Australia may be weighing the possibly unprecedented step of allowing foreign airlines to offer domestic flights, but it isn't clear the skies down under are particularly attractive to outside carriers.
"Virgin Australia and Qantas are already barely making profits. If you introduce competition, it would bring fares down further," K Ajith, an analyst at UOB KayHian, said. "Why would foreign carriers operate routes when domestic ones see little economic benefit in doing so?"
The plan under consideration, which was reported in the Wall Street Journal, wouldn't give foreign airlines carte blanche to operate in the country. Instead, the government would be targeting domestic routes in Australia's north, including smaller tourist destinations such as Cairns and Broome, while excluding the busier, more attractive routes from Sydney, Melbourne, Brisbane and Perth.
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Both Qantas and Virgin Australia returned to profit in their most recent earnings releases this year, with their domestic businesses getting a boost after the two essentially called off their capacity and price war.
Any new entrants might be fighting over a stagnant pie. Last year, around 60 million passengers flew on Australia's domestic commercial flights, nearly unchanged from 2013, and load factors actually fell slightly.