The Golden Egg may be Goosed
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The Golden Egg may be Goosed
From the Australian today -
United reminds Jetstar that protectionist policy cuts both ways
The US airline is pushing its case for open skies, writes David Stone
August 08, 2006
QANTAS and the Government have been confronted by a sharp reminder that airline protection is a double-edged sword.
To shore up the case against opening the Los Angeles route to Singapore Airlines, Transport Minister Warren Truss initially made much of Virgin Blue's aspirations to fly the Pacific route. Virgin Blue CEO Brett Godfrey has not hidden the low-cost carrier's need for considerable lead-in time - apart from anything else, it has to acquire the suitable long-range aircraft - and he has kept to his February 2008 timeline.
Virgin Blue also says it needs to operate daily for the service to be viable. But as the current entitlement under the US-Australian bilateral air services agreement provides for only four services a week by a newly designated carrier, it has urged the Government to negotiate a capacity increase with the US.
A similar situation now faces Qantas's low-cost subsidiary Jetstar, which has included Honolulu in the destinations listed for the airline's initial international services, but was unable to announce the Honolulu fare level along with the others last week.
Jetstar wants to fly five services to Honolulu from December - three services a week from Sydney and two from Melbourne. The bilateral agreement only allows four.
Undeterred, on May 26 Jetstar proceeded with an application to the US Department of Transportation (DoT) for a "foreign air carrier permit" setting out the services it intends to operate, but then found itself ambushed by United Airlines.
Under the usual US consultation and submission process, the American carrier correctly pointed out to the DoT that the services for which Jetstar sought approval exceeded the relevant Australian entitlement.
United wanted to ensure that if DoT approved a permit for Jetstar, it was not thereby approving the airline's "extra-bilateral service proposal".
United asserted that capacity was limited under the US-Australia agreement "because the Government of Australia and its carriers (particularly Qantas, the owner of Jetstar) want it that way", adding that "the US opposes such anti-competitive limitations".
Summing up the situation, United said: "Now that Australian carriers apparently find themselves hoist on the regulatory petard constructed by their own protectionist policies, the US should use the leverage created by this situation to achieve an end to all anti-competitive restrictions."
It proposed that instead of offering an incremental exception to the capacity limits to accommodate Jetstar's schedule, the US should offer Australia and its carriers the opportunity to operate without any restriction by entering into an open skies agreement.
That would allow Jetstar to operate the services it proposed, and also to increase them in line with market demands, without having to comply with "complicated and restrictive" arrangements like those currently in place.
United argued that the US should not dissipate the leverage it needed to obtain Australian acceptance of open skies by allowing selective exceptions to the present capacity regime to benefit Australian carriers.
It backed up this argument by reminding DoT that previously Australia had refused to allow United to exceed restrictions similar to those now facing Jetstar - a reference to United's plan some years before to operate a daily service over the North Pacific route included in the agreement.
United concluded that it would be "unfair to US carriers and inconsistent with a sound aviation policy to allow Australian carriers to deviate from agreed capacity limits when Australia has not allowed US carriers to do so".
In response, Jetstar argued that the reference in its application to the five services was required by the relevant US regulations. DoT could issue a permit without approving this "illustrative service proposal", which was not a "request for a specified number of frequencies".
It claimed that DoT had "consistently issued US-Australian economic authority without reference to specific bilateral provisions". What it did not tell the DoT is that when Qantas obtained from the Australian International Air Services Commission the right for Jetstar to operate capacity previously allocated to itself alone, it referred specifically to Jetstar's intention to operate the five services referred to in its US application.
Nor did Jetstar indicate that the five Honolulu services were given widespread publicity in Australia.
Over the past six weeks there has been no further public development concerning the Jetstar application, though it is likely that the Australian Government has been trying to get the US to agree to negotiate a resolution to the capacity restrictions issue affecting Jetstar and Virgin Blue.
There appears to be growing support for the liberalisation of international air services from tourism, airports and other business. But given Qantas's legendary ability to successfully lobby the government of the day to protect its interests, will open skies with the US be any more likely than with Singapore?
In the current situation, the US will almost certainly require at least a compromise from which its own carriers can also benefit.
David Stone has been involved with international air transport for the past 17 years, as a senior public servant and as an independent writer and consultant
It will be very interesting to see how the midget bullies, GD and AJ, handle this one.
United reminds Jetstar that protectionist policy cuts both ways
The US airline is pushing its case for open skies, writes David Stone
August 08, 2006
QANTAS and the Government have been confronted by a sharp reminder that airline protection is a double-edged sword.
