Talks to clear the air…………………….

A report by Steve Creedy in The Australian says that Australia and the US will shortly start talks on a “comprehensive” open skies agreement aimed at giving travellers more choice and cheaper fares on busy trans-Pacific routes.

The Government believes an open skies agreement is likely to make Australia more attractive to US carriers and make it easier for existing carriers to increase capacity on US routes.

The talks will also provide an immediate boost for Virgin Blue’s application to start 10 services a week to the US late next year using Boeing 777s flown by its long-haul international carrier, V.Australia.

The US Government had hinted it would look more favourably on the application if it was part of wider moves towards liberalisation. The talks also take the sting out of a United Airlines campaign to use the Virgin application as a lever to open-skies negotiations.

Announcing the move at the weekend, Transport Minister Mark Vaile and US Transportation Secretary Mary Peters said talks between the two countries were expected to start before the end of the year.

They predicted detailed terms of an open skies agreement could be signed by early next year.

“A commitment now to hold talks with the goal of bringing the benefits of open skies to the passenger market would permit air carriers to determine the frequency of their air services, the routes they wish to serve and the prices they wish to charge, without governmental interference,” they said in a joint statement.

Mr Vaile said the talks recognised that international aviation liberalisation was a key driver for the economies of both countries that would strengthen and expand already strong trade and tourism links.

“Further liberalised arrangements with the United States will enable airlines of each country to develop new services to meet market demand, removing government economic restrictions and giving consumers more travel alternatives and better fares due to increased competition,” he said.

The move will be welcomed by tourism groups complaining that a lack of capacity on Qantas and United Airlines flights to the US mainland is stymying tourism and making fares too expensive.

But it will not change Australia’s decision to block Singapore Airlines carrying passengers between Australia and the US.

Singapore has vowed to keep pressing its case and estimates that Australia is losing $120 million a year in tourism receipts by refusing to allow it on the route.

“A decision has been made on that front and that decision remains in that we would like to see Australian carriers offer services in the first instance,” a spokeswoman for Mr Vaile said.

The talks come as US carriers are returning to profitability and once more looking at international expansion after a significant hiatus.

Qantas and United are currently the only airlines flying non-stop to the US mainland, although Hawaiian Airlines flies to Honolulu and there are carriers providing one-stop options to US destinations through various hubs.

Qantas operates more than 40 flights a week and plans to introduce the Airbus A380 superjumbo on the route.

The non-stop US routes are money-spinners for both airlines, although the Australian carrier says they contribute less than 15 per cent of its profits.

Report by The Mole from The Australian