Qantas wants to lock up LA route

[Wirraway]

Mon "Sydney Morning Herald"

Qantas wants to lock up LA route
By Scott Rochfort
September 15, 2003

Qantas is pushing the Federal Government to "ring fence" its golden Los Angeles route from increased competition for at least another two years as fresh talks about an open-sky agreement between Australia and Singapore get under way next week.

Just six days after a proposed $NZ550 million ($490 million) alliance with Air New Zealand was shot down by the competition watchdog, Qantas is pushing for any open-sky agreement to bar Singapore Airlines flying from Australia to the US.

Federal Transport Minister John Anderson is due to meet his Singapore counterpart, Yeo Cheow Tong, next Monday.

Qantas public affairs manager Michael Sharp said the talks should "let the time-frame take into consideration the crisis that we're recovering from". Qantas has warned several times this year of weakening demand caused by the SARS outbreak and Iraq invasion, which, if anything, hit Singapore Airlines harder.

"It's a timing issue, not a blanket ban," Mr Sharp said, adding that Qantas was "one of the few airlines that is having to compete [with government-owned airlines] while delivering a return to shareholders".

With only one direct competitor to the US - the financially strapped United - Qantas enjoyed load factors of up to 90 per cent on the route even at the height of the SARS crisis.

Analysts estimate the Flying Kangaroo makes about one-third of its profits from the route.

Qantas is able to tightly control capacity from the US.

The Australian Tourism Commission blamed a lack of capacity on the route in May, June and July for a fall in tourist numbers.

Under the current air-services agreement between Singapore and Australia, Singapore Airlines only has "through rights" to fly from Australia to New Zealand.

Australian airlines can operate beyond Singapore to not more than two of Hong Kong, Taiwan, South Korea and the Philippines and any one point in Japan.

Meanwhile, analysts say it could take until early next year for the Australian Competition and Consumer Commission to decide whether to renew Qantas's eight-year-old joint-services agreement (JSA) with major shareholder British Airways.

With Qantas and British Airways competing with another 20 airlines on the so-called kangaroo route, Macquarie Equities analyst Ian Myles said: "It's a highly competitive route. It's very hard to sit there and say [the JSA] is going to be rejected."

If the JSA is renewed, British Airways and Qantas expect to save a collective $43 million in "real terms" in the next five years.

In a joint submission to the ACCC, Qantas and British Airways said rejection of the JSA would cut the number of foreigners carried by Qantas and cost Australia $418 million in lost exports over five years.

The only airline to lodge a submission against the JSA is Sir Richard Branson's Virgin Atlantic, which says it is a barrier to entry for European airlines hoping to fly the kangaroo route.

Talk of Virgin Atlantic commencing services to Australia has been reignited with the UK and Hong Kong governments set to discuss their respective air-services agreements this month.

The tough trading conditions took a toll not only on Qantas's profits in the year to June 30 but also management pay packets. No executives received a bonus.

The annual report said CEO Geoff Dixon was paid $1.6 million and CFO Peter Gregg almost $1 million.

===========================================

[Col. Walter E. Kurtz]

i suppose we'll be seeing Geoff and Peter down at the Aldi for shoppin' - trying to make ends meet now that no bonus was collected! :sad:

Still, I suppose it's a great deal better than ripping out all their bonuses, pensions and super prior to the ship goin under like most other execs these days....

[AN2002]

Ansett has the rights to fly to the US. All SQ need to do is go through the back door and buy Ansett!

[Pete Conrad]

Singapore Airlines a potential competitor for Qantas US route

MARK COLVIN: In the airline business, some routes are regarded as a licence
to print money. For Australian aviation, one of those is Sydney to Los
Angeles. For practical purposes, it belongs to Qantas and it's so lucrative
that it accounts for an estimated one-third of the airline's profits. Qantas
has dominated the route since its only competitor, United Airlines, filed
for bankruptcy last year.

Now, as Hamish Fitzsimmons reports, Qantas wants Federal Government help
against competition in the trans-Pacific trade.

