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Australia Bars Singapore Airlines Route

Posted on: Tuesday, 21 February 2006, 06:00 CST

By ED JOHNSON

SYDNEY, Australia - The Australian government on Tuesday denied Singapore Airlines access to the lucrative route between Sydney and Los Angeles, despite years of lobbying from Singapore.

Federal Transport Minister Warren Truss said that allowing Singapore Airlines to fly the trans-Pacific route would only bring minor benefits to the Australian tourism industry and could have a negative impact on the economy.

Currently, the route is flown only by the national carrier Qantas and United Airlines. Qantas Airways Ltd. controls 75 percent of the market share on the Australia-U.S. route, from which it derives around 15 percent of its net profit.

Truss said Singapore could not offer Australia enough in return for the right to fly the route.

"We could see little or no benefit to Australia in opening up the Pacific route," Truss told a news conference, adding he did not envisage the airline "operating on the route for some years."

"If access is negotiated in the future it will be limited and phased," he added.

Singapore Airlines, which has been requesting access to the lucrative U.S.-Australia corridor for a decade, said it was disappointed by the decision and said the Australian tourism industry and consumer would lose out.

"It is a sign that free trade principles, open market competition and consumer choice have again been sacrificed to protect sectional interests," the airline said in a statement. "We are confident that, while it will take time, the arguments for competition on the Pacific route will appeal to Australia's sense of fair play."

Access to national airspace is negotiated bilaterally, with government's seeking deals for their flag carriers. Australia, for instance, is seeking increased access to airports in Europe and Japan, as well as rights for Australian carriers to fly through Hong Kong and China.

Truss said the government remained committed to so-called "open skies" agreements but only when they benefited the country. Such agreements aim to improve market opportunities for airlines, promote common security, safety and environmental standards and foster technical cooperation.

He said the government was willing to "negotiate access to this route on a case-by-case basis but only when it is in the national interest."

Truss said the decision to block Singapore Airlines would give Richard Branson's Virgin Group the chance to develop plans to compete on the route - and added that was a more attractive option for the Australian government.

While the service being proposed by Singapore was "broadly similar" to that provided by Qantas, Virgin could make the route more competitive, Truss said.

"Unless there's cut-price fares or a significantly different product, we don't believe that we would tap a large new market to attract extra visitors to Australia," he said. "Virgin offers a different kind of competition, operating essentially a low cost airline which will provide real competition on the route."

Truss said Virgin had been lobbying the Australian government and believed it may be ready to fly the route linking Australia and the west coast of the United States by 2007.

He said the government would continue to offer unlimited access for airlines to all Australian airports other than the four main hubs of Sydney, Melbourne, Brisbane and Perth.

The government rejected Qantas' request to change the law that restricts total foreign holdings of the airline's shares to 49 percent. He said greater foreign equity could jeopardize airspace agreements with other countries such as Japan and the United States.

"Our bilateral air services agreements with many countries require airlines to be substantially owned by Australian interests," he said.

Source: Associated Press/AP Online

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