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Qld bids for Qantas low-cost base
Queensland is in talks with Qantas for it to establish the headquarters of its new low-cost domestic airline in the state.
A spokesman for Premier Peter Beattie says negotiations with the Qantas implementation team have already started.
Qantas has said the new airline will not be based in Sydney and that it will decide on a location along with a new name soon.
The Queensland Government says full consideration and respect will be given to existing airline relationships in any negotiations.
Virgin Blue is already based in Brisbane.
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The World Today (ABC) - Friday, 17 October , 2003 12:42:50
Reporter: Stephen Long
ELIZABETH JACKSON: It's all go at Qantas. Yesterday, our major airline announced that it would launch a new budget domestic carrier, in May. And today, it's released details of a plan, which it flagged earlier this year, to divide the company into 10 separate businesses, all of which could potentially be floated as separate companies in the future.
Geoff Dixon, Qantas Chief, told the ABC today that he's adamant that the new airline will fly, but the critics aren't convinced.
Our Finance Correspondent Stephen Long reports.
STEPHEN LONG: Budget airlines aimed at the leisure traveller are the growth area of the market. And that's where Geoff Dixon's pitching the new spin-off airline to be launched in May.
Analysts such as Ian Thomas at the Centre for Asia Pacific Aviation see this as a recognition that there's not much growth left in the premium end of the market.
IAN THOMAS: I mean, really, Qantas is saying that the higher end of its market, in other words the premium end, is essentially a mature market, which doesn't really exhibit a great deal more growth.
STEPHEN LONG: Internationally, low cost budget carriers, such as RyanAir in the UK and South West Airlines in the US, are the success stories of aviation. Established carriers have struggled to compete with their low operating and labour costs, and their ultra low fares.
Qantas isn't the first major carrier to try to copy their formula. Ian Thomas says there's a series of mainstream carriers who've spun off low cost leisure airlines, and wacky names seem to be compulsory.
IAN THOMAS: Delta, for example, has one called "Song". SAS, the Scandinavian airline has one called "Snowflake". And Air Canada's operating one called "Zip".
STEPHEN LONG: These airlines have something else in common apart from their wacky names – they've all achieve at best, limited success. British Airways launched then sold off Go, which succeeded, but largely by cannibalising BA's own market.
Geoff Dixon's adamant Qantas has done its homework and won't make the same mistake.
GEOFF DIXON: This airline will be successful in its own right and indeed, if it cannibalises Qantas it will be on the margins.
STEPHEN LONG: In Europe, airlines such as RyanAir offer fares as low as a few pounds.
Geoff Dixon won't be drawn about how low the airfares will be on Qantas's new budget carrier, but he says there'll be no fat in the costs.
GEOFF DIXON: This will be a quality airline, it's going to have no frills certainly, it's going to be the bare basics of a low cost carrier, but it will have good and modern aircraft, it will have well trained staff, it will go out of decent airports, but from then on it will be as cheaply as… as lean as you can possibly put in the air.
STEPHEN LONG: Meanwhile, Qantas released plans today, to separate the company into 10 businesses, with engineering, flight catering, holidays and other services hived off from the core business of flying.
Geoff Dixon says it's designed to promote greater accountability and efficiency.
He's denied union claims Qantas intends to force the businesses to compete with outside contractors to maintain their relationship with Qantas. But he hasn't ruled out the possibility that any of these businesses could be floated off separately in the future.
GEOFF DIXON: In the restructure we've announced today, everything could be floated off. We could float off the regional airline, we could float off Australian airlines, we could float off our catering division, we could float off Qantas holidays.
All of those are very good businesses, but I've got to tell you they're very integral to our business plan. We're one of the few airlines in the world who have decided to be fully integrated, that we have a multiplicity of businesses that hang off the main core business – that is, flying. But right now, and always has been the case, but certainly after we finished our restructure, all of them could be quite easily floated off.
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Last edited by Wirraway; 18th Oct 2003 at 07:01.