View Full Version : Emerging player in domestic air battle

15th Dec 2003, 11:00
Mon "The Australian"

Emerging player in domestic air battle
By Scott Murdoch
December 15, 2003

FLIGHT Centre could become a third player in the domestic aviation market after expanding its charter operations on the day its first charter flight left Brisbane.

The locally based travel retail giant previously had struck a deal with Alliance Airlines to fly to Cairns once a week and has now added twice-weekly flights to Hamilton Island.

The agreement with Alliance is significant given the former Flight West operation is one of only three airlines, behind Qantas and Virgin, with an aviation operation certificate, allowing it to fly commercially.

Under the arrangement, Alliance will maintain and operate the aircraft and flights while Flight Centre will buy and retail the seats.

Its maiden flight yesterday to Cairns was fully booked with 100 passengers and bookings are at 80 per cent for the next two weeks.

The scheme is on a three-month trial but is seen as the next major step for the company to effectively give it a de facto airline.

A seven-day, four-star package to Cairns sells for $399 and has already sparked reaction from Virgin Blue which responded with a $379 offer.

Flights to Hamilton Island, to begin on January 31, will operate under the Alliance brand.

Flight Centre charter operations manager Grant Theobald said charters were common in Europe and Canada.

The local venture will focus on holiday destinations before it is grown, possibly, into the high-volume commuter market.

Any expansion would put it in direct competition with Qantas's discount offshoot, JetStar, which is due to start flying in June.

"We have a very strong relationship with all the airlines, particularly Qantas and Virgin Blue, and as long as they are able to satisfy our customers needs we are happy," Mr Theobald said.

"I think in most cases they are doing that now but this chartering shows we can fill a hole and will do so if we need to."

Mr Theobald said Flight Centre was confident there was a large enough market to sustain effectively a fourth domestic carrier after Qantas, JetStar and Virgin Blue.

Qantas has an estimated 60 per cent share of the domestic market while Virgin Blue has snared 30 per cent.

"There's space for competition in the Australian market," Mr Theobald said. "The industry has changed since the times of Compass and Impulse.

"This will be an interesting exercise because it is the first time anyone has focused on the holiday market and, by us doing that, it gives us a slightly different business model."

Flight Centre retail general manager Sue Rennick said the plan was low cost, given the infrastructure was provided by Alliance which would also paid terminal costs.

The first Cairns flights would cover costs and a profit was expected once the initiative became well known, she said.

"At the moment we are break even which is what we budgeted for. We only need a certain capacity to break even and we have exceeded those capacities. We wouldn't be embarking on this if it was high risk."

Alliance will continue to operate its own Brisbane to Cairns and Townsville routes.


Pic: Alliance Fokker F-100 VH-FWH