Qantas intends its new low-cost offshoot, Jetstar, to be the lowest cost operator in Australia, but the airline's plans are causing concern among unions that fear the move could see an erosion of pay and conditions at the parent carrier.

Impulse Airlines will form the basis for Jetstar, with the new airline to launch domestic services from Melbourne in May, initially operating 14 Boeing 717s operated by Impulse under the QantasLink brand. A month later the first of 23 177-seat Airbus A320s ordered this month will be delivered. The airline will eventually move to an all-A320 fleet, with plans for a minimum of 23 of the type to be operated by mid-2005.

The A320s will be operated by Impulse flightcrew, who are believed to have negotiated a deal to fly the A320s at the same rates and conditions employed on the smaller 717s. Impulse crew are already employed at lower rates than Qantas mainline crew under an agreement reached when Impulse was acquired by Qantas in 2001. Industry sources suggest the deal could undermine pay and conditions across the Australian industry.

Qantas plans to invest A$100 million ($74 million) to launch Jetstar to take on Virgin Blue. The airline will be modelled on European low-cost operators, with no seat allocation and internet-based bookings, with the route network to be revealed early next year.

Qantas chief executive Geoff Dixon is confident that Jetstar will not cannibalise its mainline domestic operations and to distinguish the two further, Qantas' mainline domestic carrier will become a two-class jet operation using just two types - Boeing 737s and 767s.

Source: Flight International