I reported earlier that Virgin Blue will probably get the okay from the Howard Government though. The Australian low cost carrier has been tweeking its image and even toying with the idea of installing a business class. Something the executives over at Qantas would love to see, another year+ of huge profits on the trans-Pacific route.
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AFTER nine months formally reviewing its international aviation policy, the Howard Government has decided to keep the status quo, refusing Singapore Airlines access to the lucrative Australia-US route.
Cabinet decided international aviation mergers were inevitable, however, and that Qantas and Singapore should consider getting together, at least regionally.
It means Los Angeles air fares will stay high and there is no guarantee of new competition, according to the director of the Centre for Asia Pacific Aviation, Ian Thomas.
The decision angered several Liberal backbench MPs and was viewed as a triumph over those ministers backing competition, including the Treasurer, Peter Costello, and the Industry Minister, Ian Macfarlane.
For now, the Government has told Qantas it must remain in majority Australian ownership.
The Transport Minister, Warren Truss, said the Government's commitment to "open skies" was "an aspirational goal" to be judged on a case-by-case basis and pursued only when the national interest would benefit.
He said Singapore Airlines was not cut-price like the aspiring Virgin Blue, which might join the Pacific run next year, and the benefits to Australia from Singapore's entry would be minimal. His claim was a challenge to the Tourism Minister, Fran Bailey, who argued that tourism would grow if more airlines flew the Los Angeles route, which makes up a fifth of Qantas's profits and is dominated by the national carrier.
Mr Truss said economic modelling showed benefits to the economy would be very small, and that Singapore's entry would do nothing to break the preference of US tourists for US-branded airlines.
Future permission for Singapore Airlines would be "limited and phased", and "we would not envisage Singapore Airlines operating on the route for some years", Mr Truss said.
Singapore Airlines said Australian passengers were the big losers. "The decision offers no prospect for relief from high fares," it stated. On Monday it issued a report claiming the fare per kilometre to Los Angeles was 38 per cent more than to London.
Singapore Airlines had argued its entry would pump into Australia $114 million in US tourist revenue a year.
It is understood, however, that the Bureau of Transport and Regional Economics found best-case scenario benefits of about $45 million a year, and possibly as little as $10 million a year.
Geoff Prosser, a West Australian Liberal backbencher, said Qantas was being protected from competition that would benefit Australia. The "bad news" of yesterday's cabinet meeting ignored the benefits of Pacific route competition, Mr Prosser said.
But backbenchers such as Bruce Baird and Warren Entsch argued Qantas is already disadvantaged by unequal taxes, and that many of the 38,000 Qantas jobs could shift to Singapore if competition was unchecked.
Yesterday, Mr Truss made it clear he expected Qantas now to temper its enthusiasm for shifting maintenance jobs offshore. While the decision was for Qantas, the Government reinforced its preference in "a number of discussions with Qantas", he said.
Labor's transport spokesman, Kerry O'Brien, said the Government was refusing to take hard decisions on aviation competition and foreign ownership of Qantas.
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