AUSTRALIA: Landmark open skies for US/Australia

The US and Australia have concluded a landmark Open Skies aviation agreement that will eliminate restrictions on US-Australia air services for the carriers of both countries and clear the way for increased competition on one of the world’s mostlucrative and protected long-haul routes. “Today’s agreement begins a new era where American and Australian consumers, airlines […]


The US and Australia have concluded a landmark Open Skies aviation agreement that will eliminate restrictions on US-Australia air services for the carriers of both countries and clear the way for increased competition on one of the world’s mostlucrative and protected long-haul routes.

“Today’s agreement begins a new era where American and Australian consumers, airlines and economies can enjoy the benefits of lower fares and more convenient service,” said US secretary of Transportation Mary E. Peters.

Under the new agreement, airlines from both countries will be allowed to select routes and destinations based on consumer demand, without limitations on the number of US or Australian carriers that can fly between the two countries orthe number of flights they can operate.

The agreement also removes restrictions on capacity and pricing, and provides opportunities for co-operative marketing arrangements, including code-sharing,between US and Australian carriers.

Importantly the deal ends a virtual duopoly on the route held by Qantas and UAL Corp.’s United Airlines. Qantas controls 75 per cent of the market share on the Australia-U.S. route, from which it derivesaround 15 per cent of its net profit.

The deal will allow Australian carrier Virgin Blue Holdings Ltd. to begin flights to the US by the end of the year – but leaves Singapore Airlines, which has long covetedthe route, still without access.