Virgin Blue and Qantas are getting over something of a Krudd fright after the PM reaffirmed his pursuit of open skies agreements with all the countries he is visiting on his world tour.
It was on the minds of Richard Branson and Brett Godfrey amid the mini floorshow spectacular that launched V Australia on the Qantas dominated US market yesterday, and also gave Singapore Airlines another opportunity to remind Canberra it wants in and soon.
The PM’s magic words were that he would pursue open skies with all countries in the real interests of the Australian economy and its travellers. Before he gets back to Canberra, that means the EU and China. Later in the year it also means Japan and Singapore.
It is China that pops rivets in what are now the big and little Australian flag carriers of the Qantas/Jetstar and Virgin Australia camps. China’s appetite for leisure and business air travel is unbounded. Its economic growth is “qualifying” around 28 million new consumers with the income and aspirations to fly abroad each year.
It has carriers with extremely low costs yet the newest and most efficient of airliners of all types on order, and even if the rate of growth it provides for Australian inbound tourism were to shrink in the short term, Chinese travellers will eclipse visitors from all other sources by 2025 if not much sooner.
Cut to the V Australia frivolity yesterday. Branson and Godfrey said they would announce new markets for the new international Australian carrier within two weeks. The hot tips have variously included Shanghai and Beijing, but also cities in Korea and Japan.
Joint ventures with Chinese partners have been mentioned previously by both Virgin and Qantas managements. Singapore Airlines is in the midst of nailing down a crucial investment in Shanghai-based China Eastern and the acquisition hungry Air France/KLM group is keen on doing likewise with Guangzhou-based China Southern.
The reality of the US launch from this December of V Australia flights is that it will be one daily Virgin group jet of around 300 seats to LA versus at least six daily Qantas 747-400s plus one Airbus A380 with about 2500 seats in total, rising as the big Airbuses replace the older jumbos.
The pace of the government’s reform agenda for international aviation implies Virgin and Qantas have maybe three or four years at most to enjoy that market before Singapore Airlines gets what it wants and stages a cluster assault with a few A380s of its own.
After which China shows every intention, backed by several hundred billion dollars in airport and airline investments, of changing the dynamics of Australian international aviation beyond its current focus on the traditional trunk routes to the UK, Europe and the US.