans-Pacific corridor, along with 80 percent of the Australian and nearly 100 percent of the New Zealand market.
"If you believe United's presence is going to be diluted, it's going to make you think twice about Qantas/Air NZ (going into an alliance)," said an analyst who declined to be named.
Australia's Competition and Consumer Commission (ACCC) said it would consider the impact of the NZ$550 million ($276 million) Qantas/Air NZ tie-up on air travel both within Australia and from the vast island continent to the United States and Europe.
"We see (United) as one of the major players on the Pacific route. They're providing some competition in the market and we'd like to see that continue," said ACCC spokeswoman Lin Enright.
Analysts said another U.S. airline such as Northwest Airlines Corp NWAC or Continental CAL could fill the void if United pulled out of the trans-Pacific route.
American Airlines AMR , the world's largest carrier, already codeshares with Qantas.
The prospect of an open skies agreement between Australia and Singapore could also pave the way for Star Alliance member Singapore Airlines Ltd SIAL to start flying the route or codeshare with United.
Reuters