One could argue that in a completely free market economy that promotes capitalism and competition, it would be irresponsible not to lift cabotage restrictions.
Level playing fields are great if only they are that... level. And when comparing international economics, they're not. Just ask the Japanese rice farmers who protested the import of foreign rice into their country a couple of years ago.
If the government lifted cabotage to encourage
particular markets then that may work. For example:
- Regional markets - tough ask here, as many airlines fly into this country with aircraft far too large for many regional destinations. Then, you actually have to think whether it is suitable even from the get-go.
Just because they fly large aircraft on International routes doesn't mean they would use these same aircraft on domestic routes if they specifically set themselves up as a domestic carrier. Of course I'm sure they would use aircraft more suitable to the appropriate market. For example, VA doesn't (or rarely does) use 777s on domestic routes.
- Much more point-to-point, especially from non-major hubs, e.g. BNE, OOL, CBR, HBA. Possibly to connect to major hubs or from major hubs, regional markets and Trans-Tasman point-to-point. For example, finally get something like CBR/WLG or CBR/AKL happening, or EK operating something like HBA/MEL/DXB, or CHC/HBA/PER/DXB, with carriage possible between all points.
Cabotage (ninth-freedom right) doesn't govern these movements specifically: it's Eighth-freedom rights which provide the ability for carriers to fly domestically within a country, but only if they are continuing on to a foreign country. CX does this with CX102/103 as a triangulation between HKG-CNS-BNE-HKG and vice versa. However, they can only carrier international pax on the CNS-BNE segment, not domestic pax, as JQ and QF are allowed (e.g. JQ35).
Fifth freedom covers the routes EK does on the Trans-tasman and then onto DXB etc. So there are already provisions for these. If EK wanted to operate on Trans-tasman flights in its own right, and not as part of an international connection, they would need seventh-freedom rights.
In the last half-decade, the government specifically offered to foreign carriers to take up their eight-freedom rights by offering better access into first-tier international Airports (BNE/MEL/SYD) if they connected through second-tier airports (such as CNS). Not much happened, although CZ is soon to start up a route to CNS which will be similar to CX's triangulation, CAN-BNE-CNS-CAN. Of course, under eighth-freedom rights, they can't carry domestic pax on the BNE-CNS leg.
Freedoms of the air - Wikipedia, the free encyclopedia
Cabotage (ninth-freedom) is specifically allowing a foreign airline to act in a country as a foreign-owned and operated company as a domestic carrier, completely separate from any international operations it may or may not undertake. It's a whole different ball-game.
Of course, if I was a foreign airline and allowed to operate domestically within another country in my own right, I'd do everything I could to make sure I'm connecting domestic pax to my international services too! So of course many of their domestic services would align with their international services, just as QF and VA do already.
I don't see regional markets benefitting highly from lifting cabotage restrictions unless such markets are improved to cater as such. Let's not forget that many regional destinations are somewhat protected by government tenders on who can operate such routes, and there are also subsidies.
There's a reason they are protected and subsidised, and that is mainly as the cost of providing the service is potentially far greater than the value the market is willing to pay for that service, or would otherwise incur a social disadvantage to the communities requiring those services. E.g. I can get from CNS to ABM (Bamaga) on Skytrans for $189 one-way, but that's probably only because it's subsidised by the government.
Perhaps rather a foreign airline could see an opportunity and improve services on regional and rural markets.. you know, the "build it and they will come" approach.
The golden triangle - how many more flights can you stuff into that? SYD is a basket case for traffic without even thinking about adding more traffic on SYD/MEL or SYD/BNE.
However, picking up your original comment about free market, I guess a free market would not restrict the market size and would allow the market to determine the number of services required. If that means EK or SQ running more 737s between SYD/MEL for $20 a seat or $120 in business because it fits their economics, then so be it...?
Overall, are cabotage restrictions really impeding any international airline from putting in a case to operate domestic or Trans-Tasman routes right now? Or they (the international airlines) just don't want to do it?
Yes cabotage does restrict international airlines operating domestically. Let's not confuse cabotage with other freedom rights.
