What ‘open skies’ means for international travellers

‘Open skies’ agreements promise increased competition and lower airfares, but it’s not a magic bullet...

By David Flynn, September 22 2023
What ‘open skies’ means for international travellers

In the wake of the federal government’s decision to block Qatar Airways from adding more flights to Sydney, Melbourne and Brisbane, there are increasing calls for Australia to embrace an ‘open skies’ approach to international air travel.

Open skies agreements are struck between two countries, and allow airlines from both countries to run as many flights as they wish to any airports they choose (provided that airport has sufficient capacity for those flights, of course).

That’s in stark contract to more restrictive bilateral agreements, which set limits on how many flights can be made – and into which cities.

The current case in point is of course the bilateral agreement between Australia and Qatar, which pegs flag-carrier Qatar Airways to 28 flights per week to and from Sydney, Melbourne, Brisbane or Perth, with an unlimited number of flights to other Australian cities.

Qatar Airways sought to increase its cap to allow an additional 21 flights per week, or the equivalent of three extra flights per day spread across Sydney, Melbourne and Brisbane.

The government’s contentious rejection of this led to the Select Committee on Commonwealth Bilateral Air Service Agreements, which is currently holding hearings before presenting a final report by October 9, 2023 - and there’s growing support for ‘open skies’ agreements to boost competition and bring down airfares.

How open skies agreements work

Australia already maintains open skies agreements with nine countries – among them China, India, New Zealand, Singapore, Taiwan, the USA and the United Kingdom.

But open skies isn’t a magic wand that immediately fills up the arrivals and departures board at airports across the nation.

Despite open skies agreements with the US and UK, British Airways, American Airlines and Delta Air Lines fly only to Sydney.

And while Australia and Switzerland have inked an open skies agreement, we don’t see any flights from Swiss.

This reflects the commercial reality of open skies: while being a very laissez-faire approach, airlines still have to see a sufficiently strong market in terms of the number of passengers, as well as have the aircraft to serve that market.

None the less, moving away from bilateral agreements in favour of open skies has become a common theme at the government hearings.

“Even if we open the market entirely, it doesn’t mean we’ll necessarily be flooded with seats, but it would be fairer,” explains Australian Airports Association head James Goodwin.

“A more efficient outcome would be to allow foreign airlines to access, on an unlimited basis, Australia’s major airports through amendments to bilateral air services agreements,” says the government’s own economic advisory body, the Productivity Commission.

More competion, lower fares?

Flight Centre boss Graham Turner added his voice to the push, saying the government should forge open skies agreements with more other countries – and that where bilaterals were needed, the Australian Competition and Consumer Commission should be involved in the process, given it is also consulted when it comes to alliances between airlines and other issues impacting the travelling public.

“With unrestricted, ‘open skies’ air services agreements with only nine other markets, Australia is well off the pace of leading aviation markets,” notes a submission to the hearing by the Australian Chamber of Commerce and Industry.

The business group says the government has “effectively inflated the cost of airfares” by rejecting Qatar Airways’ application, which was also “a significant deterrent for tourists to travel to Australia.”

“For Australia as a market to be competitive relative to other destinations, airlines require longer-term certainty in accessing air rights on Australian routes” than can be delivered under bilateral regulations, says outgoing Sydney Airport CEO Geoff Culbert.

The Board of Airline Representatives Australia – which represents 40 carriers which fly to Australia – is understandably pro-open skies.

“Every new service, no matter whether on smaller aircraft from Australia’s closest neighbours in the Pacific Islands, to the largest aircraft operating from the furthest possible airports, bring additional visitors to Australia who spend money and generate economic activity.”

16 Dec 2016

Total posts 55

Australia already has one of the most open sky agreements in the world so let’s not get carried away. Also let’s remember that Qatar has landing rights in every other airport in Australia and can up gauge existing services. Painting Qatar as a victim is a coalition point scoring exercise and if the media here reported on landing slots and agreements in reverse there might be less hysteria. I for one don’t want the Qatari regime having more influence over Australia. At least Qantas is accountable to unions, workers, senate inquiries - Qatar can do whatever they like to whomever they like. 

Qantas - Qantas Frequent Flyer

02 Sep 2016

Total posts 7

Markspark, 

Why bring politics into the conversation? Totally irrelevant.  I think it's obvious why Qantas didn't want Qatar to have more landing rights - Qatar's product is much better than QF's, cheaper and represented a threat to QF's profits.   That's why Joyce was cosying up to the current federal govt and other pollies to prevent Qatar gaining more access.                             

 I disagree totally with your comment regarding QF being accountable to unions, etc. Qantas are accountable ultimately to their shareholders. They have only just been brought to heel by the media because of the dumb actions of their own management. "Qatar can do whatever they like to whomever they like" that's simply just a false statement.

QFF

12 Apr 2013

Total posts 1525

And to support your point can you tell us how many flights QF fly to Doha?

15 Mar 2018

Total posts 92

The reason why politics are brought into the conversation is politicians (Government) makes the landing rights available.  Maybe Qantas lobbied, but at the end of the day, it was a Government Decision.

What I don't get is Qatar say they want to make it better for passengers from regional areas, yet they have landing rights for these and don't use them.  The only want more at SYD, MEL, and BNE.

