Spoilt for choice to Europe

Airlines offer discounted fares, but if you want to avoid taxes, be careful where you land, writes Clive Dorman.

Unless the European economy really starts tanking, the prospect of incredibly cheap air fares to Europe from Australia is remote. There are no takers to fill the void created after Malaysia's long-haul low-cost carrier AirAsia X axed its services to London and Paris from Kuala Lumpur in January.

Using the tried-and-true formula of putting cost-price fares, or less, into the market to stimulate demand, topped up by ancillary fees for optional extras, AirAsiaX created a sensation in 2009 when it began offering Australia-Europe return fares for less than $1000 return.

Even in the post-GFC downturn when full-service Asian carriers were deeply discounting tickets to Europe - something they are mostly loathe to do - AirAsia's discounts were $500 or more cheaper than the competition.

Now, Asia's biggest airline, China Southern, the fifth-biggest in the world, stands alone as the region's major discounter as it builds market share to Australia.

In April, Britain's air passenger duty rose to about £92 ... Germany and Austria also have large new taxes.

While competitors such as Cathay Pacific and Singapore Airlines are happy with incremental growth and make their pitch to customers prepared to pay for quality service, China Southern has aggressive ambitions. It has six Australasian flights a day between Perth, Melbourne, Sydney, Brisbane and Auckland and its headquarters in Guangzhou (Canton), near Hong Kong, and plans to increase that to as many as 16 flights a day by the end of 2015.

China Southern is the first Chinese airline to fly the Airbus A380 and plans to use the super-jumbo on the Sydney-Guangzhou route. According to its chief executive, Tan Wan'geng, nearly half the passengers on the new CS service from Guangzhou to London are from Australia and New Zealand. Guangzhou is the ideal transit stop for what he calls the new "kangaroo route".

China Southern posted fares of about $1600 return from Australia to promote the new London service, which next month will become a daily service. However, as the October-November low season approaches, other full-service long-haul carriers are offering cheap fares to attract bargain hunters before Christmas.

For travel in November, for instance, Virgin Atlantic, which flies daily from Sydney to London via Hong Kong, had fares as low as $1560 return listed on Orbitz.com last week.

However, governments are ramping up taxes, making it harder for passengers to fly cheaply. In April, Britain's air passenger duty - the most expensive travel tax in the world - rose 8 per cent to about £92 for every long-haul traveller entering and leaving the country from destinations including Australia. For a family of four, that's an extra $568. Germany (€45/$55 a head) and Austria (€35/$43) also have large new taxes for long-haul travellers.

The Australian Tourism and Transport Forum says travellers can save money by avoiding high-taxing European countries.

A spokesman, Justin Wastnage, suggests Australian passengers use the new Qantas-Emirates joint-venture routes and fly to European countries with no air passenger duty. "Taxes do change people's behaviour," Wastnage says. "This is definitely a win for passengers. The only loser is the UK treasury."