Paul Phelan/CAIRNS

Qantas chief executive James Strong says the Australian flag-carrier has no plans to launch a low-fare carrier to combat new market entrants Impulse and Virgin Blue, the latter due to launch soon. Strong says that though a low-cost subsidiary "certainly remains an option", Qantas has enough flexibility to combat its new rivals without such a strategy.

He says the carrier, which previously enjoyed a duopoly with Ansett, has marginal pricing capabilities which have not been appreciated. "It needs to be understood how capable our yield management systems are in terms of getting the right outcomes," he says. "What has happened to date has been quite predictable in the sense that you would expect start-up operators to use some special pricing to get publicity."

"The really significant issues are the number of seats available and the extent of services on which they are available. Only time will tell whether the market is big enough for four players, and in the end that will be determined by economics. We're not taking any backward steps in terms of capacity or pricing, and it remains to be seen how all that evolves. You shouldn't assume that we're going to stand around and watch."

Strong confirms that Qantas has a "continuing interest in Thai Airways International", currently a member of the Star Alliance but due to privatise, and has "had some discussions with Malaysia Airlines", which is scouting around for partners.

Qantas reported a record performance for its 1999-2000 financial year, with operating profit up 17.2% to A$705 million ($410 million) and after tax profit up 23% to A$517.9 million.

While the carriers key markets remain the USA and UK, Japan, Hong Kong and other Asian markets have bounced back strongly. Qantas has also launched several e-commerce initiatives and is "well advanced" in a "comprehensive" fleet planning exercise due to be completed this year".

Source: Flight International