Historically if you wanted to fly between the U.S. and Brisbane, Australia non-stop Qantas had you covered with a Los Angeles flight. The aircraft from that route even used to operate a continuing flight between LA and New York. (Virgin Australia, back when it flew long haul services, operated Los Angeles – Brisbane as well. Now Virgin’s U.S. partner, United, operates that route seasonally.)
There’s been a tremendous increase in interest in Brisbane, a major Australian city near the Gold Coast. About a year and a half ago, United Airlines launched a non-stop from San Francisco – and then in the past two weeks we got announcements of new Brisbane service from both American Airlines (Dallas) and Delta (Los Angeles). That will mean a huge increase in seats between the U.S. and Brisbane. Competition is going to get bloody. How can this make sense?
It turns out that these flights are all government-subsidized. It may only be the state of Queensland, Australia that gets bloodied!
The Fund now supports three direct US connections with mainland US carriers to Brisbane including:
- United Airlines from San Francisco, operating since October 2022, supporting 227,000 inbound seats and $151 million in visitor expenditure over three years.
- American Airlines from Dallas Fort Worth, starting October 2024, supporting 140,000 inbound seats and $113 million in visitor expenditure over three years.
- Delta Air Lines from Los Angeles, starting December 2024, supporting 271,000 inbound seats and $208 million in visitor expenditure over three years.
Total seats between the USA and Brisbane in 2024 will be 178,000 seats, rising to 247 000 in 2025.
American Airlines promised their joint venture with Qantas would mean new routes between the U.S. and Australia. They didn’t say the Queensland, Australia government would be paying for it! The new service will be operated with the airline’s new business class suites Boeing 787-9. With fewer seats it can fly farther.
Credit: American Airlines
Many commenters have suggested that the Brisbane market is unlikely to be able support such a premium aircraft, and that the route can’t last. The commentary now seems wrong – at least for three years while it’s being government-subsidized.
Qantas had announced plans to fly San Francisco and Chicago to Brisbane but that didn’t happen due to the pandemic (and Boeing production delays). The massive ramp up in subsidized Brisbane capacity by U.S. airlines probably means there’s no room in the market for these flights any longer.
It’s unclear whether government subsidies are simply going to U.S. airlines instead of an Australian one, or whether these subsidies are effectively blocking flights that may have occurred without them. Indeed, Qantas is no longer even the largest airline between the U.S. and Australia!
(HT: Enilria)
What’s the budget situation like for the state subsidizing the route? Can this “bribe” to airlines generate enough extra taxes from visitors to ever have this make financial sense without encumbering the local taxpayers with unnecessary debt?
The Delta and American flights are being subsidized at over AU$750 per inbound seat. AU$3,000 roundtrip for a family of four! That average family of 4 isn’t going to be spending over 25 grand in Queensland?
And while this much capacity should hold down fares, it’s not clear how many incremental passengers will really come considering the flights may be crowding out previously-announced Qantas service.
I just flew United to Brisbane from SLC through LAX and returning through SFO. The flight there wAs fairly full but the return flight was so empty, everyone had their own row in the mail cabin. That nearly 14 hour flight over the water was pretty nice to lay down and sleep. We bought it with miles.
Thanks for providing the subsidy information, Gary.
it is notable that DL’s subsidies appear to be larger than what AA or UA get based on the number of seats and the estimated economic impact. It would be interesting to know the criteria that DL satisfied to get a higher subsidy. Perhaps it is precisely because the A350-900 is larger than the 787-9. The available subsidy to DL is for daily service which they have not scheduled so far.
The Queensland subsidy fund also notes that the A350-900 can carry 20 tonnes of cargo to the US, undoubtedly more than the 787-9 and certainly more than QF’s A330s.
and, it isn’t the first time that a government has subsidized foreign carriers more than its own national airlines. It is precisely because QF gutted its fleet during the pandemic that US carriers
The US-Brisbane market went from 1 operator (QF flying BNE-LAX, + previously HA flying HNL-BNE) to being way over-served. Subsidies are helpful, but eventually they go away and it feels as though the market just isn’t there for all these flights, and eventually, someone (or two) will drop out. AA has the advantage of a massive DFW hub, and the JV with QF. UA has two well serviced West Coast US hubs, plus Virgin Australia on the other end. Delta has no Aussie partner, other than Rex, which is a fairly small carrier. In the end, it would not be unreasonable to see QF remain on BNE-LAX (they’ve been on it for years), plus UA seasonally flying SFO-BNE, and that’s probably it.
