Clive Dorman reports on moves to lift restrictions on European air routes.
The Federal Government has signalled it is only months away from an "open slather" deal on air routes between Australia and Europe, despite pressure from some countries that still own their national carriers to stop liberalisation.
About 15 years after successive federal administrations began increasing Qantas's exposure to new foreign competition, the Federal Government signalled last week there would be no return to protectionism.
In a speech at the Asia Pacific Outlook Conference in Sydney earlier this month, the secretary of the Department of Infrastructure, Transport, Regional Development and Local Government, Mike Mrdak, said the Government would not use the recession as an excuse to put the brakes on reform.
"The current economic environment has not altered the Government's commitment to pursuing liberalisation," Mrdak said.
"One of the highest aviation priorities over the next 12 to 18 months will be the negotiation of a comprehensive air services agreement with the European Union. Such an agreement would replace Australia's existing bilateral agreements with 17 of the 28 EU member states. It holds out the promise of removing most, if not all, regulatory restrictions on Australian and European airlines operating between Australia and the EU."
The agreement with the EU would follow similar ground-breaking agreements with the US and New Zealand. Airlines can now decide on their own how many flights a week they can operate between Australia and the US. This has led to a collapse in prices. Fares that were as high as $2500 return a year ago are now less than $1000 because of new competition.
The agreement with New Zealand will be taken to a new level in the next few months, with the abolition of international status on trans-Tasman routes.
Airlines will be able to operate from domestic terminal to domestic terminal in both countries, which they say will save them up to $60 a seat a flight as they escape high international airport charges. The airlines have signalled that trans-Tasman fares could fall to as low as $130 one way.
Mrdak saw the same benefits in liberalising the air routes between Australia and Europe.
He said, however, there was still resistance from some governments. "Some of the countries in the region with which we have major aviation relationships do not favour open skies," he said.
He was speaking as the Malaysian Government was apparently giving in to pressure from government-owned Malaysia Airlines to ban the low-cost carrier AirAsia X from flying between Sydney and Kuala Lumpur.
Under the Malaysia Airlines monopoly on the route, fares have typically been as high as $1200 return. AirAsia X was offering fares last week on the Melbourne-Kuala Lumpur route from $99 one way.
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