Qantas warns intense competition on “kangaroo route” is lowering fares

qantasSYDNEY: Airfares on international routes have fallen below the levels they were at 12 months ago due to stiffer competition, Qantas said on Friday, pointing to particular challenges on the hotly contested “kangaroo route” between Australia and London.

Chief Executive Alan Joyce said more than 30 airlines offered the Australia-London route and that airfares were extremely low.

“I have to say London is a challenge,” he told a shareholders meeting, although he declined to directly answer a question on whether the route, which Qantas operates in a joint venture with Emirates, was profitable.

Key rivals on the route include Singapore Airlines , Cathay Pacific and Etihad Airways. All flights from Australia to London require at least one stop, making it attractive for carriers with hubs in Asia and the Middle East.

Joyce said Qantas was examining whether to launch a non-stop flight between Perth and London with Boeing 787-9 aircraft due to be delivered from 2017 to gain a competitive advantage.

“If we can make it work out of Perth, that is a way of having a very good operation into London,” he said.

Qantas would examine non-stop flights from Sydney and Melbourne to London in the future if advances in aircraft technology made the long distance flights economically viable, he added.

Regional rivals like Cathay Pacific and Air New Zealand have warned they face profit declines as competition rises on international routes.