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Snowballs
19th Feb 2005, 22:07
Virgin eyes Qantas Pacific route
By Phillip Hudson
Political Correspondent
Canberra
February 20, 2005
The Age

Qantas could face a second assault on its most profitable international route, with discount airline Virgin Blue weighing whether it will seek to offer flights from Australia to the US.

Singapore Airlines has mounted an aggressive campaign to win Federal Government approval to provide daily flights to Los Angeles, and cabinet is due to consider its bid in the next few months.

As Deputy Prime Minister John Anderson today begins a week-long trip to Europe to argue for greater access for Australian airlines, Virgin Blue chief Brett Godfrey said his company was paying "close attention" to the Pacific route, although no decision had been made.

The airline is believed to be considering several international routes in the Asia-Pacific region.

"I would classify trans-Pacific flights as being in our region and it is certainly an opportunity worthy of close attention," Mr Godfrey said.

"It would be remiss of us if we didn't look at all potential opportunities."

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AdvertisementBut with Virgin the subject of a takeover bid by major shareholder Patrick Corp, Mr Godfrey is also playing down expectations of a quick decision.

"At this point long haul is probably a long shot," he said. "Virgin Blue is obviously not going to openly discuss any of its strategic options until such time as absolutely necessary."

Only Qantas and United Airlines provide a regular non-stop service from Australia to the US.

A report by investment bank JPMorgan said Qantas' most profitable route earned 15 per cent of the company's overall profit, and 41 per cent of the profit from its international operations despite accounting for 27 per cent of its international capacity.

The report, by transport analysts Simon Mitchell and David Wilson, predicted that if Singapore Airlines won its bid to operate a daily service from Sydney to Los Angeles, it could slash $44 million from Qantas' pre-tax profit.

A random search by The Sunday Age of Qantas online ticket prices for flights from Melbourne to London and Los Angeles found that it was generally 33 per cent more expensive to fly to America, even though the trip was up to nine hours shorter.

There is more competition on the "Kangaroo" route to London.

The price of a standard flexible economy ticket for a 23-hour flight to London started from $2328 while the same class of ticket for a 14 to 16-hour flight to Los Angeles started from $3116 - a difference of $788.

Qantas was asking $9855 for a business-class flight to London and $13,068 for a business-class flight to Los Angeles - a difference of $3213.

Qantas rejected claims there was insufficient competition on the US route. It is offering some economy fares from $1700, although the flight availability is limited and there are restrictions on the tickets.

Airlines and analysts were not prepared to predict the size of price falls if Qantas faced greater competition. Respected aviation analyst Peter Harbison from the Centre for Asia-Pacific Aviation said business travel would be "sensitive" and a target for a company such as Singapore Airlines. "I would expect there would be lower fares," he said.

In London this week, Mr Anderson will meet Richard Branson, who owns 25 per cent of Virgin Blue, and the Australian-born chief of British Airways, Rod Eddington. He will lobby British and European authorities to give Qantas greater landing rights in London and at other key European airports.

Some Government MPs see this as being a crucial trade-off in return for Singapore Airlines being given greater access. Qantas chairwoman Margaret Jackson and chief executive Geoff Dixon have been using their influence in Canberra to try to stop Singapore's claim.

Despite last week announcing a record half-year net profit of $458 million, up 28 per cent, Qantas has told the Government it faces several disadvantages compared with international competitors, such as higher rates of company tax.

"We don't subsidise air travel in Australia and that gives Qantas a real disadvantage," one minister said. "There have got to be other opportunities for Qantas. We've got to see how we can free up the Pacific route without terminally damaging Qantas, and that's always been the quandary."

The Government is considering staggered approval for flights by Singapore and not letting it fly the new A380 Airbus to Australia until Qantas has the aircraft.

Phillip Hudson owns Qantas shares

Animalclub
20th Feb 2005, 00:29
Could Phillip Hudson be quoting round trip fares? He infers that the fares he quotes are one way.

PureRisk
20th Feb 2005, 04:02
Weather its Virgin Pacific (Vb/patrick owned) or Virgin Pacific (Branson/Patrick owned) its is certainly on its way as we have all known and predicted here for some time. No real surprises in this article. As many people have said on here before. There is no doubt this entry will hurt Q botton line on one of there most profitable routes. Even more so if or dare I say when, Singapore start flying there. Funny thing here is why do Qantas want more landing rights in other European cities. Dont they only do them for a short while before codesharing? Or is it maybe for Australian? as we watch the Q network continually shrink.

HGW
20th Feb 2005, 05:47
I have to admit that I am surprised at the price difference between Europe and the States whether it is a return or one way (they are obviously return prices).

My prediction is that with QF, VP or VS and SQ operating this route it would spell the end of UA before it had any effect on QF.
The playing field would level out again with QF having the lions share which they would protect and deserve to have. UA are on their knees with this spelling the end for this part of the world.

Interesting Anderson visiting Sir Dick. It is assumed that he wants to talk about DJ flying the Pacific route when I would say Anderson will be talking about VS also getting rights. If SQ get them then so would VS. If he wanted to talk anout DJ he would speak with Corrigan or Godfrey, wouldn't you think.

Crusty Demon
20th Feb 2005, 08:21
Went to the states twice last year and both with QF as they were cheaper than United and Air NZ. First one cost me 1450 return, and the second cost 1499.

It just pays to shop around for the best fares sometimes. Sometimes one is cheaper, another time someone else is, it all just depends on many things. But the fares being quoted in the press for a return fare seems to be a bit over the top of late, or either fares have gone through the roof in the last few months.

My brother got one through Air Pacific cheaply a couple of weeks ago. He reckons it was $150 better than QF, but he had to stop also to get there.