Travellers plying the Kangaroo Route between Australia and Europe have discovered the cheapest path goes through Guangzhou.
China Southern Airlines is undercutting Qantas Airways by as much as 34 per cent on the cost of Sydney-to-London tickets and from April 1 will operate more flights to Europe than the Australian carrier. The Guangzhou-based airline said it is ready to sacrifice profitability as it lures traffic from Singapore and Hong Kong.
China's three biggest carriers, including Air China and China Eastern Airlines, have tripled flights from Oceania to Europe over the past five years, while upgrading services. The route will provide experience needed for further expansion into North America and Europe as annual spending by Chinese tourists exceeds US$100 billion. Qantas is fighting back with discounted fares to Asia.
"The sheer volumes of travellers mean that eventually China can be the most powerful transit country in the region, probably the world," said Peter Harbison, executive chairman of CAPA Centre for Aviation. "They will be able to price very, very competitively."
The shift is squeezing carriers on the route, which started in 1935 with a 12-1/2-day trip between London and Brisbane. Stopovers once included Brisbane, Darwin, Singapore, Bangkok, Calcutta, Karachi, Cairo, Rome and Frankfurt, according to the website Aussieairliners.org, giving rise to the trademarked Kangaroo Route nickname.
Revenue passenger kilometres, a measure of traffic, has declined for 10 months at Qantas and five at Cathay Pacific Airways on reduced capacity between Europe and Oceania, according to data.
Cathay and Singapore Airlines stand to lose from the Chinese carriers' growth, said K Ajith, an aviation analyst at UOB Kay Hian.
Transit passengers make up about 30 per cent of traffic at Singapore's Changi Airport, said spokesman Ivan Tan.
China Southern's cheapest economy-class fare between Sydney and London for a two-week trip starting May 4 was A$1,442 (HK$11,500) on travel booking website webjet.com.au yesterday.
The lowest price for a non-Chinese airline, on Malaysian Airline System, was 19 per cent more expensive at A$1,721. Emirates tickets started at A$1,896 while Singapore Air's was at A$1,940.
The cheapest Qantas ticket was 51 per cent more than China Southern, at A$2,180.
Air China and China Eastern put an inch more leg room than Qantas in economy class while China Southern leased one of Sydney Airport's most expensive billboards for three years and put massage chairs in first-class cabins.