BA ready to stop flights to Australia

British Airways has warned that it may abandon all flights between the UK and Australia if it is forced to relax ties with its partner Qantas.

The two have a service agreement under which they jointly make 42 flights a week between London, Sydney and Melbourne. But the Australian Competition & Consumer Commission (ACCC) is examining whether this arrange- ment is anti-competitive.

"If the joint service agreement was disallowed, we would have to look at the routes very carefully indeed," said a BA spokesman. "The route is very important to us, especially with the [rugby] World Cup coming up, where we are the official travel partner." But while flights to Australia are popular with backpackers and businessmen, BA makes a very small margin because of heavy fuel and catering costs.

Under their eight-year-old agreement, the two airlines co-ordinate ticket prices and flight schedules. BA also has a 17 per cent stake in Qantas, which on Friday announced plans to carve itself up into three companies.

This is the third time the BA-Qantas agreement has been reviewed by the ACCC, which granted interim authorisation in June and is expected to make a final ruling in the autumn. But it has warned that, "for final authori- sation to be granted, the applicants are required to demon- strate there is a public benefit arising from the arrangement sufficient to outweigh any anti-competitive detriment".

The BA spokesman said: "There are over 20 household names competing on that route." But a number of airlines, such as KLM, Lufthansa and Alitalia, have in recent years given up routes between Europe, Asia and Australia.

BA and Qantas fly to Australia via Singapore and Bangkok. One of their biggest competitors is Virgin, which flies via Kuala Lumpur.