Australia And US Sign Open-Skies Agreement, Will Fares Drop?

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Service between the US and Australia has long been expensive and dominated by the United and Qantas duopoly.

(To be fair Continental does serve Cairns, Australia via twice-weekly flights from Guam in case you want a tour of Micronesia. It’s actualy a Onepass bargain at just 60,000 miles and even allows for a free stopover along the way in Hawaii or Micronesia)

With the new agreement any US or Australian airline will be able to start service between the two countries.

Here are some basic predictions and information, without taking any merger activity into account:

-AA is unlikely to start new service because its bases are covered by partner OneWorld partner Qantas.

-Continental and Northwest will likely wait until they receive their 787’s in the next couple of years before entering the Australian market. Look for Continental to serve Houston-Sydney nonstop by the end of 2009.

-Delta will have the potential to serve Atlanta-Sydney with their 777-200LR aircarft which they will be receiving within the coming months.

-V Australia, a venture of Australia’s Virgin Blue will soon serve Los Angeles or S. Fransisco with their 777-300ER aircraft.

-No other US or Australian airlines have the aircraft to enter the market.

-The agreement locked out Singapore Airlines, which desperately wanted to enter the US-Australia market.

The only thing going against US-Australian expansion is the fact that it is primarily a tourist and not a business market. There is much more money to be made with Chinese and Indian expansion due to business travel. Nonetheless fares will definitely be dropping in the near-future as competition heats up.