Qantas and the Australian Government have two sets of rules

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THE Australian Government called for Qantas to be given better access to European routes today just a week after dismissing a request from the flag carrier's arch rival Singapore Airlines to lift restrictions on its own network.

Transport Minister John Anderson said he was gravely concerned by Qantas' (qan.ASX:Quote,News) failure to get better access to European air routes.

"I am really concerned, really concerned, that Qantas just does not have the access it needs into Europe and into London particular," Anderson told reporters.

"This global obsession by many governments to have their carrier at whatever cost to the taxpayer, is a real problem for us.

"While you can always argue the pure, rational approach that consumers will benefit if you get lower priced tickets, there are other considerations."

The Federal Government last week refused to grant Singapore Airlines access to the lucrative Australia-Los Angeles route, saying "the time is not right".

Qantas (qan.ASX:Quote,News), which makes about 15 per cent of its profits on the prized route, lobbied strongly against SIA access, with chief executive Geoff Dixon speaking publicly of the need to move jobs offshore if Qantas' government-funded rivals won concessions.

In the stock market today, shares in Qantas (qan.ASX:Quote,News) have risen after the airline yesterday reassured investors that its current year profit would be in line with market expectations. The stock was up two cents to $3.33 by 1530 AEST on turnover of more than five million shares.

The market is expecting Qantas to post a net profit of around $730 million when it reports its results for the 2004-05 year in August.T hat would be almost 13 per cent higher than its 2003-04 net profit of $648.4 million.

Qantas (qan.ASX:Quote,News) yesterday said it would not issue a profit downgrade and that it would meet current expectations for the 2004-05 year.

Qantas rated a 'buy'

Citigroup Smith Barney analyst Jason Smith said the investment group continues to rate Qantas as a buy, with a target share price of $4.41. He said Qantas remains undervalued compared to other major local and international airlines.

"Qantas remains better placed that most airlines in relation to rising fuel costs, with fuel surcharges likely to raise around $1 billion in fiscal 2006," Mr Smith said.

"It is also 100 per cent hedged at $US38 per barrel in fiscal 2005 and 50 per cent hedged at $US48 per barrel in fiscal 2006."

The price of crude oil, from which jet fuel is derived, was trading around $US58.09 a barrel this week. The airline, like many others around the globe, introduced a fuel surcharge on ticket prices in May last year to help offset the rising cost of fuel which had jumped from $US30 a barrel.

"Despite fuel concerns, Qantas still provides solid yield support, is trading around book value and remains very well leveraged to any peak in fuel costs," Mr Smith said.

Qantas will tomorrow brief analysts on accounting changes to be made following its adoption of the Australian equivalent to International Financial Reporting Standards.

Singapore Airlines in background

Meanwhile, the Federal Government has stoked speculation that it would agree to a merger between Singapore Airlines and Qantas.

It is currently mulling the lifting of foreign ownership caps on the carrier's stock – a move that could pave the way for SingAir to create an alliance with the carrier.

But SingAir maintains that it is more interested in getting get access to the trans-Pacific route between Australia and the US.

Qantas is against SingAir competing on the route and the Government has said it is not prepared to allow SingAir on the route at this time.

SingAir has been lobbying the government for increased access for almost three years.

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19 years 6 months

Posts: 475


Transport Minister John Anderson said he was gravely concerned by Qantas' (qan.ASX:Quote,News) failure to get better access to European air routes.

"I am really concerned, really concerned, that Qantas just does not have the access it needs into Europe and into London particular," Anderson told reporters.

Yes, so deprived that they get Flightline to ringfence their slots at LHR by flying to MAN everyday, with an empty aircraft with the absolute minimum of advertising of this alleged feeder service.

Can't get into the London if wanting to serve the UK on increased frequencies? Simple - go elsewhere in the UK NOW and not in the 3 to 5 years when they submitted their plans for the increased UK-Australia frequencies which they subsquently won, and attempt to claw back some of the traffic that is currently using Emirates (at BHX, GLA and MAN), Singapore Airlines (MAN) and Malaysian Airlines (MAN) to fly to Australia by avoiding the hellhole known as LHR.

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19 years 8 months

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why would they need better access to european destinations?

I'm sure with there ONEworld partners they cover all points within europe?

I'm sure the average australian wouldnt mind a 1-2hr flight from LHR to major european destinations on a ONEworld partner flight?, seeings the average flight time from Sydney to Darwin is the same as a London-New York flight?

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19 years 6 months

Posts: 475

attempt to claw back some of the traffic that is currently using Emirates (at BHX, GLA and MAN), Singapore Airlines (MAN) and Malaysian Airlines (MAN) to fly to Australia by avoiding the hellhole known as LHR.

Bad form to quote yourself but the CAA has published results of a survey which indicates that over 180,000 passengers flew MAN-Australia via anywhere else but LHR in 2003; sample size of the survey is not known unfortunately but it does state 90,000 passenger originated in the North West. Of interest was:
MAN-DXB-Australia = 44,000 pax (about 24% of the total MAN-DXB total)
MAN-KUL-Australia = 45,000 pax
MAN-SIN-Australia = 81,000 pax

I'm sure with there ONEworld partners they cover all points within europe?

The MAN-London-Australia market was estimated to be around 44,000 passengers i.e. only 1/5th the total market flying from MAN to Australia, so it looks like people are voting with their feet and avoiding the oneworld connection!

David