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UK/AUSTRALIA AIR SERVICES
1 The Australian Government has recently completed a review of its international aviation policy. In March Australian officials told a team of UK officials in Canberra that they were considering a number of options and would consult them when their ideas were clearer. At talks in London from 12 to 23 June they presented a scheme for radical revision of the air services arrangements between Australia and all countries with services to Australia. These had been approved as a basis for negotiation by Australian Ministers.
2 The main objectives of the Australian scheme are lower fares and a continuation of on-demand scheduled services which would serve all the main cities of Australia. They would be achieved through restriction of all air services to and from Australia to the carrying of end-to-end traffic only (third and fourth freedom) on single coupon tickets and by a strict control of capacity. Although the Australians propose to negotiate this scheme with all their air services partners, the trunk route to the UK is crucial. The main effect here would be to restrict through traffic to BA and Qantas. Airlines of countries lying along the route at present carry around a quarter of the traffic all the way from Australia to the UK and vice versa by linking services to and from the UK and from and to Australia at their home base. Under the new scheme end to end travel at through fares would only be possible on BA and Qantas. Passengers wishing to travel via an intermediate point on other airlines could do so but not on the through flights and only by purchasing separate tickets at the appropriate sector fares. Only by thus cutting out the intermediate airlines could BA and Qantas obtain sufficient traffic to allow them to keep fares down and still maintain an adequate frequency of service to meet the on demand need at all the main Australian cities and at the same time make a profit. Australians explained the great domestic political importance attached by their Ministers to a cheap fare policy particularly to meet the needs of the VFR (visiting friends and relations) traffic which tends to come mostly from the middle and lower income groups. (70% of the traffic on the UK/Australia route originates in Australia and a vastly higher proportion of Australians want to visit the UK than vice versa.)
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The Australians explained why they had rejected the other low fare options:
(i) the introduction of the new single coupon cheap end to end fare now proposed without disturbing other aspects of their air services arrangements. This had been rejected on the grounds that, unless the present 6th freedom operators' capacity was reduced, neither BA nor Qantas would secure a
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