Not gonna lie- Australia is an unexplored continent and I am wide open on where to go. Sounds like fares could be dropping sharply after the new year to all of Australia and I am here for it.
shoeguy,
any objective reading of the facts of the case, rather than regurgitating generic information, would show that Delta will be the biggest winner and Qantas will be the biggest loser, followed by United
1. Delta’s subsidies are larger than any other airline and last longer. UA’s subsidy ends 2 years before AA and DL’s which means that UA will have to be competing w/ subsidized carriers to BNE just as QF is doing now and which will increase.
2. AA and JV might share benefits from the DFW route but they also have to share the loss of revenue on the QF route since DL’s LAX-BNE route, a direct competitor to QF, will now be subsidized.
3. The AA DFW route is the longest of the 3 and the most expensive to operate, meaning the subsidies will cover a smaller percentage of costs. DFW is meant to supplement LAX; if LAX is weakened, DFW has less value.
@Tim Dunn,
Yes, of course, how could we forget that Delta is a premium carrier, more premium than Starlux, Singapore Airlines, and Qatar Q-Suites combined, with the best minds in the business running it, combined with your modest advocacy, help to keep it climbing.
@ Gary Leff
These clowns (as you rudely refer to the QLD GOV in your post on the HT website) can obviously do better maths than your good self.
You claim – “The Delta and American flights are being subsidized at over AU$750 per inbound seat.”
If 411,000 inbound seats are being subsidised (DL 271,000 plus AA 140,000) at your claimed AUD750 per inbound seat, the total subsidy would be 441,000 times 750, which equals AUD308.25 million.
But the total funding pool is AUD200 million and that is spread over at least 29 recipients (and we don’t know how much has been allocated and how much unspent).
From your article – “They didn’t say the Queensland, Australia government would be paying for it!”
You might want to adjust your math before making strident comments.
Oh, and, the subsidy is jointly funded by private enterprise and state government, not solely state government. A few minutes research (not your thing, I know, because lazy and interested in sensationalist commentary) would have revealed the 50/50 split.
As for the economic merits of the subsidy, try mentioning freight and promotion of Australian exports, the student / education industry, not just inbound tourism.
For example, one of the former subsidised recipients was SQ for a freight only route from SIN to CNS using an A350 vital for exporters in FNQ. Another will be the SQ A350-900 starting 31 March replacing the current 737MAX service CNS-SIN, again, a significant investment in building local trade and tourism.
Redo the math, Gary, and then look at the bigger picture ROI.
A spectacular fail for a CFO.
@ Tim Dunn
“Thanks for providing the subsidy information, Gary.”
Except he got it profoundly wrong in his comment above! He also failed to inform his readers that the aviation funding has been allocated to 29 or so other cases (although apparently aware of that given his comment on at the HT blog) or that it is a jointly funded by state government and private enterprise.
“it is notable that DL’s subsidies appear to be larger than what AA or UA get based on the number of seats and the estimated economic impact.”
We need to know the actual subsidy amounts for each recipient rather than making presumptions. If you have that info, please share it.
“The Queensland subsidy fund also notes that the A350-900 can carry 20 tonnes of cargo to the US, undoubtedly more than the 787-9 and certainly more than QF’s A330s.”
Yes – Gary ignores the importance of the freight in is article / comments.
Before COVID, Qatar flew Doha-Aukland non-stop with the 777-200LR. Despite being a double red-eye to AKL, Q-Suites made it a piece of cake. After COVID they dropped the non-stop and used a non-200LR 777 with a technical intermediate stop in Brisbane. This was irritating, because we had to go through security again, and had to sit in the gate area to wait to board again, with no-lounge access. This made the trip much longer and unpleasant compared to the non-stop. Whether the Brisbane stop was due to subsidies, or just more economical than using the gas guzzling 200LR, I don’t know.
Now I see they have gone back to non-stop using a 350-1000 on the route.
https://simpleflying.com/qatar-airways-restarts-flights-auckland-airbus-a350-1000/
@platy – Yes, I focused on the subsidies for U.S. airlines and not on the subsidies to other carriers which are just as profoundly stupid – like subsidizing multiple airlines on the same route, and subsidizing Qatar Airways even!
