The strict conditions placed on the linkup between British Airways and Qantas on the Kangaroo route by the Australian Trade Practices Commission may have appeased the Asian carriers, but some of Europe's majors are feeling the squeeze in the highly competitive Europe-Australia market.
Lufthansa has opted to abandon direct services and Air France is likely to do the same. Both are victims of the growing dominance of Asia-Pacific operators and intense competition - there are 35 carriers operating between Europe and Australia - is promoting heavy discounting and putting pressure on yields.
The combined marketing presence of British Airways and Qantas on the route is also changing the economics of flying from Australia to Europe, on a route with high operating costs already.
Lufthansa announced late last year that it would pull out of Australia, then deferred the decision for six months in an attempt to lift profitability. Its efforts have failed and the German carrier will quit in October after 30 years. Instead, Lufthansa will offer flights through Austrian equity partner Lauda Air via Vienna or under its codeshare agreement with Thai International over Bangkok.
The expected withdrawal of Air France follows a review of unprofitable routes, specifically operations in south-east Asia and the Pacific. Though no final decision had been made at presstime, Michael Ceccaldi, Air France's regional manager South Pacific, says the twice-weekly flights from Paris to Sydney via Singapore will cease in October. This leaves only a single weekly service into Australia from the French Pacific island of Noumea, 30 hours from Paris.
The Air France decision mirrors that of Qantas earlier this year when it abandoned the Paris sector tagged on to the end of Sydney-Frankfurt flights. Despite the decision, Ceccaldi says Air France plans to maintain a strong presence in the Australian market and adds the 'modification is in line with corporate policy to return to profitability'.
'We will be emphasising our interline partnership agreements with Qantas and other airlines to provide easy connections to Air France services via common gateways, such as Singapore, Bangkok, Hong Kong, Jakarta and Los Angeles,' he says.
The expected Air France withdrawal will leave KLM and Alitalia as the only other European majors on the route. Alitalia says it has no intention of pulling off the route after rationalising services as part of its overall restructuring. The carrier maintains three flights a week from Rome through Bangkok to Sydney and Melbourne.
Meanwhile, KLM is bucking the trend. The Dutch carrier says the route is 'cost-effective' and actually added a third weekly frequency in July. KLM expects more competition as the routes grow.
Source: Airline Business
