Wirraway
9th Feb 2004, 01:59
Mon "Melbourne Age"
Jetstar aims for one-third market stake
By Eli Greenblat
February 9, 2004
Qantas Airways chief executive Geoff Dixon has tipped that his airline's new budget offshoot, Jetstar, will capture at least a third of the Australian market as the region's airline industry enters a new wave of competition that one CEO has labelled a "bloodbath".
The CEO, Air New Zealand head Ralph Norris, says the trans-Tasman carrier has $NZ1 billion ($A898 million) in cash to cope with both Qantas and Virgin competing for passengers between the two countries, but claims his airline won't be the first to fall over in the duel.
"I have used somewhat colourful language in describing it as a bloodbath, certainly when you consider that there are a number of (operators) particularly on the Auckland route, it is easy to see that some of them are going to be damaged by this," he said on Channel Nine's Business Sunday yesterday.
Leading the onslaught will be Jetstar, which was unveiled in December with the ambition of going head-to-head with Virgin Blue.
Taking off in May, it will emerge from the remnants of Impulse Airlines, at first using its fleet of 14 Boeing 717s before taking delivery in June of the first of 23 new Airbus A320s.
Mr Dixon told Business Sunday Jetstar would take a competitive slice of the Australian market. He expected that Jetstar would gain about a third of the market and Virgin would have a third share.
Virgin Blue now holds 34 per cent of the market.
Its CEO, Brett Godfrey, said Qantas's low-cost carrier would not affect Virgin Blue's market share.
"They're going to bring on some aeroplanes, we're going to bring on some aeroplanes: I still believe we are not going to have a material detriment to our market share," he said.
"I am quite confident that we will be very competitive and I don't envisage us losing market share this year."
Mr Dixon maintained that that Qantas continued to compete "very well" against Virgin Blue.
"That will become apparent when our results come out," he said.
Qantas is due to release its half-year results on February 20.
Mr Dixon said Qantas was determined that Jetstar would have the "lowest possible cost-base we could find", with competitively priced tickets.
"On the low yield leisure routes they are on, there'll be quite substantial discounting: it'll be around the Virgin rate now," he said.
"They may go down lower when there's competitive pressures out there."
Meanwhile, Mr Norris from Air New Zealand said it would be wrong to identify his airline as the weakest of the pack.
He said his airline was in a strong position to cope with increased competition on the trans-Tasman route.
Virgin Blue recently launched its trans-Tasman offshoot, Pacific Blue, adding to the intense competition between Air New Zealand and Qantas.
"Air New Zealand is in a significantly improved position from what it was 18 to 24 months ago," Mr Norris said.
"We are certainly going to be inflicted with some competitive damage on the route - there is no doubt about that - but certainly I don't see it being terminal."
- with AAP
=============================================
Jetstar aims for one-third market stake
By Eli Greenblat
February 9, 2004
Qantas Airways chief executive Geoff Dixon has tipped that his airline's new budget offshoot, Jetstar, will capture at least a third of the Australian market as the region's airline industry enters a new wave of competition that one CEO has labelled a "bloodbath".
The CEO, Air New Zealand head Ralph Norris, says the trans-Tasman carrier has $NZ1 billion ($A898 million) in cash to cope with both Qantas and Virgin competing for passengers between the two countries, but claims his airline won't be the first to fall over in the duel.
"I have used somewhat colourful language in describing it as a bloodbath, certainly when you consider that there are a number of (operators) particularly on the Auckland route, it is easy to see that some of them are going to be damaged by this," he said on Channel Nine's Business Sunday yesterday.
Leading the onslaught will be Jetstar, which was unveiled in December with the ambition of going head-to-head with Virgin Blue.
Taking off in May, it will emerge from the remnants of Impulse Airlines, at first using its fleet of 14 Boeing 717s before taking delivery in June of the first of 23 new Airbus A320s.
Mr Dixon told Business Sunday Jetstar would take a competitive slice of the Australian market. He expected that Jetstar would gain about a third of the market and Virgin would have a third share.
Virgin Blue now holds 34 per cent of the market.
Its CEO, Brett Godfrey, said Qantas's low-cost carrier would not affect Virgin Blue's market share.
"They're going to bring on some aeroplanes, we're going to bring on some aeroplanes: I still believe we are not going to have a material detriment to our market share," he said.
"I am quite confident that we will be very competitive and I don't envisage us losing market share this year."
Mr Dixon maintained that that Qantas continued to compete "very well" against Virgin Blue.
"That will become apparent when our results come out," he said.
Qantas is due to release its half-year results on February 20.
Mr Dixon said Qantas was determined that Jetstar would have the "lowest possible cost-base we could find", with competitively priced tickets.
"On the low yield leisure routes they are on, there'll be quite substantial discounting: it'll be around the Virgin rate now," he said.
"They may go down lower when there's competitive pressures out there."
Meanwhile, Mr Norris from Air New Zealand said it would be wrong to identify his airline as the weakest of the pack.
He said his airline was in a strong position to cope with increased competition on the trans-Tasman route.
Virgin Blue recently launched its trans-Tasman offshoot, Pacific Blue, adding to the intense competition between Air New Zealand and Qantas.
"Air New Zealand is in a significantly improved position from what it was 18 to 24 months ago," Mr Norris said.
"We are certainly going to be inflicted with some competitive damage on the route - there is no doubt about that - but certainly I don't see it being terminal."
- with AAP
=============================================