Jetstar and V Australia allowed to start services to Fiji

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Australia has allowed Qantas subsidiary Jetstar and Virgin Blue's long-haul arm V Australia to begin services to Fiji, with both carriers receiving a lower capacity allotment than they hoped for.

V Australia has been granted 907 seats per week, 360 less than the 1,267 seats that it sought, says the International Air Services Commission.

However, it notes that Virgin Blue's subsidiary Pacific Blue has an allocation for 360 seats per week that it has not used. While Virgin Blue says that these are reserved to enable Pacific Blue to add services to Melbourne and Adelaide in 2010, the commission has allowed the company to transfer that capacity to V Australia if it would like to.

"In the absence of the transfer, V Australia could operate six [Boeing] 777-300 services per week, compared with daily services if the capacity is transferred to it," says the commission.

The Qantas Group has been awarded 852 seats of capacity per week, less than the 1,491 seats that it had wanted. This would allow low-cost subsidairy Jetstar to operate four Airbus A321 services per week from Australia to Fiji, says the commission. Qantas has also been allowed to place its code on the Jetstar flights to Fiji.

It adds that Qantas would also have "access to substantial market capacity" through its code share with Air Pacific, in which the Australian carrier owns a stake, and has scope to grow further if the Fijian carrier increases its capacity over time.

"Each carrier brings unique product features to the route. Both offer efficient modern aircraft with low cost structures, which should enable them to compete vigorously with one another and the incumbent carriers. There will be new competition for the premium market component and in the freight market through V Australia's entry," says the commission.