How sustainable are the subsidies? And should future generations of Brisbane taxpayers be burdened so that foreign visitors and local baby boomers can get cheaper flights to and from before they themselves kick the can?
@ GUWonder
“How sustainable are the subsidies? And should future generations of Brisbane taxpayers be burdened so that foreign visitors and local baby boomers can get cheaper flights to and from before they themselves kick the can?”
It’s of benefit to QLD taxpayers, not just Brisbane.
According to the relevant QLD GOV website sustainability is one of the factors considered in the allocation process.
The subsidy is temporary, not ongoing.
Gary’s math is way out (see my other posts). A more realistic analysis paints a very different picture to Gary’s histrionic and unfounded claims.
The cost-benefit takes into account more the just inbound tourism – crucially, also freight, stimulation of exports, marketing outreach, etc.
Basically, the above article is just another Gary Leff brain fart attempting to sensationalise stuff Australian that he knows sweet FA about. As ever, Gary is a fake.
@ Gary
To note that a commentator over at OMAAT is claiming to have access to the confidential data and is trashing your claims of AUD750 per inbound seat (and deliciously sending @ Tim Dunn into a tail spin in the process who is currently claiming he honest have the idea to argue with but argues with his presumption of the data anyway).
You gotta love the hubris and arrogance of some US-centric travel bloggers.
A bunch of clowns.
@platy – the Queensland government’s press release shows the amount of subsidy and number of seats, it’s their math not mine. If confidential data shows that the Queensland government is lying then that would be interesting, too!
Gary, it seems quite clear you have miscalculated this. The Queensland Government’s $200 million Attracting Aviation Investment Fund is a total of $200M – not $200M for these flights alone. The government’s economic modelling suggests that Delta’s flights (not the total program) will bring $208 million into the economy and American’s will bring in $113M. There is nothing in the government’s press release stating the specific amount allocated to Delta so I think you misread it.
@ Andy
And Gary also refuses to recognise that 50% of that funding is from the private sector. Basically, he has NFI. But his sensationalist approach will attract a certain readership irregardless of the lack of any evidence to support his wild accusations.
Sadly, even @ Tim Dunn fell for it in his desperation to keynote DL here and on OMAAT. So sad.
As you would understand, opening up airline routes is a lifeline for those of us in regional FNQ. All that means to Gary is a points based stay at the Sheraton in Port Douglas. WTF. He has NFI about the local community.
Reach out and I’d introduce him to the locals. Nah. Cue the arrogance to make ill founded claims about state government policy (e.g. ignoring that half the fund is financed by the private sector an his math is utterly bogus) and totally disregarding that there a highly beneficial impact on our local community sitting smugly in Austin.
This is the guy who claimed that boarding hadn’t started on time on his SYD-CNS VA flight. Clue, it had. Disabled people had priority. Disgusting.
This is the guy who could have reached out and been introduced to a selection of locals from tradies, to teachers, to disability care workers, to lawyers, barristers, even high court judges and the state premier, but is more concerned about reviewing a buffet breakfast in a local Marriott property.
That’s why I call Gary Leff out as a utter fake.
A revolution is coming to the frequent flyer landscape, sadly, Gary will be left behind.
Complete non-sequitur @platy about where the Queensland government is sourcing the funds for these route subsidies, point is ‘why are U.S. airlines suddenly flying to Brisbane’ the volume of these new flights is not sustainable, there are bizarre subsidies also to.. Qatar.. and duplicative subsidies, multiple airlines flying the same route.
@ Gary Leff says:
“Complete non-sequitur @platy about where the Queensland government is sourcing the funds for these route subsidies, ”
Non sequitur?! You math is quite simply wrong. Because your math is wrong, the claims you make are wrong. Your arrogance is so pervasive that you cannot accept error.
You are selectively censoring my comments to protect your invalidated position. You have no interest in an evidence based approach.
Even if you don’t publish them I know you are reading my comments.
You are so scared of being called out that you hide behind veil of censorship, ironically, having let t=some of most vile sexist and discriminatory commentary run rife on your blog.
So from me to you, Gary Leff, you are a fake. A sad, pathetic fake. The frequent flyer community deserves better.
I’m keeping copies. One day you will be totally exposed as a fake.
@platy – I am not ‘selectively censoring you’ though I don’t bother to read most of your comments, I am sick and tired of your childish insults.