28 Mar 2018

Total posts 31

I live in Darwin, used to live in Cairns.  We've had open skies for decades. The experience up here is that airlines come and go. Having a policy doesn't guarantee a successful outcome. 

From what I understand, Qantas flies about 20%-30% of international seats. Australia is its home so it has to fly from here, but they aren't dominant. 

On the flip side, many flights by international airlines haven't returned after COVID. I'd like to know why they haven't returned if the fares are so high? Could it be that it's in their interest to hold back flights and keep fares up? 

QFF

12 Apr 2013

Total posts 1525

I like to see figures that support those 20-30% because I think numbers are much less

28 Mar 2018

Total posts 31

https://www.bitre.gov.au/sites/default/files/documents/International_airline_activity_0323.pdf

Here is the Australian govt data. The Qantas & Jetstar sitting at about 28%. 

QFF

12 Apr 2013

Total posts 1525

"And Jetstar" - nuff said.

15 Mar 2018

Total posts 92

I'd like cheaper airfares, but am sure there is a financial and operational model those wanting more flights are ignoring.  

Qatar Airways and other airlines have unlimited opportunity for flights into cities other than Sydney, Melbourne, Brisbane or Perth.  They only want more flights into these four cities, which are already struggling to provide facilities and handle what they already have.  

Who is going to fund the infrastructure?  There doesn't seem to be a lot of price difference between comparable carriers on specific routes, but on other routes there can be a significant variation.  It is more driven by what airlines can get, rather than what is good for the travelling public.  There are low-frills, low-cost airlines, but they only fly to certain cities or via certain cities.  There are not the dramatic differences some might have us believe.  

The airlines who operate hub and spoke models could fly from other Australian cities and carry tourists, but they only want the most profitable cities, which is not about tourism.  If this happens, watch the regional flights to other cities dry up.  If current airlines are not able to cross-subsidize, I doubt they'll continue to fly the low profit routes.

SCM
SCM

28 Sep 2022

Total posts 15

In order to get infrastructure we need demand, in order to get demand we need more flights, in order to get more flights we need open skies....

It's not complicated.

The notion that limits exists on how much airlines should fly to Australia for absolutely no reason at the government level is ridiculous. Let them come, let airports fund expansions, let competition rise. It should be a free market.

Qantas - Qantas Frequent Flyer

03 Jan 2013

Total posts 59

It needs to be a two way street.

15 Mar 2018

Total posts 92

By demand do you mean more cheap fares?  If I was running an airline, I'd be chasing higher revenue passengers, not those chasing cheap seats.  The flights have to be profitable before you can offer more at a low price to win market share.  

It seems many of the airlines with unused landing rights don't want to fly into some cities, because there aren't enough people prepared to pay the fares to make the flights work.  This could result in a situation where major airports can't handle the volume of requests for landing slots, so fares actually go up!

Qantas - Qantas Frequent Flyer

13 Jan 2017

Total posts 73

Erm exactly what is preventing Qatar from almost doubling the seats they bring into the 3 major cities they are complaining about? 

Nothing - just upscale the flights they already scheduled and approved to come here with consequential saving on staffing, landing slots et al. 

Not sure what the end game is by QR but Im pretty certain its not about customers or reducing fares or anything of the like. 

09 Nov 2018

Total posts 8

They appear to mostly/exclusively flying the A380 into Sydney so not much room to upscale....

I would assume their end game is to fly more passengers and make more money..... the byproduct of increasing capacity is it tends to reduce prices provided demand doesn't increase by the same amount.

Qantas - Qantas Frequent Flyer

03 Jan 2013

Total posts 59

The LNP and media is whipping up this anti-Qantas frenzy and linking the narrative to Qatar Airways rejection of extra slots. The two are very, very separate. The UAE collectively isn’t utilising all its existing slots, there’s a good piece in SimpleFlying on this. Linking additional Qatar flights to lower prices is a very long bow. Lower prices comes from competition, lots of people don’t want to fly through the Middle East, Qantas doesn’t and also doesn’t fly to most places Qatar does - Qatar is in it to make money and feed into fellow IAG airlines. There is substantial traffic through Asia, prices to Europe are just as competitive as ever. We have open skies agreements with 9 countries but the biggest market, the US, only sees 3 of their airlines fly here and prices are extortionate demonstrating such agreements are not the panacea to high prices.

09 Nov 2018

Total posts 8

Qatar isn't in the UAE....

Of course Qatar is in it to make money... as is Qantas and every airline. Prices are not as competitive as ever, it currently costs a fortune to fly to Europe.

Qantas - Qantas Frequent Flyer

03 Jan 2013

Total posts 59

You can pick almost any carrier and fly to Europe return in economy for less than $2k, get on any search engine.

QFF

12 Apr 2013

Total posts 1525

OK, we have Open Sky Agreement with Singapore, UK and USA. Why then those directions are most difficult to get award tickets? We have kind of such agreement on our domestic skis and what result? Regional flights cost an arm and a leg while MEL-SYD corridor infested with mosquito fleet that not as economical to fly as say A330/B787,  those B737/A320 pollute more per seat and take all take off/landing slots. Who is the winner? IMHO no one. This zoo must be regulated.


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