Singapore Airlines shown the door

“In terms of Singapore Airlines’ request for access to the Pacific route, the government has decided not to grant access at the present time.  If access is negotiated in the future it will be limited and phased.”

“We would not envisage Singapore airlines operating on the route for some years.”

With these words Federal Aviation Minister Warren Truss cleared the way for Qantas to continue its  dominance of the Pacific route and also breathed life into the opportunity for Virgin Blue to continue with plans to take on the national carrier at some time in the not too distant future.

Mr Truss said the government had decided against changing the Qantas Sales Act, which the company had sought to give it the chance for more foreign equity.

“Our bilateral air services agreements with many countries require airlines to be substantially owned by Australian interests,” he said.

“Maintaining current ownership requirements provides certainty and ensures this icon company remains in Australian hands.”

Mr Truss said the Government would also continue to offer unlimited access for airlines to all airports other than the gateway centres of Sydney, Melbourne, Brisbane and Perth.

He stated that economic modelling suggested opening the Pacific route to Singapore would have few benefits to Australia and its tourism market.

“The economic modelling work that we have done suggests that the benefits of an airline such as Singapore entering that route would be very, very small to the Australian tourism industry,” he said.

“In fact, perhaps even potentially negative to the Australian economy in some years.

“The reason for that is that the Singapore product is broadly similar to Qantas. Whilst any new airline would attract some new clientele, the reality is that the US travellers prefer to travel on US carriers.

“If we want to bring large numbers of US visitors to Australia it would be good to have more US competition on the route.

“In addition, unless there’s cut-price fares or a significantly different product, we don’t believe that we would tap a large new market to attract extra visitors to Australia.”

He said the option of a Virgin operation on the Pacific route was much more attractive.

“Virgin offers a different kind of competition, operating essentially a low cost airline which will provide real competition on the route,” he said.

“Singapore Airlines, of course, offers a similar kind of product to United Airlines and Qantas.

“Virgin would be something completely different and would offer a very high level of competition on that route.”

On the subject of Ar Canada, Mr Truss said the Government had not received a formal approach about the trans-Pacific route.

“Some of you will have read that Air Canada is expressing interest in flying the route with some of their new aircraft,” he said.

“They currently have access to fly from San Francisco via Honolulu to Australia.

“They’re now interested – it seems – in direct services and when we receive a formal approach from Canada we would obviously negotiate with them but again, under the same terms and principles as I’ve spoken of in regard to Singapore Airlines.

“If there’s to be a deal, we’d expect there to be some advantages also for Australia.”

Singapore Airlines said the decision meant consumers had lost out.

“Today’s decision from the Australian Cabinet to not lift protection of Qantas on the Australia-US route is a disappointment in the long journey to opening the aviation market to more competition,” it said in a statement.

“The Australian tourism industry and all consumers who pay high fares on the USA route are, again, the losers from todays decision. The decision offers no prospect for relief from high fares,” it said.