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Singapore Airlines LA route bid likely to be rejected

21-Feb-2006

SYDNEY (XFNews) - The Australian government is set to reject Singapore Airlines' bid to fly between Australia and the United States, ending a 10-year campaign to operate the lucrative route, reports said.

The decision will be announced after the Australian cabinet signs off on a new aviation agenda tomorrow after more than a year of debate, The Australian and Sydney Morning Herald newspapers reported.

The Australian said the cabinet was poised to announce that the Sydney-LA route would be off limits to Singapore Airlines for at least two years, possibly longer.

Prime Minister John Howard, who has suggested that national carrier Qantas and Singapore Airlines could eventually merge to form a giant trans-Asian airline, refused to speculate on the reports.

"We will be considering this issue and when the government has taken a decision that decision will be announced," he said, according to Agence France-Presse.

"I'm not going to speculate about what cabinet might decide."

In Singapore the chief executive officer of Singapore Airlines said he hoped that "fair mindedness and openness" will prevail.

"We don't give up on what we believe are fair principles of reciprocal access," Chew Choon Seng said on the sidelines of an industry summit.

Qantas's stranglehold on the trans-Pacific route accounts for as much as 20 pct of its profits and there are fears that increased foreign competition on the route could lead to huge job losses.

Senior ministers said that thousands of jobs could be lost if the route, currently only serviced by Qantas and US airline United Airlines, was opened up, The Australian reported.

Qantas has argued that it would be unfairly disadvantaged if state-backed airlines such as Singapore Airlines were allowed to fly the Sydney-LA route.

Singapore Airlines has called for the route to be opened up to competition, saying it would lead to increased tourism to Australia.

The Australian said that Qantas, which is battling rising fuel and operating expenses, was also likely to lose its campaign to end the 49 pct foreign ownership cap on the airline.

The airline's bid for preferential tax treatment on aircraft purchases has also failed, it added.

Last week Qantas blamed soaring fuel costs and redundancy pay-outs for a 10 pct fall in first half net profit.

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