Australian airlines in increasingly fierce competition

by Alfie FEATHERSTONE on July 26, 2010

The Australian domestic airline industry is bracing itself for what has been called ‘the mother of all battles’.

Peter Harbison, founder of the Sydney Centre for Asia-Pacific Aviation, one of the s most respected airline analyst groups in Australia, made the claim after the fight for domestic market dominance down under begins to heat up considerably.

The remarks come at a time when four separate carriers are vying for the public dollar, something unheard of in Australia until recent years, despite the deregulation of the airline industry some 20 years ago.

Even 10 years ago, the common thinking was that Australia could support no more than two major carriers on its domestic routes, backed by the abortive launches of Impulse and Ansett Airlines. But this all changed in 2004 when Qantas launched its own domestic carrier Jetstar, which proved that not only could the country handle increased competition, but that consumers could benefit from healthy competition.

In 2007, the Singapore Airlines offshoot Tiger Airways entered the market and despite a difficult first couple of years has now begun to break even. In 2010, Virgin Blue has marked its territory under former Qantas chief John Borghetti, and is taking on its larger rival in a head-to-head battle for the domestic leisure market, and has recently announced the launch of its new business class. Last month, for the first time, Virgin Blue operated more Australian flights than any other airline.

All this activity has led Harbison to claim that the battle ahead is looming as Australia’s biggest ever in air travel. With all four players having a solid backing behind them, the likelihood the at least one will fall by the wayside will represent a massive disappointment for some investors.

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