August 27, 2012
Credit: Image: Airbus
Adrian Schofield Sydney
A new influx of capacity is heating up competition on the crowded—and lucrative—routes between Australia and Europe. But it is not the home-market carriers on either end that are gaining. Instead, this is increasingly becoming a key battleground for the Middle Eastern and Asian airline giants.
This has always been one of the highest-profile long-distance markets, thanks largely to the so-called Kangaroo route from the U.K. to Australia. In a dynamic that is being echoed all over the globe, legacy airlines based at the extremities of this corridor are struggling to compete against carriers with growing hubs in the Persian Gulf region, Southeast Asia and China.
Emirates and Singapore Airlines have established themselves as leading players on Europe-Australia routes, which all require at least one stop due to their length. Most European airlines have pulled out, and Qantas and British Airways have retrenched. Other carriers such as Etihad Airways and China Southern Airlines have entered the fray to underline their emergence as industry powers.
A fresh phase of growth is underway, with most of the relative newcomers planning significant expansion in the near future. The demand for service to Australia is further demonstrated by the fact that three airlines operate Airbus A380s to multiple cities, and at least another two will bring A380s to this market as soon as their deliveries begin. Only five other airports globally have more A380 service than Sydney.
Qantas has certainly recognized the changing dynamic of this market. As well as cutting back its European flights, it is considering linking with Emirates to take advantage of the Gulf carrier's extensive European network. If this deal eventuates, it would represent an admission that if you can't beat 'em, joining them is the only alternative.
Rival Virgin Australia has already reached this conclusion. It has formed a partnership with Etihad Airways, relying primarily on the Gulf airline's Europe services rather than attempting to start its own flights there.