20 July 2008

Submissions on Australian aviation policy review

The period for public submissions on the planned Australian National Aviation Policy Statement has closed and they are now available NEW on the web (see previous post).

Notable submissions come from Qantas (188 pages), Virgin Blue (46 pages), Emirates (8 pages) and Singapore Airlines (12 pages).

With Australia being in close geographic proximity to New Zealand, some of the points made by Qantas about exchanging traffic rights are particularly interesting:

"1.1.4 Additional policy considerations


We recognise that increased competition has contributed to driving efficiencies and strengthening the competitive ability of the Australian aviation industry more broadly.

We note, however, that Australia’s policy contains a delicate balance of competing interests, and relies heavily on market efficiency principles that do not always recognise the harsh realities of international aviation, including the lack of a level playing field, and the complexity of the bilateral system. In particular, we believe that the Government should have regard to the following considerations when implementing policy to achieve further liberalisation. Australia has limited leverage

Australia’s market size and relatively remote ‘end-of-line’ location combine to limit the leverage it can bring to bear in seeking expanded market access rights for our airlines. Indeed, Australia has few “high value cards” left to play when trading rights of access under the bilateral system. It is important that this leverage be conserved and, when deployed, used to maximise commercial opportunities for Australian carriers. This principle should guide any future consideration of access to the trans-Pacific route. Hub carriers have significant natural advantages

Under the bilateral system, hub carriers such as Emirates, Singapore Airlines, Malaysia Airlines and Cathay Pacific can more readily combine third and fourth freedom rights in both directions to exercise sixth freedoms.

By contrast, Australian carriers, being end-of-line operators, often lack the rights needed from third countries to replicate many of the beyond point services operated by hub carriers. For this reason, reciprocal exchanges of rights do not necessarily result in equivalent improved commercial opportunities for Australian carriers.

This characteristic of the bilateral framework underscores the importance of careful sequencing of liberalisation. Qantas has consistently advocated liberalisation in end-of-line markets before hubs, to maximise Australia’s leverage and offset the hub carrier advantage inherent in the bilateral system."

1 comment:

Khoa Huynh said...

Dear Mr. Macilree,

I would hope that you may find my submission to the Australian NAPS interesting too.


In my view, there are many myths and untruths propagated by certain entities that must be scrutinised in the interest of rationality and transparency.

Kind regards