High fares turn Aussies away from Africa

Trying to get from Australia to Africa these is like what trying to get to America five years ago was like: a ludicrously expensive example of the failure of competition.

The days when it cost around $1600 return – dearer than the current best fares to Europe – are long gone. If you’re prepared to book three months ahead, the best you can get from Sydney or Melbourne to Johannesburg is about $2000 return. If you want to go next week (still in the low season before Christmas), you’re lucky if you can get out of it for under $4000 return.

This is a direct result of the fact that the only two airlines on the route decided to divide up the market between themselves a decade ago, with Qantas running a daily Sydney-Johannesburg flight and South African Airways running six or seven a week from Perth to Jo’burg.

It didn’t matter that SAA and Qantas were in opposite commercial camps, Qantas a member of the oneworld alliance and SAA in the Star alliance. They simply buried the hatchet for the sake of commercial expediency and profits.

The commercial flying business, generally speaking, is the most brutally competitive in the world, but airlines will rush to sign up for an anti-competitive money-earner in a heartbeat.

Five years ago, Qantas was boasting about its near-monopoly on Australia-US routes. Former chief executive Geoff Dixon even said he didn’t think Australians would begrudge the airline its nice little earner on the South Pacific route, which was raking in $100-$200 million a year in profits.

Now, with proper competition, it’s a sea of red ink, but Australian travellers have long memories. Five years ago Qantas was demanding $2500 for a return ticket to the US in low season, rising to $3500 and more in times of high demand.

It was possible to save a few hundred dollars flying with Jetstar via Hawaii, but the process was time-consuming and could involve the expense of hotel rooms and layovers en route.

Now that Qantas is bleeding money on international routes, there is little public sympathy.

Especially when travellers realise Qantas continues to behave like a true monopolist across the Indian Ocean. At some times of the year it’s dearer to fly from Perth to Johannesburg on the Qantas-SAA codeshare than to Europe, with fares surging past $2000 return in the “cheap” seats.

Sydney-Joburg is 1000 kilometres shorter than Sydney-LA, where fares in the past year have been below $1000 return because of effective competition. Yet the Australian government continues to buy Qantas’s argument that it needs the government-sanctioned SAA codeshare for “investment certainty”.

But the International Air Services Commission – the body that allocates international air rights – is less patient these days when it is clear that consumers are being taken for a ride.

In its latest ruling on the Africa route, the IASC has knocked back Qantas’s application for approval of its SAA tie-up for the next five years, extending its approval for just over a year until December 31, 2012.

That was at least partly as a result of a submission by Virgin Australia, which said the Qantas-SAA deal was a barrier for any new airline that wanted to fly between Australia and South Africa.

(Virgin Australia axed three weekly unprofitable Melbourne-Johannesburg flights in February to concentrate on US routes. There were several technical and commercial issues that killed the service, not least of the fact that three a week was not enough for business travellers and the Virgin flights were operated by twin-engined Boeing 777-300s that added up to three hours to the time taken each way to keep within safe diversion limits over the Southern Ocean – a restriction that doesn’t apply to Qantas’s four-engined 747s).

The IASC notes that, if Qantas was forced to relinquish its SAA tie-up, it would open up the possibility that Virgin Australia could re-establish a relationship it used to have with South Africa Airways and begin proper price competition on SAA’s Perth-Jo'burg flights, which the IASC has stipulated must be at least daily under the terms of the new agreement.

Part of the problem is that Virgin Australia hasn’t yet announced its intentions on its alliance relationships: two of its partners, Singapore Airlines and Air New Zealand are already members of Star alliance, along with South African Airways, but there is still no Star carrier in Australia.

Have you been put off travelling to Africa by high fares? Have you looked at flying via Asia or the Middle East? Is Africa just not on your shopping list? Why?

 

 

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