To shore up the case against opening the Los Angeles route to Singapore Airlines, Transport Minister Warren Truss initially made much of Virgin Blue's aspirations to fly the Pacific route. Virgin Blue CEO Brett Godfrey has not hidden the low-cost carrier's need for considerable lead-in time - apart from anything else, it has to acquire the suitable long-range aircraft - and he has kept to his February 2008 timeline.
Virgin Blue also says it needs to operate daily for the service to be viable. But as the current entitlement under the US-Australian bilateral air services agreement provides for only four services a week by a newly designated carrier, it has urged the Government to negotiate a capacity increase with the US.
A similar situation now faces Qantas's low-cost subsidiary Jetstar, which has included Honolulu in the destinations listed for the airline's initial international services, but was unable to announce the Honolulu fare level along with the others last week.
Jetstar wants to fly five services to Honolulu from December - three services a week from Sydney and two from Melbourne. The bilateral agreement only allows four.
Undeterred, on May 26 Jetstar proceeded with an application to the US Department of Transportation (DoT) for a "foreign air carrier permit" setting out the services it intends to operate, but then found itself ambushed by United Airlines.
Under the usual US consultation and submission process, the American carrier correctly pointed out to the DoT that the services for which Jetstar sought approval exceeded the relevant Australian entitlement.
United wanted to ensure that if DoT approved a permit for Jetstar, it was not thereby approving the airline's "extra-bilateral service proposal".
United asserted that capacity was limited under the US-Australia agreement "because the Government of Australia and its carriers (particularly Qantas, the owner of Jetstar) want it that way", adding that "the US opposes such anti-competitive limitations".
Summing up the situation, United said: "Now that Australian carriers apparently find themselves hoist on the regulatory petard constructed by their own protectionist policies, the US should use the leverage created by this situation to achieve an end to all anti-competitive restrictions."
It proposed that instead of offering an incremental exception to the capacity limits to accommodate Jetstar's schedule, the US should offer Australia and its carriers the opportunity to operate without any restriction by entering into an open skies agreement.
That would allow Jetstar to operate the services it proposed, and also to increase them in line with market demands, without having to comply with "complicated and restrictive" arrangements like those currently in place.
United argued that the US should not dissipate the leverage it needed to obtain Australian acceptance of open skies by allowing selective exceptions to the present capacity regime to benefit Australian carriers.
It backed up this argument by reminding DoT that previously Australia had refused to allow United to exceed restrictions similar to those now facing Jetstar - a reference to United's plan some years before to operate a daily service over the North Pacific route included in the agreement.
United concluded that it would be "unfair to US carriers and inconsistent with a sound aviation policy to allow Australian carriers to deviate from agreed capacity limits when Australia has not allowed US carriers to do so".
In response, Jetstar argued that the reference in its application to the five services was required by the relevant US regulations. DoT could issue a permit without approving this "illustrative service proposal", which was not a "request for a specified number of frequencies".
It claimed that DoT had "consistently issued US-Australian economic authority without reference to specific bilateral provisions". What it did not tell the DoT is that when Qantas obtained from the Australian International Air Services Commission the right for Jetstar to operate capacity previously allocated to itself alone, it referred specifically to Jetstar's intention to operate the five services referred to in its US application.
Nor did Jetstar indicate that the five Honolulu services were given widespread publicity in Australia.
Over the past six weeks there has been no further public development concerning the Jetstar application, though it is likely that the Australian Government has been trying to get the US to agree to negotiate a resolution to the capacity restrictions issue affecting Jetstar and Virgin Blue.
There appears to be growing support for the liberalisation of international air services from tourism, airports and other business. But given Qantas's legendary ability to successfully lobby the government of the day to protect its interests, will open skies with the US be any more likely than with Singapore?
In the current situation, the US will almost certainly require at least a compromise from which its own carriers can also benefit.
David Stone has been involved with international air transport for the past 17 years, as a senior public servant and as an independent writer and consultant
It will be very interesting to see how the midget bullies, GD and AJ, handle this one.
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In my opinion Qantas (management) has been running on borrowed time for the past few years with their "woe betide Australia if Qantas takes a hit" government lobbying practices. They've been telling their line staff to become more competitive at the same time as they have been successfully lobbying for an anti-competitive market share. Qantas cannot continue to shout advice to both sides while remaining comfortable on the fence. UA knows this and has just placed a well aimed shot across the bow.
