David Knibb / Brisbane
Australia’s two major airlines, Qantas Airways and Virgin Blue, have different motives for venturing into this largely untried sector, but both prove the point made by some observers, that established carriers, not start-ups, have the best chance of success in the long-haul, low-cost arena.
Qantas will be first out of the gate in November when its wholly owned Jetstar launches longer-haul flights. Jetstar International, as it is called, will start with three Airbus A330 widebodies instead of the A320s and Boeing 717s that Jetstar now operates on domestic and trans-Tasman routes.
By the middle of next year it will have six A330s flying sectors up to 10 hours long from Sydney, Melbourne and Brisbane to six destinations in South-East Asia, Japan and Hawaii.
Jetstar International will replace Australian Airlines, which will make its last flight under its own brand name on 30 June at the close of the Qantas financial year. Also in June Jetstar International will unveil schedules and fares, which it predicts will be “low”, for its new two-class service. Unlike Australian, which focused on inbound Asian tourists, Jetstar initially will emphasise outbound tourism because of its brand recognition within Australia. Alan Joyce, chief executive of the Jetstar division, says that in the longer term he hopes to achieve more balanced traffic flows.
The main reason for Jetstar International’s launch is to regain market share that Qantas claims has eroded over the years as economics have forced it to retreat from lower-yield leisure routes. Yet, within Asia, the only route that Qantas has abandoned and Jetstar will re-fly is Ho Chi Minh City. Eventually, Qantas will turn over its Bali route to Jetstar, but the two carriers will both serve Bangkok, Osaka and Honolulu. Longer term, when Jetstar takes delivery of Boeing 787s in 2011-12, it hopes to return to some European cities that Qantas no longer serves.
By contrast, Virgin Blue’s long-haul low-cost plans represent an opportunity to enter a new market rather than regain an old one. Transpacific US flights will give Virgin Blue a chance to compete in a lucrative nonstop market that Qantas now dominates, and allow Virgin Blue to connect traffic with its potential US ally, Virgin America.
Virgin Blue has created a 10-member team of senior executives to evaluate plans for the new Pacific service, scheduled to start by February 2008. ■
Source: Airline Business
