Singapore Airlines Not Permanently Barred From Trans-Pacific Route

CANBERRA, Australia (AP) -- The government has not completely rejected Singapore Airlines' bid to compete on the trans-Pacific route between Australia and the United States, Australia's prime minister said Wednesday.

Last week Canberra told Singapore Airlines Ltd. it was not yet time to increase competition on the lucrative route. On Wednesday, Prime Minister John Howard said he had told his Singapore counterpart Lee Hsien Loong that the government was still considering the issue.

The matter needs to be looked at ''in the context of overall aviation policy, including the question of whether Singapore Airlines and (Australian flagship carrier) Qantas were to remain as separate companies for an indefinite period of time,'' Howard said, referring to media reports that the airlines might merge.

Qantas and Singapore Airlines denied this week that a merger was in the works.

''The idea that we have shut the door permanently on some kind of accommodation (on the trans-Pacific route) in relation to Singapore Airlines is not correct,'' he added. ''The issue is certainly not going to be the subject of a decision in the next few weeks, but the whole question has not been finally taken off the table either.''

Qantas, which was once state-owned, currently commands a 75 percent share of the Sydney-Los Angeles route. United Airlines, owned by Illinois-based UAL Corp., has the remainder.

The deliberations include whether Qantas' foreign ownership cap should remain in place, he said.

Federal legislation prevents total foreign ownership in Qantas from exceeding 49 percent, with no single foreign entity allowed to hold more than 25 percent. Foreign airlines as a group are barred from owning more than 35 percent.

British Airways last year sold its 18.25 percent stake in Qantas for about 1.1 billion Australian dollars (US$766 million; euro624 million). The stock was snapped up by several domestic and international investors, including Singapore's state-owned investment company Temasek Holdings.

In addition to its Qantas stake, Temasek owns 56.8 percent of Singapore Airlines.

Qantas has repeatedly called on the government to dismantle the foreign ownership restrictions, arguing that the company is being hindered by outdated regulations and an uneven playing field.

Australia and free trade partner Singapore deepened aviation links in 2003, but stopped short of an open-skies agreement that would have given Singapore Airlines access to the trans-Pacific route.