HAMISH FITZSIMMONS: The skies between the east coast of Australia and the
west coast of the United States are pleasant indeed for Qantas. It has a 70
per cent share of the route with the financially troubled United Airlines
filling the rest. So profitable is the route for Qantas, analysts estimate
that it accounts for up to 30 per cent of its profits.

But there's some turbulence on the horizon. Australia is in discussions with
Singapore for an open skies agreement. This would remove restrictions on air
services to the countries in question and to ports beyond.

It's the prospect of Singapore servicing the US from Australia that has
Qantas worried. It's asked the Federal Government to place a condition on
any agreement, which would give it two years protection on the route

Ian Myles is a transport and infrastructure analyst at Macquarie Equities.
He says there's logic in the Qantas request.

IAN MYLES: It would like to balance the environment, such that if Singapore
was to compete in its US route, it needs something of equal value to be able
to compete in Singapore's market.

HAMISH FITZSIMMONS: What are the difficulties with an open skies agreement?
Does it create a level playing field for the airline and the countries and
the airlines involved?

IAN MYLES: Not necessarily. Given that open skies is not universal,
countries who have partial open skies with, say, Australia may also have a
partially protected airline on routes, which are quite profitable. And that
might be, for instance, Singapore-Hong Kong, which only has two or three
local operators on, which Qantas could become more significant on.

HAMISH FITZSIMMONS: What would be the disadvantage to Qantas if Singapore
cross-subsidised a route like the Australia to the US?

IAN MYLES: Clearly, Qantas would be at a disadvantage, given the capital
strength of Singapore. The battle of attrition would see Qantas ultimately
lose and have to cede a substantial amount of share without significant
value possibly being created for the Australian consumer.

HAMISH FITZSIMMONS: Even at the peak of the SARS outbreak, Qantas had a 90
per cent load rate on its services to the US. An open skies agreement would
enable Singapore Airlines to compete with Qantas for passenger and freight
travel but also for the very lucrative business traveller.

Stephen Forshaw is the Public Relations Manager for Singapore Airlines in
the south-west Pacific.

STEPHEN FORSHAW: Singapore Airlines has for many years been a proponent of
liberalising air services agreements. We take the view that the agreements
that have existed in the current form, for the best part of the last 40 or
50 years, should be modernised.

They should allow consumers to make choices based on factors which are
important to consumers, not important to Government. Now, obviously this is
an incremental process. We'd like to see air services agreements
liberalised, but we're also not so idealistic as to think that that's going
to happen overnight. It will take time.

We think that governments around the world and in the particular case
mentioned, Singapore and Australia, will sit down and realise the benefits
in due course of a much more competitive framework for aviation.

HAMISH FITZSIMMONS: Qantas has some concern that Singapore would compete
with it in the premium traveller class. Is that a genuine threat?

STEPHEN FORSHAW: Well, look, we have concerns of course that Qantas compete
against us for premium travellers on key routes around the world.
Competition is good for consumers and if you're up to the game then
consumers will, of course, choose your product.

HAMISH FITZSIMMONS: The Transport Minister John Anderson will meet his
Singaporean counterpart, next week. Qantas is understood to have thrown its
considerable lobbying weight at Canberra to achieve a favourable outcome in
any open skies agreement.

A Spokesman for Mr Anderson told PM the Government will keep the Australian
national interest in mind in any negotiations.

Of course Anderson will keep QF's interest in mind. We all know Geoff and Margaret are currently crying poor to Anderson and Howard.Why don't they just come out and admit it publicly.

[Three Bars]

Grinding your anti-Qantas axe again Pete?!! By now I think no-one is in any doubt about your biases.

What could Singapore possibly offer Australia to offset gaining a foothold on the Australia-US route and justify a full open skies agreement? Looks like you would be quite happy to see more Australian jobs sacrificed on the altar of "consumer competition".

[Pete Conrad]

Well three bars, thats the crap that I and other AN group employees had to cop when we went under. As we say in the trade, thats business, if you guys arent up to the match, then you will lose custom to an airline that offers better.

