The harmony and light that Australia and the US are enjoying over their just announced plan to “conclude a comprehensive open-skies aviation agreement” in the new year mightn’t last long. Singapore Airlines will inevitably want to know why “open skies” always means “closed to Singapore Airlines”.

While the US carriers generally fear the Singapore carrier and might endorse the current Australian government insistence that this is a bilateral not multilateral negotiation of open skies, there is a big potential hang-up.

US carriers generally want to be free to fly to Australia via extensions to their current or future services to Japan, South Korea, China, and perhaps even Singapore, as well as directly across the Pacific.

The last time a US carrier, Northwest, flew New York to Sydney via Osaka in the mid 1990s, Qantas and the Japanese carriers lobbied fiercely against this invasion of the lucrative Japan-Australia passenger and freight market.

It didn’t matter. Northwest burned itself so badly with cheap fares it abandoned the route.

Yet all of the US carriers today speak strongly about their wish to fly free of traffic restrictions anywhere, even though their balance sheets are much weaker than those of Qantas, Virgin Blue and Singapore Airlines.

Is an open skies agreement that re-opens Japan or China to Australia to US carriers a threat to Qantas and Virgin Blue subsidiary V Australia, which starts its flights late next year?

Not in the short term, because the Australian airlines have lower costs, and newer and better jets, and getting new slots out of the Japanese airports is a tough ask even for Japanese carriers.

But Singapore Airlines non-stop from Sydney or Melbourne to Los Angeles or San Francisco is another matter. Watch for Canberra and the Australian flag carriers to try and shut down any possibility of this at the first opportunity.

Peter Fray

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Peter Fray
Editor-in-chief of Crikey

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