25th July 2006

Austrian Airlines Out Of Australia

After almost twenty years of serving Sydney, the Vienna-based carrier decided to close the route by March 2007. At the same time, its other Australian destination, Melbourne, will also be axed in an effort to slash costs and return to profitability.

Sydney and Melbourne have always been prestige destination for Austrian Airlines. But financially, they were more and more difficult. Despite the fact that the airline recorded good load factors, the yield, the paid fare, is just not covering the costs of the operations anymore. Austrian was filling its planes by offering really competitively priced tickets, quite often the lowest in the market. This mad the airline popular among travellers, but it didn't help at Austrian's bottom line.

The two Australian service will be discontinued by the end of March 2007. Austrian's offices in Sydney and Melbourne will most probably be closed too as they won't be needed anymore.

And the cut goes deeper. The Syndey flight made a stop in Kuala Lumpur, while the one to Melbourne stopped in Singapore for new fuel. This two destinations will also lose their service by Austrian Airlines.

An Austrian Airlines Boeing 777 in Sydney. Soon a view of history.

Austrian Airlines' decision marks an end to an air link that has been running for quite some time. Lauda Air, founded by Formula One star Niki Lauda, started flying from Vienna to Sydney in 1988. In October 1991, Melbourne was added as the second destination in Australia. The flights were first operated by Boeing 767s and have since been upgraded to larger Boeing 777-200 aircraft, equipped with almost 350 seats. When Austrian Airlines acquired Lauda Air, it also took control of the Australian routes and integrated them into their operations.

But this combination of two companies proved to be difficult. Changing the brand has probably been the easiest step. The two airlines had totally different cultures, and different wage levels. Lauda's pilots eventually received a pay increase to bring them to the same level as their Austrian Airlines' colleagues.

While Austrian Airlines particularly blames the soaring oil prices for its decision to leave Australia, the increase in wage costs have certainly not helped either.

Keeping costs on a low basis is a crucial point, specifically on the kangaroo route from Europe to Australia. Competition has drastically increased over the past years, especially with the arrival of Emirates Airlines. Based in the United Arab Emirates, the carrier has opened a number of flights to Sydney, Melbourne, Brisbane and Perth. Using its hub in Dubai, Emirates offers connections to most major European cities.

This has certainly put a lot of pressure on the existing carriers. But even before Emirates entered Australia, Asian carriers have been competing with European and Australian competitors. This has let to less direct connections to Europe. Qantas as an example, is only serving London and Frankfurt these days. Destinations such as Rome, Athens and others have been closed. Other destinations are offered on code-share flights by partner airlines.

Code-sharing is also a solution for European carriers. Airlines such as Lufthansa, Air France and KLM among others have stoped flying to Australia. Their passengers are now transferred through the big hubs in Asia. Austrian Airlines will soon join this list, thus leaving British Airways and Virgin Atlantic as the only European carriers to operate direct flights to Australia.

Michael Meier

Photo: Michael Meier

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