Oh, and get over the anti QF sentiment.

[Rich-Fine-Green]

I could be wrong, but I seem to recall that QF no longer offers First Class on AKL-LAX flights.

This could be part of the niche SQ could target if QF is not able/willing to provide.

A bit of competition on this route couldn't hurt.

A friend of mine recently went Business Class to the USA.

QF - A$11,000 !!

JAL - A$5,800 (via Tokyo)

Of course he had a 90 wait in Tokyo and arrived a little later than the QF flight but quite a saving.

[Pete Conrad]

Rich-Fine-Green

Not only are JAL cheaper but the cabin service is first class and the aeroplanes are immaculate.

Can't wait for SQ to start SYD - LAX.Watch the defection of QF pax!

[turnleftnow]

What about YBBN-KLAX?? Surely there is a need, rather than going via NZAA and wasting time adding hours to the flight.

[Wirraway]

Dow Jones
Thursday September 18, 2:34 pm AEST

Australian Govt: Qantas Can Cope With More Open Skies

CANBERRA (Dow Jones)--The Australian government said Thursday that Qantas Airways Ltd. is robust enough to withstand a more liberal air services arrangement between Canberra and Singapore.

"Handled carefully, phased in, done at a sensible sort of rate, the answer to that is yes," Deputy Prime Minister and Transport Minister John Anderson told reporters.

Anderson is due to visit Singapore next week to negotiate a more open air services deal with Australia's new free trade agreement partner.

He said the government will balance consumer benefits with ensuring a strong domestic aviation sector.

"We handle these things sensitively, with caution," said Anderson.

"But we are committed, probably more than any other country in the world...to reform of the skies, to more liberalized aviation arrangements," he added.

Singapore Airlines Ltd. is reportedly keen to use the east coast of Australia as a base for flights to Los Angeles.

But Qantas chief executive Geoff Dixon, keen to protect what is a lucrative route for the carrier, has said he is opposed to Singapore Airlines flying between Australia and the U.S.

Dixon warned Wednesday that while liberalizing market access is continuing to drive competition, "it must be recognized that the playing field in these markets is far from level, for many reasons including government support to carriers."

===========================================

[Buster Hyman]

Mr Sharp said, adding that Qantas was "one of the few airlines that is having to compete [with government-owned airlines] while delivering a return to shareholders

Well BOO-HOO!:{ Reg had to put up with that for years & he kept his airline going!:*

[DJ737]

Dixon warned Wednesday that while liberalizing market access is continuing to drive competition, "it must be recognized that the playing field in these markets is far from level, for many reasons including government support to carriers."

Hmm......Isn't locking up the route a sort of government support?

DJ737
The Roo Rooter:E

[Wirraway]

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."

============================================

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.

=============================================

[Rich-Fine-Green]

QF only use LAX as their first entry point into the USA.

Why not let SQ fly BN - SFO or CNS - Hawaii - Seattle?.

I'm sure that QF would not be hurt if these other routes were allowed to develop as QF have so far shown no interest at all in other USA West Coast cities.

Personally, I would fly SQ to the USA if they went to SFO or Seattle as I hate transitting through LAX.

[Wirraway]

AFP
Last Update: Monday, September 22, 2003. 8:07pm (AEST)

Singapore, Australia to sign air-services agreement

Singapore and Australia will sign an agreement to expand their aviation links tomorrow, officials said, however the deal is not expected to lead to an immediate "open skies" policy between the two nations.

Australian Deputy Prime Minister John Anderson held talks with Singapore's Transport Minister, Yeo Cheow Tong, with a press conference to announce the agreement scheduled for Tuesday.

Mr Anderson told a business lunch ahead of his meeting with Mr Yeo that the agreement would "work towards an open skies agreement".

Aviation analysts said his comments confirmed "open skies", which would allow national carriers Singapore Airlines (SIA) and Qantas much greater freedom to operate from each others' territory, had been put on the slow track.

