Originally Posted by
Bear96
If the route is only marginally profitable now (which would appear to be the case, or carriers would have added capacity without needing subsidies), adding a third, subsidized airline might make the route for the non-subsidized airlines unprofitable, leading them to pull out.
If I were UA or QF, I'd certainly be making that threat unless I got the same subsidy as DL.
The goal of new service is to stimulate demand that wouldn't be there otherwise.
If UA, QF, and DL were all taking a slice out of the same pie, then certainly it wouldn't be ideal. The goal of the subsidy is to increase connectivity, and thereby incentivize people who may not have traveled in the first place to visit Melbourne. Obviously, it's not that straightforward of a cause-effect situation, but that's what the hope is it will accomplish.
That's why the Queensland government did so for BNE, since they want to stimulate growth ahead of their 2032 Olympics.