'Stiff competition' on US flights to continue: United

UNITED AIRLINES expects competition for passengers on flights between Australia and the US - one of Australia's main international air routes - to remain stiff despite strong demand for services as the high Australian dollar encourages more people take their holidays in America.

The entry of Virgin's offshoot, V Australia, and Delta Air Lines in 2009 turned what had once been a highly profitable route for the two incumbents, Qantas and United, into a substantial loss-maker.

United's vice-president for the Asia-Pacific, James Mueller, said the market had since digested some of the increased capacity due to the strength of the Australian economy and the high dollar making the US a more affordable destination for Australians.

"But there is still a lot of very stiff competition on the route and we continue to compete aggressively," he said.

United signalled that it will be several years before it will be in a position to increase the number of services between Australia and the US because "one of the realities" of its merger with Continental Airlines in 2010 was that it ended up with a lack of wide-body aircraft needed for long-haul routes.

The airline is due to take delivery in July of its first Boeing 787 Dreamliner aircraft, which will become the "growth engine" of its operations in the Asia-Pacific.

United has firm orders for 50 of the aircraft but will take delivery of just five this year.

"As they gradually become part of the United fleet we will be in a greater position to grow and, as we evaluate growth plans, certainly Australia is a market that is very interesting to us," Mr Mueller said.

"Hopefully that will include the opportunity to at least expand on our existing services."

Qantas's international operations lost more than $200 million last financial year but it has deemed the trans-Pacific route as "structurally sound" because its cost base is similar to that of rival airlines while it also has the benefit of a close alliance with American Airlines.

However, Qantas has decided to shelve flights between Auckland and Los Angeles in May because of the losses it was suffering on that route. Air New Zealand believes it will pick up a "decent chunk" of new passengers on the route following Qantas's exit, which it has estimated is worth about $50 million a year in revenue.

Qantas operates Airbus A380 superjumbos between Australia and Los Angeles - boosting its appeal to passengers - while its Boeing 747-400 jumbo jets fly to Dallas. The latter replaced San Francisco as a destination for Qantas last year, partly because it is the main hub for its alliance partner, American Airlines.