Australia, U.S. to start open-skies pact talks

CANBERRA Tue Jan 1, 2008 8:00pm EST

CANBERRA Jan 2 (Reuters) - Australia and the United States will start talks on an open-skies aviation deal within the next six weeks to open up the lucrative trans-Pacific route between the two countries, Australia's government said on Wednesday.

Transport Minister Anthony Albanese gave approval for formal talks to start in Washington next month, in a move which could see more U.S. carriers fly to Australia via ports in Asia, such as Tokyo.

A spokesman for Albanese said the meetings would be held between Feb. 12-14.

A deal could clear the way for Australian airline Virgin Blue Holdings Ltd VBA.AX VBA.AX to begin flights to the United States on its carrier V Australia by the end of this year, edging open one of the world's most lucrative and protected long-haul routes.

Under the current aviation treaty between Australia and the United States, airlines based in either country can only launch four weekly flights on the route in the first year.

V Australia, which is 62 percent owned by Toll Holdings Ltd (TOL.AX), has asked for 10 weekly flights, having already placed an order for six long-range Boeing 777-300ERs with options to buy another six of the jets.

Australia's former conservative government rejected repeated requests from Singapore Airlines (SIAL.SI) for permission to fly from Australia to the United States, protecting flag carrier Qantas Airways Ltd (QAN.AX) from more competition on the route.

The new centre-left Labor government, elected in November, has not yet said if it supports the entry of Singapore Airlines on the route. Singapore wants access to new markets to help offset competition from low-cost carriers in Asia.

United Airlines is currently the only competitor to Qantas in non-stop flights to the U.S. It runs 14 flights a week to Australia. Qantas operates 48 flights a week and reportedly generates as much as 20 percent of its profits from the route.

A 2006 report for Singapore Airlines said Qantas charged 38 percent more for flights from Sydney to Los Angeles than on the more competitive "kangaroo route" from Sydney to London.

Singapore Airlines estimates that opening the Pacific route to more competition could increase the number of travellers between the United States and Australia by up to 8 percent. (Reporting by Rob Taylor; Editing by James Thornhill)

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