News: Govt to underwrite VB in North Aust [Archive]

Wirraway

2nd Nov 2001, 13:22

Fed Govt to underwrite Virgin flights to north Australia

The Federal Government will underwrite the Virgin Blue airline to fly on three north Australian routes in competition with Qantas.

Virgin Blue will fly from Brisbane to Darwin and Brisbane to Cairns from December 1.

Flights from Brisbane to Mount Isa will begin immediately, twice a day.

The Government is putting up $7.5 million for the move, which airlines will be able to access if passenger loads are under a certain figure.

Mr Anderson announced the plan while campaigning in Darwin, in a bid to provide competition to Qantas.

[ 02 November 2001: Message edited by: Wirraway ]

[ 02 November 2001: Message edited by: Wirraway ]

Wirraway

2nd Nov 2001, 13:53

CANBERRA, Nov 2 (Reuters) - The Australian government unveiled a A$7.5 million scheme on Friday to underwrite discount carrier Virgin Blue for flights from Brisbane to the northern ports of Cairns and Darwin, as well as inland Mount Isa.

Under the plan, guaranteed until the end of January, Virgin Blue will operate twice daily flights between Brisbane and Cairns and daily services between Brisbane and Darwin beginning December 1, Transport Minister John Anderson said in a statement.

The discount carrier of British entrepreneur Richard Branson would begin flights between Brisbane and Mt Isa immediately, with the government underwriting the services if the passenger load falls below 60 percent.

"By underwriting Virgin Blue, we are standing by this commitment and ensuring that these three vital business and tourism routes are maintained as well as being opened up to competition," Anderson said.

Virgin Blue's niche position in the Australian market has been strengthened dramatically by the collapse of former number two airline Ansett Australia.

The country's largest carrier Qantas Airways Ltd , which now has about 85 percent of the A$10 billion Australian market, described the government's announcement as astonishing.

"More than 70 percent of Qantas' capacity is operating in the international market which has been ravaged by the events of Sept 11," a spokesman told Reuters.

"Qantas has been working overtime to preserve employment and provide urgently needed capacity in the domestic market. The government, by these anti-competitive actions involving taxpayers' money, is seriously undermining our ability to do this."

Qantas shares closed two cents higher at A$4.00 on Friday.