Mon "Melbourne Age"
Qantas under gun on US seats
By Scott Rochfort
Sydney
September 22, 2003
The lack of airline seats on the Qantas-dominated Sydney-Los Angeles route is deterring US tourists from visiting Down Under, tourism and travel groups have warned.
Calling for increased competition on the US route, Flight Centre managing director Graham Turner said: "Australia is just not getting enough American and Canadian tourists and the lack of seats is one important factor. Load factors over about 70 per cent will show serious seat shortages on any route."
With the Australian and Singapore Governments set to hold talks today over a possible "open skies" agreement, Qantas chief Geoff Dixon warned in Canberra last week that "liberalisation for its own sake is fraught with dangers that outweigh potential opportunities".
Singapore Airlines is pushing hard to gain rights to fly directly between Australia and Los Angeles, but Qantas is lobbying the Government and Opposition to oppose any agreement granting Singapore Airlines immediate access on the lucrative US route.
Federal Transport Minister John Anderson has already signalled a "carefully phased-in" agreement.
But with average load factors or plane seats filled on the Sydney-LA route hovering around 90 per cent recently and more than 70 per cent for all of last year, the Australian Tourist Commission has warned that fear of terrorism, war and SARS isn't the only factor that can hurt inbound tourism.
"If you rock up to book a ticket, the chances are you can't get the seat you want or the flight you want, on the day you want it," ATC managing director Ken Boundy said.
"In some cases that leads to slippage. So people will actually choose not to fly to that destination and go somewhere else. And we know that happens when loads go over 80 per cent.
"On the Pacific route for the last three years, we've been seeing this occur because in the peak periods it's really hard for the airlines to find the capacity."
But with Qantas recently lifting its capacity into the US, the ATC has softened its recent criticism that the lack of capacity had cost Australia tens of thousands of lost American tourists.
"It's very difficult for airlines to get the capacity right," Mr Boundy said. "It is difficult for them to take planes off and put them on again."
In 2002, 434,500 Americans visited Australia, down 13,000 from the previous year and down 54,000 from the Olympic year.
Centre for Asia Pacific Aviation managing director Peter Harbison said: "The real question that needs to be asked is how much (competition from Singapore Airlines) would hurt Qantas.
"It's not as if it is going to greatly dilute (Qantas) traffic going into Los Angeles."
Mr Harbison said Qantas should be given only one year - not the two years being pushed by Mr Dixon - to prepare for the entry of Singapore Airlines on the route.
Singapore Airlines public affairs manager Innes Willox said: "Australia and Singapore have just signed a free trade agreement. We believe that the benefits of that agreement should flow to airlines just like in other industries."
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Mon "The Australian"
Qantas resists pact on free sky
By Steve Creedy, Aviation writer
September 22, 2003
Qantas lobbying appears to have headed off – at least for now – a competitive threat from powerful rival Singapore Airlines on lucrative routes between Australia and the US. Australia and Singapore are expected to announce an expanded air services agreement as early as tomorrow, during a visit to the island state by Transport Minister John Anderson.
But analysts doubt the deal will immediately involve the full "open skies" agreement sought by SIA and opposed by Qantas.
Instead, they expect an incremental liberalisation that leads to open skies.
A partial liberalisation will be seen as a plus for Qantas.
Qantas has lobbied hard against open skies, arguing it would favour SIA and damage the Australian carrier, now in recovery from recent airline industry crises.
It asked the Government for protection against competition by SIA on its profitable US routes, where it is rebuilding capacity that was cut back during the SARS and Iraq war crises.
The carrier's share price is especially sensitive to regulatory decisions – more than 8.5 per cent has been wiped off Qantas's market value since Australia's competition watchdog ruled against its proposed alliance with Air New Zealand.
A Canberra source last night agreed a full open-skies agreement was unlikely but said the new pact would be more liberal.
The source pointed to comments last week by Mr Anderson, reaffirming Canberra's commitment to liberalised aviation arrangements.
The minister said he believed Qantas was robust enough to handle an open-skies regime with Singapore that was handled carefully and phased in "at a sensible sort of rate".
He said Australia would carry forward the negotiations in a way which balanced the best outcomes for the travelling public with the national interest.
"We handle these things sensitively, with caution, but we are committed – probably more than any other country in the world – to reform in the skies, to more liberalised aviation arrangements," he said.
Both airlines are waiting for agreement details to assess its commercial impact.
"We look forward to a positive outcome this week," said Singapore Airlines spokesman Stephen Forshaw.
"We're hopeful the arguments have been well understood and that the Australian Government recognises a competitive aviation environment is desirable in the interests of the travelling public."
Singapore sees open skies as a logical extension of the recently negotiated free trade agreement with Australia. Singapore already has an open skies agreement with New Zealand.
SIA claims Qantas enjoys an advantage under the existing agreement because it can compete directly with SIA on key routes out of Singapore.
They say existing regulations prevent SIA from competing in a similar manner for routes out of Australia and that this limits the ability of Australian consumers to choose an airline based on price, product and frequency.
In another development, Qantas and the Transport Workers Union have reached an agreement that will avoid industrial action in Melbourne over the use of labour hire companies.
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