ANALYSIS: Who will jump where on the Kangaroo route?

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Change is coming to the Kangaroo Route following the decision by Qantas Airways to align with Emirates and move its hub for European flights from Singapore to Dubai.

Next April Qantas will stop flying from Singapore and Bangkok to Europe, drop its service to Frankfurt, and operate its only remaining London flight via Dubai. It will also discontinue codeshares with British Airways over Singapore and Hong Kong to London; with Cathay Pacific over Hong Kong to Rome; and with Air France over Singapore to Paris. Its only remaining codeshare with a European carrier will be with Oneworld carrier Finnair between Singapore and Helsinki.

Qantas is also scrapping plans for further joint ventures through southeast Asia to Europe. These include a proposed codeshare with British Airways from Bangkok to London, and a similar codeshare with Oneworld-bound Malaysia Airlines from Kuala Lumpur to the five cities MAS serves in Europe.

As Alan Joyce, Qantas chief executive, explains: "Our European gateway is [now] through Dubai so the only codes we will be doing into Europe will be with Emirates. The BA, Air France and Cathay ones will change. Helsinki is not served by Emirates today so that will continue, but wherever Emirates operates in Europe, Qantas will go."

Symbolically, the most dramatic change will come next March when Qantas and British Airways end their joint services agreement, which enjoys antitrust immunity from both Australia and Singapore and has allowed the two carriers to fly the Kangaroo Route on a metal-neutral basis for the past 17 years. Joyce acknowledges that this agreement has been "central to the Qantas network", but "global conditions have changed" and it is time for Qantas to move on.

The traditional Kangaroo Route from Australasia to western Europe with stops in southeast Asia, largely pioneered by Qantas and British Airways, will never be quite the same again.

BA is putting on a brave face. Willie Walsh, chief executive of parent International Airlines Group, says BA and Qantas will part on "amicable terms". BA will continue to operate its daily service to Sydney. It will also continue to serve New Zealand via its codeshare with Cathay Pacific over Hong Kong. But Virgin Atlantic, which competes with BA for UK-Australia traffic, must be quietly cheering that it will soon be able to compete on more equal terms. When BA and Qantas last sought renewal of their joint services agreement, Virgin's Richard Branson loudly complained: "They should be competing, not colluding."

Walsh says IAG is already looking for "alternative options" in Asia, and speculation is rife about which Asian airlines might make a deal with BA. Cathay Pacific and Malaysia Airlines are mentioned most often. Cathay is already a Oneworld alliance member, and Malaysia a member elect. As analysts point out, however, it will be a long time before BA can cultivate with either of them the kind of deep relationship it enjoyed with Qantas.

Other players on the Kangaroo Route are taking notice of the changes. Six southeast Asia carriers already exercise sixth freedoms over their own home hubs between Australia, New Zealand, or both, and western Europe. China Southern and Air India may soon join them. Singapore Airlines is the biggest carrier on the route, with the strongest presence of any foreign airlinein Australia and routes to more than a dozen cities in western Europe. The Eurozone's malaise may not make this the best time to add capacity, but analysts see Singapore Airlines as the most likely to fill the vacuum left by Qantas.

Subhas Menon, regional vice-president for SIA, agrees. He cites the 112 weekly flights that his airline expects to have to Australia by year end, and Singapore's recent announcement of a fourth daily flight to London. He told the Australian media that it would take up any "slack on the Kangaroo Route".

SIA may also be aided by Virgin Australia in its efforts to attract more Australia-Europe traffic. Virgin Australia cannot codeshare with SIA to London, as that would put it in competition with partner airline Virgin Atlantic, but this does not keep it from working with Singapore Air on other European routes. To this end, Virgin Australia has applied to Australian authorities for capacity allocations via Singapore to Amsterdam and Paris.

Finally, given the right conditions, long-haul, low-cost carriers could be attracted to the Kangaroo Route. Qantas unit Jetstar's previously-described plans to serve Rome and Athens from Singapore are unclear, given its recent focus on Asia and the Qantas shift to Dubai. AirAsia X has suspended its flights to Paris and London from Kuala Lumpur, but promises to revisit them when fuel costs fall and Europe's economy strengthens.

If players such as Jetstar and AirAsia X join the competition, the Kangaroo Route could be in for even more change.