Recently Europe opened up to an Open Skies (unlimited flights between any destinations) agreement with the USA. Now Australia has signed on as well. Prior to this agreement non-stop flights from the mainland US to Oz were limited in frequencies, destinations (LAX/SFO only on the USA side) and there were some controls on pricing. All that goes away with this agreement. Any carrier based in the USA or Australia can operate any flight to any airport between the two countries. This is going to be a big hit on Qantas’s operations, as they currently operate ~77% of the capacity between the two countries (United has the rest), and they do so at a significant premium over their other main longhaul route (Oz-London). The airline most likely to benefit in the immediate future is Virgin Blue, the Richard Branson operation down under. They’ve got the planes on the way and he’s got some experience taking on a major flag carrier on their money routes and winning. With all the recent news in the US travel market being about the potential mergers and the associated reductions in service levels that are likely to follow, this improvement is a nice one to see come to fruition.
Update: On further study this agreement is only semi-open. Perhaps “Ajar Skies” is a better description. The main limitation here is that the carrier has to be US or OZ-based, while regular open skies allows any carriers. This was done to prevent Singapore Air and Air Canada – two carriers that actually want to fly the routes – from competing. No US-based carrier has expressed any interest in starting the route in the immediate future, though Continental and Delta rumors are starting to swirl.
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