It's Pacific warfare on the Australia-US route

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This was published 15 years ago

It's Pacific warfare on the Australia-US route

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The skies between Sydney and LA are a battleground, writes John Burfitt.

Whoever made the claim that there are no winners in war, only losers, could never have imagined what may happen in the air fare price war that's about to start. Airlines are on the losing end as cheap tickets cut into their profit margins leaving passengers the big winners.

Some tickets from Sydney to Los Angeles are half what they were a year ago. Midway through last year, a Qantas return flight from Sydney to LA was listed as $2540. This June, a ticket on that same route flying with United Airlines is $1258, including fees and charges. Even Qantas has fares slashed to $1432 in June.

Flight plans ... competition on the LA route is fierce.

Flight plans ... competition on the LA route is fierce.Credit: AFP

The impending entry of new players - V Australia and Delta - into a market already weathering the economic storm means the competition to fill empty seats is the fiercest in years.

V Australia takes off at the end of this month launching its service with return fares to LA of $1199. Fares are now being offered from $1399 until mid-June - just weeks before US airline Delta begins flying into Australia. Delta, the world's largest airline, will start a Sydney-to-LA service from July 3 for about $1710.

The traditional carriers on this route - Qantas, United Airlines and Air New Zealand - are responding to the new competitors by slashing prices at a time when profits are already tight and passenger loads are down.

These prices are good and no one knows what is ahead.

United Airlines has fares from $1258 through May and June, which then rise to a starting price of $1515 for July and August. Similarly, Qantas has fares from $1432 in May and June, which then rise to between $1700 and $2000 in July and August. Air New Zealand, which flies to LA via Auckland, has also followed suit, offering fares from $1513.

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With fares all fairly similar, purchase decisions could be based on such factors as which airline offers the best seat pitch, the best reward points or flight schedules to best suit travel plans.

V Australia flies three times a week to LA until March 20, when the service becomes daily, leaving Sydney late evening and arriving in LA in time for dinner.

Qantas offers two flights a day arriving in LA in the morning. United departs Sydney daily after lunch and arrives in LA after breakfast, while Delta is scheduled to leave Sydney after breakfast and arrive in LA in the early morning.

While the fares across the Pacific are the cheapest seen in years, can airlines afford to drop them even more?

Fares are already said to be squeezing the tight profit margins of many airlines but if the choice is between having flights with passengers aboard or flying planes with empty seats, airlines are almost certain to slash prices even further.

"I'm sure we are going to see the carriers dropping fares from time to time in the coming months," says a Flight Centre spokesman, Colin Bowman.

"If the load factors are down, the prices will drop but these kind of fares cannot be sustained long-term.

"Once the dust settles around mid-year, I predict prices to Los Angeles will settle around the $1450 to $1500 mark.

"But even that is a big saving from where fares have been. My advice is if you see a fare you think is good value, grab it. Don't wait.

"These prices are good and no one knows what is ahead."

COMPARE THE FARE

* V Australia - vaustralia.com.au

* Delta - delta.com

* Qantas - qantas.com

* United - united.com

* Air New Zealand - airnewzealand.com.au

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