No Way
QANTAS chief executive Geoff Dixon yesterday hosed down predictions of an airfare bloodbath after the company's decision to go ahead with plans for a low-fare domestic airline.
Geoff Dixon at the press conference yesterday announcing the new Qantas venture / Martin Jacka.
Mr Dixon said the new value-based airline would be "low-cost but not cheap" when it is launched next May.
"We're not starting something to lose money, we're starting something to make money," he said after the company's annual meeting in Adelaide yesterday. "This will be a serious carrier that will be here to stay."
Qantas aims to quickly expand the new airline and predicts it will have at least 23 Airbus A320 or Boeing 737-800 aircraft by mid-2005.
Mr Dixon's comments suggest the new airline could follow the model set by Qantas's low-cost international offshoot Australian Airlines, which does not offer significantly lower fares but uses its reduced cost base to compete on marginal routes.
Such a model would allow Qantas to expand its reach while reducing labour costs and limiting growth by competitor Virgin Blue. But Centre for Asia Pacific Aviation managing director Peter Harbison believes there will still be "a real feast" of low fares as Qantas moves to establish the airline.
"This is an interesting strategy that's bigger than I thought and they are really going to grow ... fast," he said.
Operational details of the new carrier were skimpy yesterday and Mr Dixon would not say where the airline would fly.
He said a decision on where it would be based would be made within six weeks but it would not be Sydney.
A meeting today at Melbourne advertising agency Dewey and Horten would consider six possible names for the carrier.
Asked if three airlines could survive in the Australian market given the demise of Ansett, Mr Dixon said Ansett had been severely overstaffed and suffered an "out of whack" cost structure.
"Qantas is much leaner, Virgin Blue is very lean and the business we're going to start is very lean," he said.
Tourism authorities yesterday welcomed the new carrier, saying it would help bring more tourism dollars.