Travellers wanting to fly to Europe are benefiting from airlines responding to Qantas' extensive alliance with Emirates by discounting fares heavily on routes to London.
Australia's largest travel agency, Flight Centre, said tickets from airlines including British Airways, Cathay Pacific and Malaysia Airlines were in some cases thousands of dollars cheaper than similar fares last year.
Flight Centre said British Airways had been offering a return economy ticket from Sydney to London from $1778, which was $849 cheaper than the fare available last year.
The travel agency analysed fares available on April 5, and compared them with similar fares last year.
A premium economy fare on British Airways to London was $2990, which was $2120 cheaper. Cathay was also offering a premium economy ticket to London for $3940 ($961 cheaper).
Flight Centre managing director Graham Turner said the deals were available in all travel classes and in some cases were for flying during the peak northern summer season.
"Generally, airlines are reacting quickly to the recent change in market dynamics brought about by the Qantas-Emirates relationship and are taking positive steps to maintain their positions on the highly competitive Australia-UK route," he said. "It's already delivering some bargain fares through to London and Europe."
Last week Qantas and Emirates launched their alliance, which is focused mostly on routes to Europe but includes those to North Africa, the Middle East and New Zealand.
Although the airlines have received approval from Australian authorities, they still need the green light from the New Zealand Transport Minister Gerry Brownlee before they can form an alliance on the Tasman.
Qantas boss Alan Joyce said last week that the airline's fares on routes to Europe would drop on average by about $100 as a result of the alliance. Flying to Europe via Emirates' hub in Dubai rather than Singapore would reduce transit fees, landing fees and extra flight charges.
While the discounted fares are welcome news for travellers, they threaten to eat into the earnings of the 32 airlines which fly or code-share on routes between Australia and Europe.
Commonwealth Bank analyst Matt Crowe said he expected the intense competition between airlines on routes between Australia and Europe to remain for some time.
"While there is a lot of capacity out there and not much demand, you will get competitive pressure," he said.
"There is bound to be a response [from competitors to Qantas-Emirates]."
Shares in Qantas fell as much as 4 per cent this morning – one of the biggest declines among the top 200 companies on the ASX – amid jitters about bird flu in China, and signs of profit taking by investors.
By noon, Qantas had recovered some of the lost ground to be down 4 cents at $1.72.