Qantas' problems now? They can't expand without new markets. They can't get new markets without conceding to open competition. Both Qantas and Jetstar are a looooong way from being able to compete in the international marketplace without foreign partners. The Australian aviation market is protected to ensure Qantas remains inviting to foreign investment. No foreign investment is forthcoming without access to the Australian market. And the kicker...Qantas and Jetstar have had departments cut to the bone (eg. maintenance) and are in real danger of not just stagnating, but going backwards. That's just my opinion, but what do I know?
Qantas' problems now? They can't expand without new markets. They can't get new markets without conceding to open competition. Both Qantas and Jetstar are a looooong way from being able to compete in the international marketplace without foreign partners. The Australian aviation market is protected to ensure Qantas remains inviting to foreign investment. No foreign investment is forthcoming without access to the Australian market. And the kicker...Qantas and Jetstar have had departments cut to the bone (eg. maintenance) and are in real danger of not just stagnating, but going backwards. That's just my opinion, but what do I know?
It backed up this argument by reminding DoT that previously Australia had refused to allow United to exceed restrictions similar to those now facing Jetstar - a reference to United's plan some years before to operate a daily service over the North Pacific route included in the agreement.
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Qantas always has been a protected species . Any real competition would harm them badly . It may even expose Q.F management as the incompetent twats they are. It would be interesting to see how Dicko's perceived status as a CEO would hold up in the face of real competition.
This bloke had the biggest leg up during the S11 crisis whet AN went tits up . Compared to most airline CEO's in the world he has had it on a platter.
Bring it on.
This bloke had the biggest leg up during the S11 crisis whet AN went tits up . Compared to most airline CEO's in the world he has had it on a platter.
Bring it on.
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Qantas and Honolulu
I think this is but an intended glitch on the horizon as Qantas does not want to signal its true intentions at this point in time. When the time is deemed 'right', Qantas will announce that it is withdrawing from Australia/Honolulu and in its place will be..........Jetstar International with flight numbers and schedules not that much different to those belonging Qantas. Does anyone really think that Honolulu can support two Australian carriers, each with wide body equipment, when almost 100% of the traffic is Australian?
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Rubbish
Intended glitch ...my fat Aunt Martha.
Jetstar took over Osaka with no problem.
If what you are saying is correct it will necessitate QF pulling out of LAX as well.
QF management have no agenda...they are not that clever
Jetstar took over Osaka with no problem.
If what you are saying is correct it will necessitate QF pulling out of LAX as well.
QF management have no agenda...they are not that clever
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People read between the lines. It's obvious isn't it?.
JetStar is nothing but a short term business model at best ,designed to kill off the last vestiges of public service grandious type awards in Qantas.
( Management's sentiments not mine).
What will happen once the last protected EBA's in Qantas expire, which for most unions (assuming another 3 year stint) will be sometime around 2009. Come 90 days after expiry of those EBA's guess what ?You will all be hit with JetStar agreements.
Why do you think the 787's are going to JetStar first.
Why replace the A330's so quickly?
Why do you think the Qantas management have concocted this Australian Airlines Wet Leasing company abomination?
That will be the legal precedence used to trigger the use of contract crews flying 787 in Qantas colours.
If I was JetStar crew I wouldn't be crowing too loudly either.
Because once Qantas management have everyone working at indentured labour rates guess what? The chances are JetStar will all of a sudden be shown not to be returning a sufficient rate of return on the invested capital and in all probability be rebrand/absorbed back into Qantas, a name brand recognised throughout the world.
Once that has been achieved what do you think will happen with the excess of pilots now vying for a limited number of places?
You guessed it , Qantas will be able to employ the best and reject the rest.
As a friend in Qantas told me, 100% of Qantas pilots have passed the stringent Qantas pilot application procedures.
How many of JetStar's pilots have managed to pass?
JetStar is nothing but a short term business model at best ,designed to kill off the last vestiges of public service grandious type awards in Qantas.
( Management's sentiments not mine).
What will happen once the last protected EBA's in Qantas expire, which for most unions (assuming another 3 year stint) will be sometime around 2009. Come 90 days after expiry of those EBA's guess what ?You will all be hit with JetStar agreements.
Why do you think the 787's are going to JetStar first.
Why replace the A330's so quickly?
Why do you think the Qantas management have concocted this Australian Airlines Wet Leasing company abomination?
That will be the legal precedence used to trigger the use of contract crews flying 787 in Qantas colours.
