Thurs "The West Australian"
Qantas set for low-fare launch
By Geoffrey Thomas
QANTAS is expected to announce the launch of its new low cost/low fare airline at its annual meeting in Adelaide today.
First flagged two months ago by chief executive Geoff Dixon, the new holiday airline will operate a fleet of up to 20 all-economy class Boeing 737-800 or Airbus A321 aircraft.
The airline, which some insiders refer to as skimpy, will be modelled on Qantas' low cost international brand, Australian Airlines.
According to ABN AMRO airline analyst Bruce Low, Qantas has gained significant insight into the operation and structure of low cost carriers through buying Impulse Airlines two years ago and the establishment of Australian Airlines.
"Qantas appears to have come to the conclusion that it must do more to cut costs to compete with Virgin Blue," Mr Low said.
With the new airline to target domestic leisure routes, there may be some overlap with Qantas' regional subsidiary Qantaslink which operates 106-seat Boeing 717s and 75-85 seat BAe146 aircraft.
The new airline is part of Qantas' bid to cut its expenses by $1 billion over two years.
According to Mr Dixon, $800 million in cost savings have already been identified with $385 million from increased labour productivity, $200 million in fleet simplification overheads, $135 million through distribution initiatives and $80 million from refinement of the domestic product.
Qantas has also been striving to position itself and its fleet to meet widely varying market demands, from high yield traffic on routes to London and Los Angeles, to very low yield traffic from Sydney to Cairns or Melbourne to the Gold Coast.
This month Qantas unveiled its new business class skybeds and is in the final refit of its long haul fleet with seatback videos for all passengers.
Qantas shares yesterday jumped 10¢ to $3.62.
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