Qantas seeks regulatory changes to operate China-Europe flights

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In a renewed emphasis on China for the Qantas Group, the flagship carrier is working with the Australian government to change bilateral agreements so it can operate flights from China to Europe, CEO Alan Joyce says at the Australia Pacific Aviation Outlook Summit.

Under the current Australia-China bilateral agreement Australian carriers can fly from China to Europe, Joyce says. He explains the prohibiting factor is that Australia's bilateral agreement with European nations, including Germany and the United Kingdom, do not permit Australian carriers to fly there via a stop in China.

The bilateral agreements primarily permit stops in South Asia, South East Asia, and the Middle East, locations used in the early days of the Australia-Europe "Kangaroo Route". Qantas currently operates flights from Australia to Frankfurt via Singapore and to London via Bangkok, Hong Kong and Singapore. Qantas holds fifth freedom rights on those services.

A Qantas spokeswoman says the Australian government is in the process of negotiating an air service agreement with the European Union that would cover all 27 member nations.

Joyce says including provisions to permit flights from Australia to Europe via China is "on the agenda" of the Australian government.

"That's something the [Australian] government is working with us on to see if it can facilitate that into the future," Joyce says. "We would love to potentially hop out of China back into Europe."

A spokeswoman declined to comment how many European services from China Qantas could operate, when the services could commence and if European services via China could replace existing services via Bangkok, Hong Kong or Singapore.

Joyce agitated that since Australia is liberal with its air rights, other countries should reciprocate. "Carriers have been given very good traffic rights in Australia and have a huge amount of flexibility. But there are still restrictions on what Qantas can do in terms of markets we would like to serve," Joyce says.

"We're very keen on liberalisation occurring everywhere but it has to occur at an even pace and things like this are an issue," he adds in reference to flying to Europe via China.

The announcement comes as Joyce affirms China's prominent role in the Qantas Group's long-term strategy.

Joyce says he sees growth opportunities for both Qantas and low-cost subsidiary Jetstar on non-stop flights between Australia and China. This is despite Qantas cutting its Melbourne-Shanghai and Sydney-Beijing services last year due to under-performance. Qantas currently operates a daily service from Sydney to Shanghai while Jetstar does not operate any direct flights, according to Flightglobal's Innovata database.

The Boeing 787 could be useful for re-entering China, Joyce says, as the aircraft "opens up that range of routes that we wouldn't see to be economical today".

Earlier this month Qantas brought forward by two years the delivery of its first 787 to mid-2012. The first eight aircraft for the Qantas Group have been allocated to Jetstar, the carrier says.

Joyce says China will also be part of the Qantas Group's Pan-Asian network with low-cost subsidiary Jetstar continuing to operate flights to China from its Asian hub in Singapore.

Freight will also have an important role for the Qantas Group in China, Joyce says. Qantas currently operates freighter service between China and the USA. "That's a platform that's done very well for us in the freight market," Joyce says. "That's a platform we would like to build on."