The Change Mariner

Virgin Atlantic wins approval to fly 'kangaroo route'

ABC:
MARK COLVIN: The stranglehold that Qantas enjoys on the so called 'Kangaroo route' between Australia and London faces a new challenge tonight, after Sir Richard Branson's international airline, Virgin Atlantic, won approval to fly into Sydney.

An agreement between aviation authorities in Britain and Hong Kong allows Virgin Atlantic to begin flights from Hong Kong to Sydney. The airline already offers a number of services between Hong Kong and London. The deal saw Qantas' share price fall by as much as four per cent as investors faced the prospect of greater competition on the Kangaroo route.

Michael Rowland reports.

MICHAEL ROWLAND: Sir Richard Branson has been talking about flying Virgin Atlantic jets into Australia for so long, that a lot of aviation analysts were starting to think it may never happen. So the deal reached overnight between Hong Kong and Britain took more than a few by surprise.

One of those reading the news release twice was Peter Harbison, the Managing Director of the Centre for Asia Pacific Aviation.

PETER HARBISON: First reflex is somewhat surprised. I didn't think that this would go through at this stage.

MICHAEL ROWLAND: The deal went through only after the British government allowed Hong Kong's Cathay Pacific airline to fly from London to New York.

Mr Harbison says Virgin Atlantic will undoubtedly benefit from the agreement, most particularly on that first hop of the kangaroo route, between Sydney and Hong Kong.

PETER HARBISON: In terms of direct impact, the greatest effect will be on the Hong Kong-Sydney route which is currently basically the preserve of Qantas and Cathay Pacific.

Adding Virgin Atlantic onto that route is going to create some additional capacity of course, which will dilute the power of the existing carriers and also create a bit of high level competition at the premium end of the market.

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