BRITISH AIRWAYS and Qantas Airways have finally won clearance to link services between Australia and Europe, after a change of heart by Australian competition watchdog the Trade Practices Commission (TPC). The airlines have had to agree to a cap on economy fares, however.

The two carriers are now preparing to begin coordinated services from the end of October. The agreement also extends to joint marketing, pricing and revenue sharing on the routes, which had originally caused concern at the TPC.

In November 1994, the TPC issued a draft ruling which indicated that it planned to refuse approval for the link, but this was subject to intense lobbying by the airlines and the Australian Government, which feared that a rejection would harm plans to complete the Qantas privatisation later this year.

The commission was finally persuaded to reverse its decision and issued an approval on 12 May, which will run for the next five years. The only major new condition attached to the approval is an agreement that economy fare increases on the "Kangaroo" route will be kept below the Australian inflation rate over the next three years.

The route, direct from Australia to London, "...serves as a benchmark for the fares on all other routes from Australia to Europe", argues TPC chairman, Professor Allan Fells.

Under the new coordinated schedule, BA and Qantas will operate four daily services from London. BA will fly daily to Perth and Sydney, while Qantas will operate twice daily to Sydney and Melbourne. The Australian carrier, in which BA holds a 25% stake, will also serve Sydney daily from Frankfurt, and three days a week from Rome.

Other conditions laid down by the TPC appear to do little more than formalise the plans already set out by Qantas and BA, when the link was announced.

The joint services are to be fully interchangeable and tickets transferrable between the two carriers, while Qantas and BA also undertake to offer occasional discount fares on indirect routes to Europe, via third countries.

Fells says that the TPC was persuaded to drop its opposition to the deal after the carriers had demonstrated that existing price competition was greater than first revealed. With around 30 airlines offering services through to Europe, BA and Qantas had pleaded that the route had become unattractive.

Virgin Atlantic has been given the go-ahead to launch Australian services via its code-sharing agreement with Malaysia Airlines. The approval, agreed by the Australian and UK Governments, is for an initial 12 months. Australia says that Virgin has undertaken to announce a date for direct services within a year.

Source: Flight International