Singapore, Australia sign air deal

Singapore, Australia sign air deal

Gail Wan, Agence France-Presse, Singapore

Singapore and Australia signed an agreement here on Tuesday to expand their air links but the deal fell short of a full "open skies" deal with Singapore Airlines (SIA) denied the lucrative Australia-United States route.

Australian Deputy Prime Minister John Anderson inked the memorandum of understanding with Singapore's Transport Minister, Yeo Cheow Tong, and both ministers reiterated that a full open skies agreement was the ultimate goal.

The deal, which will take effect immediately, will allow airlines from both countries to fly without restriction between Singapore and Australia, as well as using each country as a base to fly to other nations.

However, the arrangement has one crucial caveat with Singapore planes not allowed to fly to the United States from Australia, meaning SIA cannot compete with Qantas on the profitable Australia-Los Angeles route.

Anderson conceded during the media event to mark the agreement that Australia had baulked at a full open skies agreement after considering the impact SIA's competition would have on Qantas' flights to the United States.

He said the Australian government had to find a balance to ensure non-subsidized carriers such as Qantas could cope and grow while looking to the increased national benefits of increased trade and tourism.

Both he and Yeo said they had agreed to revisit a full open skies agreement once the aviation industry, battered by the war on Iraq, terrorism and Severe Acute Respiratory Syndrome (SARS), was stronger.

"The current global aviation industry is still very volatile," Anderson said.

"The (Singapore) minister and I have agreed that the issue of an exchange of trans-Pacific rights and other beyond rights can be considered again when there is greater stability.

"I would seek to leave you with no doubt that Australia believes in open skies ... the step we are taking today is a major liberalization on the way to our clear objective of open skies."

Yeo did not mention Australia's protection of Qantas in his speech and backed Anderson's comments that a full open skies agreement was a possibility once the industry picked up.

"I am greatly heartened by the progress that has been made and I look forward to taking the next step to conclude a full open skies agreement with Australia once the aviation industry has stabilized in the very near future," Yeo said.

Qantas had lobbied intensely against a full open skies agreement and welcomed the decision on Tuesday, saying it had pushed for "a careful and measured approach to the timing and sequencing of further liberalization.

"The complex nature of bilateral air services agreements means that Qantas is unable to compete against its major international competitors on some of their most important routes," Qantas chief executive Geoff Dixon said in a statement.

SIA had not issued a public reaction to the announcement by Tuesday afternoon.

Analysts believe SIA would have got a lot more out of a full open skies agreement than Qantas in the short-term because the Australian carrier will not gain very much from the extra routes available into and out of Singapore.

Qantas is already the largest foreign airline operating out of Singapore, accounting for over two million passenger movements at Changi Airport each year.

Anderson said it was only the second air-service agreement Australia had signed with another country, following one with New Zealand three years ago.

Singapore forms the seventh largest tourist group to Australia and is the sixth most popular tourist destination for Australians. A total of 296 flights operate between Singapore and Australia each week.