Qantas is evaluating the establishment of a new low-cost international airline to re-open routes it was forced to abandon due to its high cost base. The move is an effort to recapture lost business in the Asia-Pacific region.

"Over the last few years we pulled out from Korea, Malaysia, Kyoto, Osaka, Saporo and Tahiti, and in the last couple of days we've announced we'll pull out of Canada and China," says new chief executive Geoff Dixon. "I don't think Qantas, with its cost structure and its high standards of service and a three-class product could ever go back into those markets, unless it went in with another vehicle. That vehicle would be a high-standard airline but at a lower cost base, and we're going to be talking to our unions about that," he adds.

The proposed airline would focus on one-stop routes out of Australia, but would not compete on Qantas routes. Dixon says Frankfurt and Rome would "definitely not" be targeted. Qantas would continue to fly to the Philippines, but its Indonesian commitments would be reviewed. Another possible target is the trans-Tasman route on which Qantas competes vigorously with Air New Zealand. Dixon says: "It [trans-Tasman] is a very important market. I would love to see it come back into profitability, but it's a very, very difficult market."

Although Dixon says Qantas could fund the proposed new operation independently, it is most likely to be a partnership with another carrier or a wholly-owned Qantas subsidiary. Operations could start within a year. "We're going to review this business totally. We started about three months ago, we've got another three months before we take it back to the board," says Dixon, adding that union agreement is crucial to the introduction of the plan.

Source: Flight International