Europe-Australia market changed forever as sixth freedom carriers gain scale and drop prices

The once prestigious Europe-Australia market continues to lose financial allure for traditional incumbents like British Airways and Qantas, as sixth freedom carriers, leveraging efficiencies and wider networks, take a wider share. China Southern is the most recent entrant, and its move to a daily offering to London Heathrow is being accompanied by AUD5000 return fares in business class, a historical low compared to more common recent prices between AUD6000 and AUD7000 (with these already below longer term pricing). This, for services of around 23 hours travel in each direction.

For now, the pressure comes most strongly via the Gulf, with its array of one-stop services to almost anywhere. But as the Chinese airlines (and other North Asian long-haul operators) adapt to the opportunities in Australia-Europe travel, the competitive balance will continue to swing.

The current pressures are forcing British Airways and Virgin Atlantic, along with even Qantas, to slash business fares as the quiet season approaches.