Open Skies for Singapore & Australia ?
S'pore, Australia to explore open-skies pact
Talks come amid competition concerns over Qantas' plan to take 22.5% of Air NZ
(SINGAPORE) Singaporean and Australian aviation officials will meet here today for an 'informal discussion' looking into an open-skies agreement between both countries.
A Civil Aviation Authority of Singapore (CAAS) spokesman confirmed to The Business Times that its representatives will resume informal talks on the removal of all restrictions on the two countries' respective flag carriers, Singapore Airlines (SIA) and Qantas Airways, between the two destinations.
The liberalisation topic was last discussed in September 2000, but has reignited in the wake of competition concerns arising from the latest proposal by Qantas to take a 22.5 per cent equity stake in Air New Zealand (ANZ).
An open skies arrangement would open up whole new markets for SIA, including direct connections between Australian cities and the US and Europe - competing with Qantas. It could also open up some of Australia's domestic market - a A$10 billion (S$9.9 billion) industry SIA has been eyeing for years, but which is monopolised by Qantas.
Not surprisingly, Qantas holds serious reservations over the prospect and is likely to resist the Canberra-backed push, the Australian Financial Review reported.
Citing unnamed Qantas sources, AFR said the airline believed Singapore would benefit most from an open skies arrangement, and argued that its planned NZ$550 million (S$489 million) equity partnership and alliance with ANZ should not be linked to the bilateral agreement.
In support of the Qantas-ANZ link, the airlines issued a joint submission to regulators in Australia and New Zealand on Monday claiming enormous direct and indirect economic benefits and minimal anti-competitive fallout from their proposed tie-up, but authorities have so far remained sceptical.
SIA has made clear its intentions to expand into Australia for years, but was set back by the erosion of its 25 per cent stake in ANZ last year.
The New Zealand government took control of its national carrier after the collapse of ANZ's subsidiary, Australia's second largest domestic carrier, Ansett.
Ansett's demise left SIA with less than 5 per cent of a whittled-down ANZ, and Qantas with the lion's share of Australia's A$10 billion domestic aviation market, now competing only with newcomer Virgin Blue.
The Business Times-Singapore