Qantas savages Virgin’s Tokyo airport slot bid

Qantas has savaged Virgin Australia’s bid for one of two daily slots at Tokyo’s Haneda Airport, suggesting it’s a risky option.

Aircraft being prepared for takeoff in Tokyo Haneda International Airport. Picture: Istock

Qantas has savaged Virgin Australia’s bid for one of two daily slots at Tokyo’s Haneda Airport, suggesting the smaller airline is a risky option because of its poor financial position.

The International Air Services Commission is considering applications for the new slots which will become available from March 29, ahead of the 2020 Tokyo Olympics.

Qantas applied for both slots for additional services between Melbourne, Sydney and Haneda, while Virgin Australia sought one for a new Brisbane-Haneda route.

It would be the airline’s first foray into Japan whereas Qantas has operated flights into the country for 70-years.

Submissions made to the IASC by Tourism Australia, Brisbane Airport Corporation and the Australian Competition and Consumer Commission backed Virgin’s bid.

In the case of the ACCC, the watchdog said giving one slot each to Qantas and Virgin Australia would promote competition on the route and deliver “a better outcome for consumers”.

“Virgin Australia is more likely to compete vigorously for passengers on its own flights than under a code share arrangement with a foreign carrier,” ACCC adjudication manager David Jones said.

Tourism Australia managing director Phillipa Harrison said giving one of the slots to Virgin would allow a fourth airline to enter the Japan route.

“Japan is the fifth largest tourism market for Australia, bringing 450,000 visitors to Australia each year, who spend approximately $2bn,” Ms Harrison said.

“Virgin Australia’s proposal has the potential to increase dispersal of Japanese visitors within Australia between the eastern and western seaboards.”

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But the Qantas submission by group executive Andrew Parker argued the Flying Kangaroo was the only “no risk” option to launch and use scarce and strategically valuable slots to and from Haneda Airport.

Located 24km from the Tokyo CBD, Haneda is a much more desirable port for airlines and passengers, than the larger Narita Airport more than 70km away.

Mr Parker said Virgin Australia’s ability to use the capacity on an “ongoing and sustainable basis” was a critical consideration for the IASC that had not been adequately addressed in the airline’s application.

“Since the reporting of Virgin Australia’s $75.6m loss in 2019, initiatives to strengthen Virgin Australia’s financial performance have been announced including a fleet, capacity and network review,” Mr Parker wrote.

“The network review includes ‘assessing potential market withdrawals on certain markets deemed uneconomic’ and is relevant context for the IASC when considering the use of capacity.”

He said in Qantas’s case, the airline had proven its ongoing commitment to the Japan route during periods of growth, as well as declining demand.

“Allocation of two frequencies per day to Qantas, as requested, will deliver the greatest benefit to the public,” said Mr Parker.

“Qantas’s plans to expand services to and from Haneda Airport will deliver operational certainty and more capacity, compared to the proposal outlined by Virgin Australia.”

The IASC is expected to make its decision on the slots by the end of the month.