The doorway between cities in Australia and China hasn’t just been flung wide open, it’s been blown off its hinges.
A new Air Services Agreement suddenly announced this morning immediately removes all capacity restrictions on airlines flying to and from Chinese cities.
The implications for Qantas and Virgin Australia, and Australia’s airport owners, and the stakeholders in Australian tourism and its attendant support and construction industries are enormous.
The potential rewards and risks are unlimited, and Australia’s airlines will no doubt be seeking to leverage maximum benefits from their commercial partners in the PRC as well as the large equity holdings in Virgin held by HNA (which controls Hainan Airlines 海南航空公司 and Hong Kong Airlines 香港航空公司) and Nanshan Holdings.
This is what Infrastructure Minister Darren Chester and Trade and Tourism Minister Steven Ciobo said in a joint statement this morning.
Which may be all the usual motherhood stuff. The scramble for advantage in the new world of unrestricted flying between Australia and China will be anything but motherly.
Early winners from the situation might include Canberra Airport, hungry for new international services to add to those of Singapore Airlines and Qatar Airways, and whoever ventures the capital needed for Sydney West Airport.
Early losers will be Australian airlines who hesitate to take the plunge, or dive into the wrong part of the pool.
Postscript: There are many unanswered questions arising from this announcement. Taken literally, the pursuit of open skies can take commercial aviation to a situation which resembles global shipping today and would probably end national carriers as currently know.
However the world may be tipping over towards the reinstatement of more restrictive trade policies, particularly if President elect Trump, and key EU states renounce that union and bring it undone. Qantas and American airlines are still in shock over US obstruction of their commercial alliance, in something of a slow motion crisis that doesn’t look like being resolved before the Trump administration takes charge of US trade relations.
A more restrictive trading environment for Qantas would devastate the hopes of its people, and its customers, for more routes, new jets and product innovations. The appetite for more PRC investment in Australia, as well as its airlines, could falter in a US-China trade war.
Such global concerns could overshadow China-Australia bilateral trade expansion.
This YouTube makes an effort to simplify the existing if archaic manner in which traffic rights have been largely determined. Readers may well question its relevance. Whether the processes it describes are about to be destroyed is something that is in play very visibly on the North Atlantic routes where disputes about the expansion of the Norwegian trans border franchise and strategies of the Middle East carriers may be reaching breaking points.