They said SIA's key goal of being able to fly the lucrative Australia-Los Angeles route would not be part of the deal following strong opposition from Qantas.

Qantas has lobbied the Australian Government to not allow the open skies agreement with Singapore to expose it to competition from SIA on the Australia-US route.

"I know they had been definitely talking about open skies between the two places," a regional aviation analyst at ING Financial Markets in Hong Kong, Philip Wickham, told AFP.

"That's been taken off the table now, given the concerns of Qantas."

A Singapore-based aviation analyst said SIA would most likely instead be allowed to fly more services into Australia, and possibly from Australia to Fiji and other Pacific Islands.

In return, the analyst said Qantas would be given more rights to operate out of Singapore to elsewhere in South-East Asia and possibly to Europe, although the Australian carrier did not need those extra services in the short-term.

SIA has also reinforced its assertion that it should be allowed to fly out of Australia with less restrictions, citing the free trade agreement between the two nations which went into force in July.

"We do not fear competition and do not see why anybody else in the industry should either because competition is what makes us all work harder and bring real benefits to consumers," SIA spokesman Innes Willox said.

--AFP

===========================================

[Buster Hyman]

So now SQ get an open skies policy with Fiji and....:rolleyes:

[Johhny Utah]

Finally - a voice of reason amongst all of the madness that was the proposal for an 'open skies' agreement with Singapore :rolleyes:

As for the Singaporeans - how noble of them to only want the best for the consumer - maybe they've taken a leaf out of the DJ 'little red book of spin' and are now trying to tout themselves as the 'underdog' in their bid to 'keep the air fair'...:rolleyes:

As for flying to Fiji - how does that tie in with the proposed Dj/Rex/SQ merger - or will they operate in opposition to each other, taking away any high yield travellers & leaving Virgin/Pacific Blue with just the leisure market...:confused:

[Airtart]

S'pore-Aussie air deal signed but no US route for SIA
SINGAPORE
Singapore and Australia signed an agreement here on Tuesday to expand aviation links but the deal fell short of a full 'open skies' policy with Singapore Airlines (SIA) denied the lucrative Australia-United States route.


The new air deal will allow airlines from Singapore and Australia to fly without restriction between the two countries. Minister for Transport Yeo Cheow Tong (right) and Australian Deputy Prime Minister John Anderson exchange the signed agreement. -- AFP
Transport Minister Yeo Cheow Tong inked the memorandum of understanding with Australian Deputy Prime Minister John Anderson and both reiterated that a full 'open skies' agreement was the ultimate goal.

The deal, which will take effect immediately, will allow airlines from both countries to fly without restriction between Singapore and Australia, as well as using each country as a base to fly to other nations.

But the arrangement has one crucial caveat with Singapore planes not allowed to fly to the United States from Australia, meaning SIA cannot compete with Qantas on the profitable Australia-Los Angeles route.

Mr Anderson conceded during the media event to mark the agreement that Australia had baulked at the full open skies policy after considering the impact SIA's competition would have on Qantas' flights to the US.

He said the Australian government had to find a balance to ensure non-subsidised carriers such as Qantas could cope and grow while looking to the increased national benefits of increased trade and tourism.

Both Mr Anderson and Mr Yeo had agreed to revisit a full open-skies agreement once the aviation industry, battered by the war on Iraq, terrorism and Sars, was stronger.

Qantas had lobbied intensely against a full open skies agreement, with the carrier's chief Geoff Dixon warning last week that 'liberalisation for its own sake is fraught with dangers that outweigh potential opportunities'.

Analysts had said that SIA would have got a lot more out of a full open skies agreement than Qantas because the Australian carrier would not gain that much of an advantage from extra routes into and out of Singapore.

Qantas is already the largest foreign airline operating out of Singapore, accounting for over 2 million passenger movements at Changi Airport each year.

Mr Anderson said this was only the second air-service agreement Australia had signed with another country, following one with New Zealand three years ago.

'The fact that the second country is Singapore relects the importance which Australia assigns to its relationship with Singapore and the strength of that relationship on many levels,' he said.

