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7/02/2009 – US-Australia Fare Wars : Can Four Airlines Survive The Routes?
Starting in February the lucrative marketing between California and Australia will begin a competitive shift that will again take another shift on the 1st of July.
Come February 28th the link between Los Angeles (LAX) and Sydney (SYD), which has long since been dominated by two airlines. Qantas, the Australian National Airlines and United Airlines (United purchased the route from Pan Am in 1985 and began flying the routes in 1986). On February 28th a new Virgin airline will change the competitive nature of the route when V-Australia takes to the skies.
A few months after V-Australia begins LAX-SYD service, Delta Airlines will begin non-stop service on the route. Currently the LAX-SYD route is flown almost exclusively with Boeing 747-400 aircraft, except Qantas’ single Airbus A380-800 that does not fly daily service. In a further dynamic shift on this route, V-Australia will begin service with the Boeing 777-300ER and Delta will shun its newly inherited 747-400 fleet from Northwest Airlines and also opt for the 777, using the 777-200LR.
The changing face of competition on this highly sought after route has also forced United Airlines to change its aircraft flying the route between San Francisco (SFO) and SYD from a 747-400 to a 777-200.
So what does this all mean? Well in the immediate future there will be some fantastic airfares between the United States and Australia. This new route will also affect other carriers, such as Air New Zealand who flies from both LAX and SFO to SYD via Auckland (AKL). As V-Australia offers other cities on its route, it will further eat into the established routes by Qantas and United, as well as Air New Zealand.
Sir Richard Branson, the founder of Virgin, Virgin Atlantic, Virgin America, V-Australia, Virgin Blue, etc etc etc, who has now created a network that can fly completely around the world (03/12/2008 – Virgin Inches Closer To Completely Circling The Globe) has stated he believes that one, if not more than one airline, will stop competing on this route.
Branson is not the only one who sees one of the U.S. carriers dropping off this route. United Airlines’ service ranks far below that of Qantas, V-Australia’s expected service and Delta in terms of in-flight amenities, seat comfort and in flight entertainment. History has shown United to go from a top player to an ‘also flying’ airline, such as their history involving service to London Heathrow (LHR).
Qantas and V-Australia have the two highly competitive advantages on the US-Oz route.
1) A lower cost of doing business
2) A built it domestic route structure to move passengers throughout Australia
United Airlines flies to both Sydney and Melbourne (MEL), Delta will only fly to Sydney. Upon arrival in Australia, neither airline has any airline alliances within Australia. United is a Star Alliance airline, and while Air New Zealand is a Star Alliance carrier, they do not fly domestic routes within Australia. Delta Airlines is a Sky Team alliance airline, and there is no domestic or regional Sky Team connection within Australia or New Zealand.
When Qantas lands anywhere in Australia they can move passengers to their extensive domestic route network spanning from the Pacific Ocean to the Indian Ocean. When V-Australia puts its wheels down, it can move passengers freely through the Virgin Blue airline, which also services the whole of Australia.
So if you plan on visiting Australia from the United States; or the United States from Australia, remember the seasons are reversed as your cross hemispheres, pack your cameras and check out the soon to be ramping up fare wars.
I don’t expect the fare wars to last long, as one, if not two, of these non-stop airlines will stop flying these routes in the somewhat near future.