Air China will cease flying to Melbourne and Sydney, Australia, from Shanghai in March because of strong competition and low prices, an industry source close to the company said.

The carrier is no longer selling tickets for the services for flights after March 31, according to the source. The 3X-weekly Airbus A330 services also carries Air New Zealand's code.

An Air China spokesperson was unable to be reached.

According to the source, Air China managers have decided that long-haul capacity used by Australian routes can be profitably switched to European and North America services. The basic problem is excess capacity to Australia from China. 

Air China has been losing money on the Shanghai and Australia flights, according to the source, because of direct competition from Shanghai-based China Eastern Airlines that flies twice a day to both Melbourne and Sydney. Also, Qantas has a daily Sydney-Shanghai service. 

Hong Kong’s Cathay Pacific Airways and China Southern Airlines in Guangzhou and Shenzhen offer competitive one-stop Australian connections from Shanghai with little diversion from the straight-line route. Airlines throughout Southeast Asia also can sell one-stop flights to Melbourne and Sydney.

Air China has a substantial operation at Shanghai but is based at Beijing.

Bradley Perrett,