If I was JetStar crew I wouldn't be crowing too loudly either.
Because once Qantas management have everyone working at indentured labour rates guess what? The chances are JetStar will all of a sudden be shown not to be returning a sufficient rate of return on the invested capital and in all probability be rebrand/absorbed back into Qantas, a name brand recognised throughout the world.
Once that has been achieved what do you think will happen with the excess of pilots now vying for a limited number of places?
You guessed it , Qantas will be able to employ the best and reject the rest.
As a friend in Qantas told me, 100% of Qantas pilots have passed the stringent Qantas pilot application procedures.
How many of JetStar's pilots have managed to pass?
Last edited by max autobrakes; 9th Aug 2006 at 10:35.
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The bit that has me wondering, is where are all the a/c that they will need from start up if they are to go to all the places named to date - especially since the announcements so far indicate they will only have 2 or 3 a/c at start up!
Would be a good guess that they won't start HNL any time this year, especially now UA have got into the act.
Not saying it wont happen, just wondering how given the number of a/c required to do what they say??
And on the jubject of a/c, what is QF going to replace the A330's with on the domestic sectors they operate now? Some of those sectors will not take kindly to less seats(??)
Interesting times!
Would be a good guess that they won't start HNL any time this year, especially now UA have got into the act.
Not saying it wont happen, just wondering how given the number of a/c required to do what they say??
And on the jubject of a/c, what is QF going to replace the A330's with on the domestic sectors they operate now? Some of those sectors will not take kindly to less seats(??)
Interesting times!
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Same Horse.....
Jet* Australian Airlines who cares?..the end result is the same.
Last time I looked HNL was still part of the Union.
There is still a bilateral agreement in place that doesnt cover Jet*.
This is just another example of the poor research done by QF boffins(sic).
I would have thought checking the aviation agreement was a fundamental.
At QF there is only "dumb"and "dumber"
There is only one person responsible for all this....Ian Oldmeadow.
Have a conversation with Borghetti or Dixon, and it soon becomes obvious that neither one is too bright, or well educated for that matter.
The Peter principle comes to mind.
HEY MAX..stop being so pedantic and get a life or a boyfriend(sounds like u need both)
Last time I looked HNL was still part of the Union.
There is still a bilateral agreement in place that doesnt cover Jet*.
This is just another example of the poor research done by QF boffins(sic).
I would have thought checking the aviation agreement was a fundamental.
At QF there is only "dumb"and "dumber"
There is only one person responsible for all this....Ian Oldmeadow.
Have a conversation with Borghetti or Dixon, and it soon becomes obvious that neither one is too bright, or well educated for that matter.
The Peter principle comes to mind.
HEY MAX..stop being so pedantic and get a life or a boyfriend(sounds like u need both)
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"Now that Australian carriers apparently find themselves hoist on the regulatory petard constructed by their own protectionist policies" - best use of language I've heard from the Seppos in years!! 
But... I can't really see why UA are fighting this one that hard - if they really are going for open skies, then the logical extension of that on the Pacific run is the entry of SQ ... unless, of course, UA are happy to let SQ operate the route and just code-share on SQ and NZ services.
Or possibly just SQ, if the NZ authorities see the light one day and allow QF and NZ to consolidate in some fashion (so pulling NZ out of Star)...
But... I can't really see why UA are fighting this one that hard - if they really are going for open skies, then the logical extension of that on the Pacific run is the entry of SQ
... unless, of course, UA are happy to let SQ operate the route and just code-share on SQ and NZ services.Or possibly just SQ, if the NZ authorities see the light one day and allow QF and NZ to consolidate in some fashion (so pulling NZ out of Star)...
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quote:
":And on the jubject of a/c, what is QF going to replace the A330's with on the domestic sectors they operate now? Some of those sectors will not take kindly to less seats(??):"
word on the street from a reliable source-(ie the townsville refueler)
that QANTAS are looking at leaseing the 4 ex aae 727 freighters and reworking them back to pax config at our avalon heavy maint base.
BRING BACK THE 3 HOLER
":And on the jubject of a/c, what is QF going to replace the A330's with on the domestic sectors they operate now? Some of those sectors will not take kindly to less seats(??):"
word on the street from a reliable source-(ie the townsville refueler)
that QANTAS are looking at leaseing the 4 ex aae 727 freighters and reworking them back to pax config at our avalon heavy maint base.
BRING BACK THE 3 HOLER
