Thursday, January 11, 2007

Inquiry on open skies for Australia - one to watch

I have blogged on the case for an ‘open skies’ aviation policy for Australia. It seems that the case for one will be tesated by an inquiry launched by Tourism Minister, Fran Bailey, though details are scant. Qantas has predictably rejected the case for it and I wonder if the falling Qantas share price is an indication that the Macquarie debt-junkies looking for a quick buck from their planned private equity move on Qantas are being anticipated by the market not to appreciate the implied extra competition.

Efficiency in international and domestic aviation is a major concern to Australia given the distribution of our population over a large area, the distance of Australia to its major markets and the crucial role of internal and external tourism as economic drivers. The low travel flows within Australia on all routes other than the Melbourne-Sydney (M-S) route means internally the sorts of competition gains the US has enjoyed on its domestic routes won't be realized.

I looked at domestic fares on internal US flights during my recent trip to the US. For example, the 4 hour flight from Chicago to Los Angeles for less than $200US return can be compared to discount return tickets on the 1 hour flight from M-S of about double that. And the M-S route is a major link with huge traffic volumes.

I’ll add to this post as further information about the inquiry comes to hand.


derrida derider said...

Harry, this is the Howard govt we are talking about. Hell will freeze over before they initiate an inquiry which is likely to come up with embarrassing policy recommendations.

Just watch the ToR and the composition of the inquirers closely.

hc said...

Some transport analysts I have spoken to concur with your views. The main critical noises within the government so far have come from the Tourism Minister who might not drive things.

I think that the high fares to the US are a scandal that provides an impediment to trade as well as tourism. The extent of foreign ownership won't change with the private equity move but the character of Qantas might.

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