Discussions under way with Airbus and Boeing to supply aircraft for domestic airline

Qantas is in talks to acquire Airbus A320s or Boeing 737-800s for its new low-cost domestic airline which will be launched next May.

In August the airline set up a study team to investigate the feasibility of establishing a low-cost carrier and last week the board approved its go-ahead.

It will be established using the operation of former low-cost carrier Impulse, which Qantas purchased in May 2001, or using a new company, with a decision to be made in six weeks.

A headquarters for the airline will also be selected around the same time, says Qantas, adding that it will not be based in Sydney.

The airline will operate a minimum of 23 aircraft by mid-2005, says Geoff Dixon, managing director. Although a competition is being run between Airbus and Boeing, Qantas only relatively recently concluded a major short-haul fleet re-equipment deal with Boeing for 15 737-800s, plus 60 options in November 2001. Four of these were firmed up in 2002, and the airline is still believed to hold significant options.

The carrier, which will serve the domestic Australian leisure market, will be a separate business from the mainline carrier, with its own brand. The operation will be headed by Alan Joyce and will include former senior executives from Ryanair.

The move comes as Virgin Blue increasingly bites into Qantas's domestic market share after rapid expansion of its network since the collapse of Ansett two years ago.

Source: Flight International