The Wall Street Journal-20080216-Politics - Economics- Australia- U-S- Air Accord Opens Long-Haul Routes

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Politics & Economics: Australia, U.S. Air Accord Opens Long-Haul Routes

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CANBERRA, Australia -- Australia and the U.S. signed an aviation agreement that clears the way for increased competition on one of the world's most lucrative and protected long-haul routes, though in practice the pact isn't likely to have a profound effect on the market.

The deal, announced Friday, will allow all Australian and U.S. airlines to freely select routes, destinations and frequency of flights between the two countries and to other nations.

Australia's Qantas Airways Ltd. and Chicago's UAL Corp.'s United Airlines are the only airlines flying nonstop between Australia and the continental U.S. The agreement will allow Australian carrier Virgin Blue Holdings Ltd. to push ahead with its plans to begin flights to the U.S. by the end of this year.

Virgin Blue, Australia's second-largest airline by revenue behind Qantas, wants to fly to the U.S. West Coast using Boeing 777-300ER aircraft, and would operate the service through its new international arm, V Australia. Virgin Blue Chief Executive Brett Godfrey called the deal a "great outcome" for Australian travelers and said it would usher in a new era of competition for air services between the countries.

Qantas operates 43 flights a week between Australia and Los Angeles, San Francisco and New York, while its budget offshoot, Jetstar, flies five times weekly to Honolulu.

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Bruce Stanley in Hong Kong contributed to this article.