The Australian government is due to decide on an open skies accord that could allow SIA to operate fifth freedoms between Australia and the USA.

qantasThis is the most important international route Qantas serves. On its second most important, Emirates is looking to double frequencies so it can boost sixth-freedom flights over its Dubai hub between Australia and Europe. The battle over both routes is crucial for Qantas.

Australia shelved a decision last June on the highly charged issue of SIA transpacific flights. The government agreed to review a number of aviation policies that Qantas claimed put it at a disadvantage in competing with government-supported carriers such as SIA.

Qantas’ complaints ranged from foreign ownership caps to tax policies and security charges. Initially, the government pledged to complete this review by October, but that date has slipped. Partly this was due to a switch in the transport portfolio. When Canberra completes its policy review, it is anyone’s guess how that will affect SIA’s access to the Pacific. Australia’s cabinet is deeply divided on the issue.

The Emirates request to double Australian flights to 84 a week underscores how much the “Kangaroo” route is served by sixth-freedom carriers – airlines that link Australia and Europe over their own hubs in Asia or the Middle East. In the past five years, Emirates has boosted Australian capacity at an annual average rate of 39%. Its Australian flights connect at Dubai with 120 weekly flights to more than 20 destinations in Europe. By contrast, Qantas has only 28 weekly Australia-Europe services, all but two of them into Heathrow. This largely explains its slide in international market share from 41% 10 years ago to 30% now.

Both Singapore and Emirates have tried to neutralise Qantas objections by inviting it to use their hubs to launch its own fifth-freedom flights to Europe. But that poses other complex questions.

The European Commission says it wants to negotiate a so-called horizontal aviation accord with Australia on behalf of all European Union countries. But until it does, it is unclear how Qantas could gain more fifth freedoms into Europe and still comply with EU law that bans nationality clauses in aviation accords. ■


Source: Airline Business