Qantas Airways has successfully lobbied to stop Singapore Airlines and Cathay Pacific gaining fifth freedom rights beyond Australia as new bilateral deals keep its rivals off routes to the USA. At the same time it is appealing over the decision to deny its tie-up with Air New Zealand.
The new bilateral deals mean that, for now, Qantas Airways is insulated from Singapore Airlines or Cathay Pacific on the Australia-USA route. In recent months Singapore and Hong Kong both pressed Australia to expand their air service accords. Canberra agreed with Singapore on unlimited third and fourth freedoms. But Qantas successfully lobbied for a ban on fifth freedoms, subject to review after two years.
In Hong Kong-Australia talks Qantas itself sought Hong Kong-London fifth freedoms, but opposed allowing Cathay Pacific fifth freedoms beyond Australia. Again, Canberra refused any beyond rights. John Anderson, Australia's transport minister, says he prefers to see fifth freedoms phased in at a slower rate.
In other talks, to which Australia was not party, Virgin Atlantic Airways won the right, pending EC approval, to compete against Qantas on the UK-Australia "Kangaroo route". Virgin Atlantic will fly London-Hong Kong-Sydney in competition with the joint UK-Australia operations of Qantas and British Airways over Singapore.
The opposition of Qantas to fifth freedoms by South-East Asian carriers has drawn fire from Australia's tourism minister Joe Hockey. He says the shortage of competition on the Qantas-dominated Australia-Los Angeles route hurts Australia's inbound tourism. Since Air New Zealand's withdrawal from Sydney-Los Angeles, United Airlines is the only nonstop rival Qantas has in that market.
As Qantas fights its corner on the bilateral front, so too it continues to battle for the future of its proposed alliance with Air New Zealand. Both carriers have appealed to the New Zealand High Court over the Commerce Commission's decision denying their proposed alliance.
They already have an appeal pending to the Australian Competition Tribunal from the negative decision by Australia's competition commission. Because their alliance ultimately requires approval in both countries, the only way to benefit from a successful appeal in Australia is also to appeal in New Zealand. The Australian Competition Tribunal could consider their case as early as March. It could be mid-year before the New Zealand High Court does so.
Both airlines have already spent an estimated NZ$30 million ($19 million) in presenting their case. They can challenge the New Zealand decision for only another NZ$3 million. Lawyers regard the New Zealand appeal the harder one to win because of that court's deference to commission expertise. Yet, it is a relatively inexpensive option and Air New Zealand insists that the commission committed a reversible error.
With appeals now pending in both countries, the airlines hope to keep their alliance prospects alive even as they compete in the short term against each other.
DAVID KNIBB SEATTLE
Source: Airline Business
