Singapore surrenders on US route

Matt O’Sullivan
The Age

Singapore Airlines has stopped short of objecting to Virgin Blue’s tie-up with US carrier Delta Air Lines on the Australia-US route, but has called for regulators to reconsider the planned deal if it leads to higher fares and fewer flights.

Singapore Airlines has long had ambitions to fly between Australia and the US but has recently resisted lobbying aggressively for authorities to open the route further amid a severe downturn in travel. It has little interest – in the short-term, at least – in entering a market that has gone from a cosy duopoly to an aggressive four-airline contest in less than a year.

Emphasising that liberalisation of the route has been ”left on the backburner”, Singapore Airlines said that the Virgin-Delta application should be reconsidered or the trans-Pacific opened to even more competition if it resulted in fewer flights or higher fares.

”If a partnership between airlines leads to fewer flights or an artificial floor on fares … then it begs the question if consumers would be better off from such an arrangement,” the airline said in a submission to the Australian Competition and Consumer Commission.

Air New Zealand and the Singapore Airlines-backed Tiger Airways have been vocal in their opposition to the deal, but Qantas, the biggest operator on the route, has said it would not oppose it.

Virgin and Delta unveiled plans last month to form a revenue-sharing agreement under which a steering committee would manage aircraft on the trans-Pacific route.

Delta has said it does not expect a decision from regulators in the US on its proposed tie-up for up to a year. Industry officials believe US regulators will prove the biggest hurdle to the deal.

The two airlines argue in filings to regulators that without the joint venture their ability to compete against Qantas and United Airlines across the Pacific will be ”considerably weakened”. They argue it will not reduce competition.

Australian governments have repeatedly rejected Singapore Airlines’ attempts to gain entry to the route. But the Rudd Government has been careful not to publicly show its hand on whether it supports the entry of airlines from other countries, such as Singapore Airlines.


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