Middle Eastern airlines ready to swoop on Qantas

Etihad, the young Middle Eastern airline run by Australian aviation veteran James Hogan, says it has every intention of snapping up routes dropped by Qantas in its upcoming restructure.

The troubled Australian flag carrier is on the cusp of revealing the details of a major restructure of its international operations in just nine days.

CEO Alan Joyce has softened the ground for major changes, with repeated warnings that Qantas International, in its current form, is losing $200 million per year, sapping the airline's profitable domestic business.

It is widely expected that Qantas will announce a new subsidiary based in Hong Kong or Singapore that will aim to capture the newly affluent Chinese middle class' rapidly expanding appetite for travel.

Joyce also says it is time to recognise that Asia is now a key destination for Australian travellers, rather than just a traditional halfway point to Europe.

However, Qantas' competitors are salivating at the opportunities that will be opened when Qantas casts off some of its less profitable routes.

"If they [Qantas] do dilute or marginalise their international flying that's a great opportunity for us ... and we're happy to fill the gap," Etihad's Hogan told The Age newspaper's Andrew Heasley.

"The Gulf airlines and the Asian carriers out of Australia will have a stronger consumer offering - whether it's leisure or corporate," he said.

Etihad is only seven years old, but it, along with the giant Emirates and vigorous competitor Qatar Airways, have made a significant dent in the number of passengers flying with Qantas internationally.

Qatar recently won the title of "World's Best Airline" in the most recent Skytrax survey, with Qantas slipping to eighth place.

In February, Alan Joyce accused Middle Eastern and Asian carriers of flooding the Australian market with cheap flights, in what was widely seen as a signal to the federal government that he wanted more government protection due to the significantly higher operating costs Qantas endures.

"Qantas International market share has dropped from 35% to 20%," he said, pointing out that 39% more seats from international carriers were marketed to Australians, despite only a 10% growth in actual passenger traffic.

Etihad's increased international route map could benefit Qantas' key domestic competitor, Virgin Australia, too, as it expands its efforts to sell itineraries with domestic and Etihad's international flights under Virgin Australia codes.

danwarne