Singapore forms the seventh largest tourist group to Australia and is the sixth most popular tourist destination for Australians. A total of 296 flights operate between Singapore and Australia each week. -- AFPS'pore-Aussie air deal signed but no US route for SIA

[Johhny Utah]

If John Anderson = Minister for Qantas,

then

Premier Beattie = Minister for Virgin.

After all, a recent study has put the Queensland Governments aid to Virgin Blue at a level of approx $60 million.

Just my thoughts...

[Pete Conrad]

Beattie helped DJ get off the ground, nothing wrong with that. whats your beef with Virgin Johhny? they getting too much market share for you?

Oh, and there's no room for another player on SYD - LA but it's ok for QF to add more flights.

QF admitted it themselves, THEY CANNOT COMPETE WITH THE LIKES OF SQ for premium travellers who want better service. The good thing is, the stay of SQ on this run is short lived, in time SQ will get access to it.

[Johhny Utah]

Pete

My concern over the Virgin deal is the way it has been presented to the general public.

Virgin Blue was started by Richard Branson, an overseas citizen, as a private company. I was a bit intrigued by the Queensland government offering to assist them to the tune of several million dollars, but I guess Beattie is only to keen to do whatever it takes to create employment & PR for his state.

However, to find out later that the real cost to the Queensland taxpayer was in the order of $60 m is completely outrageous. Especially when Virgin is still a privately held company, now controlled by Branson & also another of Australias wealthy elite.

What I find particularly galling is the fact that Beattie trumpeted Virgin as bringing employment & numerous other benefits to Queensland, thereby justifying the grants of several million dollars. However, these grants no doubt greatly contributed to the demise of Ansett, and the loss of tens of thousands of jobs both directly and indirectly.

And at the end of the day, it subsequently turns out that Bransons initial investment of $11m stands to recoup him something in the order of several hundred million dollars - all at the expense of Queensland tax payers & ex-Ansett employees...(I would be most interested to see what sort of $ value could be placed on the benefits to the taxpayer of the governments investment in Virgin.)

All well & good for Branson, Godfrey et al - they have done very well out of it all & stand to make even more when Virgin is floated. However, to present themselves constantly through the media as being hard done by is just too much too swallow...

[Pete Conrad]

Johhny, I agree, I too was a little peeved the way DJ got all the help, PR public and state government support which contributed to AN's demise, I was one of the many that lost out when AN collapsed but like I said in a previous post, DJ are not Robinson Crusoe in all this.

No offense, QF has done more than well out of their lobbying of the federal government when the financial position of the company is really not all doom gloom like Dixon indicates it is.

There was no reason at all why SQ could not have commenced operations on the route to LA. Only two years ago you had Air Pacific, AirNZ, QF and UAL operating daily flights to LA, now, you have UAL and QF. The stay of execution for SQ to operate on the route is short term, 2 years I believe.

You have to just get over the fact that DJ are here to stay now and that with an improving climate there is enough work for everybody.

Dixon's continual bleating and doom and gloom is really no better or worse than Brett Godfrey and co's spin doctoring, QF and DJ are really no better than the other in this department.

[longjohn]

Too true.

Ansett employs thousands in Qld.

Beattie assists Virgin to set up in Qld, employing hundreds

Ansett goes under.

Virgin expands to maybe a few thousand staff nationwide.

Virgin starts up in NZ employing locally.

Taxpayers 0

Majority of employees 0

Branson $400 mill up.

I only wish I had the ability to convince everyone that I was such a great bloke they should bend over and take one for the cause, my cause.

So big International buisness once again wins, at the expense of ultimately the little people.

So why should Singapore be given access to the most lucrative Qantas route?

Will they employ as many staff in similar poositions as QF enevidably lays off?

Will they dramatically reduce airfares on the route and promote competition (they are not that much cheaper on other competitive routes)?

Will they offer something dramatically better than the current incumbants offerings?

Ot will they simply carve some Austrailian jobs and profits off to take home to Singapore, all in the name of free competition.