The airline industry is starting to heat up, with a number of developments taking place in recent weeks that will see a significant influx in competition on various routes.
Middle Eastern agreement boosts capacity
Most notably, Emirates Airline and Etihad Airways have achieved a significant breakthrough in negotiations with the Federal Government. Dubai-based Emirates and United Arab Emirates based Etihad Airways will offer 56 extra flights to Australia per week by March 2011. Increased flights will open up the European route to the foreign players through the Middle East.
Melbourne and Brisbane airports had been vocal in raising concerns regarding the limited number of flights entering Australia, given that so much traffic is currently directed through Sydney. The increased flight numbers awarded to Emirates and Etihad is likely to ease some of that concern by increasing the number of flights landing in Melbourne and Brisbane.
New age of competition
The agreement comes a week after the government’s granting of increased landing rights to Qatar Airways. In addition, Virgin Blue has also announced its intention to increase competition on the Sydney to Los Angeles route by flying 10 times a week to the United States from the second half of 2008.
Consumers stand to be the biggest beneficiaries of the government’s policy, with the prospect of lower fares on international travel.
The recent decisions are indicative of the brave new world for the airline industry. The government’s moves are in line with global movements that have seen the Canadian, United States and European Union governments opening up their skies.
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For information regarding possible implications for your business, contact a member of the Competition & Market Regulation team.