While Warren Truss relies on the
possibility of Virgin Blue entering the trans-Pacific market as a justification
for keeping Singapore Airlines away, Qantas and VB are in danger of being hoist
by their own protectionist petard.

According to a former head of New Zealand’s international air services division, United Airlines is using
Jetstar’s Hawaiian ambitions as a means for suggesting an end to protectionism
on the Pacific route. The argument would be even stronger should Virgin Blue
get around to seeking permission to fly across the Pacific.

Writing in the New Zealand Herald (unfortunately not available on line), Dr David Stone says the present
US-Australian bilateral agreement only allows for four services a week by a
newly designated carrier. Virgin Blue says it would need to fly daily to make
the route work and Jetstar wants to fly five times a week to Honolulu. Reports
Dr Stone:

Jetstar
has proceeded with its application to the US Department of Transportation (DOT)
for a “foreign air carrier permit”, setting out the services it intends to
operate, but has then found itself ambushed by United Airlines.

Under
the usual American submission process, the American carrier correctly points
out to the DOT that the services for which Jetstar seeks approval exceed the
relevant Australian entitlement.

United
wants DOT to be assured that by approving a permit for Jetstar, it is not also
approving the airline’s “extrabilateral service proposal”.

United
points out that capacity is limited under the US-Australia agreement
because “the Government of Australia and its carriers (particularly
Qantas, the owner
of Jetstar) want it that way”, adding that “the US
opposes such anticompetitive limitations”.

Summing
up the situation, United says “now that Australian carriers apparently find
themselves hoist on the regulatory petard constructed by their own
protectionistic policies, the US
should use the leverage created by this situation to achieve an end to all
anticompetitive restrictions”.

It
proposes that instead of incremental exceptions, the US
should offer Australia and
its carriers the opportunity to operate without restrictions by entering into
an open skies agreement. And United backs up its argument by reminding DOT that
previously Australia has
refused to allow it to exceed restrictions similar to those now facing Jetstar.

Nice one, United and Dr Stone. It looks
like the Virgin Blue ambitions in particular will not be without cost to the
Australian duopoly.

Peter Fray

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