A new report on liberalisation has supported Emirates’ efforts to lift weekly services into Australia from 42 to 84.
A new report on liberalisation has supported Emirates’ efforts to lift weekly services into Australia from 42 to 84.
InterVISTAS-ga2 Consulting report, Liberalization of Commercial Aviation Study, found that air travel doubled between some countries after liberalisation agreements were put in place.
An increase of that nature for Emirates would mean a four times daily Perth-Dubai service.
The report found that: “Traffic growth subsequent to liberalisation of air services agreements between countries typically averaged between 12 per cent and 35 per cent, significantly greater than during the years preceding liberalisation. In a number of situations, growth was at rates exceeding 50 per cent, and in some cases reached almost 100 per cent of the pre-liberalisation rates.”
Emirates, which is one of the world’s fastest growing airlines, connects Perth, Sydney, Melbourne and Brisbane to more than 78 destinations in 54 countries on the Emirates network.
For Perth passengers, a host of European and African destinations are now one-stop. Emirates operates to 22 European destinations, while Qantas services just two – London and Frankfurt. However, unlike Singapore Airlines, Emirates is not focused on access to Qantas’ Australia-US routes.
The InterVISTAS-ga2 study found: “Extensive and significant evidence that supports the generally accepted ‘conventional wisdom’ that liberalisation of air services between countries generates significant additional opportunities for consumers, shippers and the numerous direct and indirect entities and individuals affected by such liberalisation.”
Conversely, the report found evidence that restrictive bilateral air services agreements between countries stifle air travel, tourism and business and, consequently, economic growth and job creation.
The study found that:
• A simulation of the likely results of liberalising 320 country pair markets that are not today in an ‘open skies’ (deregulated) mode indicate traffic growth, on average, of almost 63 per cent. This is substantially higher than typical world traffic growth of between 6 per cent and 8 per cent. Liberalising only these 320 bilateral agreements of the 2,000 in the database would create 24.1 million full-time jobs and generate an additional $653 billion in gross domestic product. This corresponds to an economy almost the size of Brazil.
• The creation of the single European aviation market in 1993 led to an average annual growth rate in traffic between 1995 and 2004 that was almost double the rate of growth in the years 1990 to 1994. This produced about 1.4 million new jobs.
• An examination of 190 countries and 2,000 bilateral air service agreements suggests that there are still a number of countries that place a priority on protecting their flag carrier(s), rather than enhancing the overall welfare of the broader public interest.
The report highlighted some dramatic growth before and after liberalisation between the US, Canada and South America in 1995. Traffic on the Vancouver-Phoenix route jumped 146.4 per cent within a year, while the Dallas-Lima route leapt 482 per cent.
When the US signed an open skies agreement with Italy in 1999, traffic on the Atlanta-Rome route leapt by 110.8 per cent.
Closer to home, Australia and New Zealand signed a one-market agreement in 1996 and, supporting Emirates’ argument that it would help boost tourism to Australia, the report found that the liberalisation of the Germany-UAE market in 1986 resulted in a growth rate 19.7 per cent higher than if the routes had not been liberalised. The study found that UAE-UK traffic was 30 per cent higher because of the 1998 liberalisation of air routes between the two countries.
Australia and New Zealand concluded a Single Aviation Market (SAM) agreement in 1996 and the study found that air travel between the two countries was “56 per cent higher than it would have been in the absence of any liberalisation”.
The federal government faces some vexing problems over airline access to Australia. Qantas argues that it has seen its share of the market slide from 39 per cent to just 27 per cent in the past decade and that it faces tough unions, which have been slow to compromise.
However, tourism operators argue that Qantas has been slow to implement cabin innovations and new equipment, so passengers have drifted to airlines such as Singapore Airlines and Emirates, which were the first in the world to offer seatback videos for all passengers in the early 1990s. Qantas has only recently completed that upgrade on its 747s and A330s, and its 767s which serve Perth will not be upgraded.
Qantas points out that Emirates and Singapore Airlines pay little or no tax in their home cities, however, it should be acknowledged that Emirates pays huge staff accommodation and benefits costs. Qantas is at a disadvantage on many routes into Europe because of limited rights. For instance, it can only fly to Paris three times a week – whereas a daily service is needed to make the route viable.
While the former federal transport minister, Warren Truss, shared Qantas’s view of the world, the new minister, Mark Vaile, is in favour of more competition. That push for more competition is gaining ground after Qantas cut back services to Melbourne by 18 per cent since the Sydney Olympics. Emirates adds to the argument the fact that last year it flew to/from Australia 650,000 passengers from centres not served by Qantas. The airline also asserts that traffic between Australia and the Middle East will grow by 800,000 passengers between 2006 and 2014.
By 2014, it could be flying 2.7 million passengers to/from Australia and the airline would be spending $222 million a year on advertising Australia.
