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Delta Airlines has challenged Qantas‘ dominance of the Australia-US route after describing its foray into the market as a "disaster" for the Australian airline. Qantas stands to lose more than 200 passengers a day — about half the seats on a standard Boeing 747 — when Delta begins daily flights between Sydney and Los Angeles in July.
Even before Delta begins its services, the trans-Pacific route has been transformed in a matter of months from being one of Qantas’ most-profitable international legs to become loss-making, due largely to a dramatic drop in demand for business and first-class seats. Delta’s network planning chief, Glen Hauenstein, said its flights in July would be "relatively full" because more than 30 per cent of seats were booked.
Mr Hauenstein said there was demand to fly the route because under previous arrangements Qantas picked up more than 200 passengers a day through an interlining agreement with Delta and Northwest Airlines. The American carriers merged last year. "So the demand is there and … if you’re the incumbent carrier this is a disaster; if you’re the non-incumbent carrier, this is an opportunity," he said during Delta’s first-quarter earnings briefing.
"And the question is long run, as being the world’s largest carrier and having the extensive route network that we have, do we want to have outlet to Australia? The answer is clearly yes." Delta’s Boeing 777s will increase passenger seats on the route every week by almost a quarter, or 4900, to 25,000, just as the aviation industry suffers its worst downturn. Fares on the route have fallen about 57 per cent since September, according to Macquarie Equities, due to a dramatic slump in demand and Virgin Blue’s long-haul carrier, V Australia, joining Qantas and United Airlines on the trans-Pacific in February.
However, Delta’s decision to charge $US50 ($A71) to check in a second bag on international flights could bring a backlash from passengers. United has also revealed in its latest earnings briefing that it is already suffering on the route. Of its Pacific network, Australia and China suffered the biggest declines in revenue in the first quarter.
V Australia has began thrice-weekly flights from Brisbane to Los Angeles, two months after its daily flights from Sydney to the US started, and it plans to launch three return services a week from Melbourne in September.
source: business.theage.com.au/business/
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