News: Qantas in new fare war
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News: Qantas in new fare war
Qantas in new fare war
By STEVE CREEDY
October 19, 2001
QANTAS will start flooding the domestic market this weekend with 1 million discount fares as cheap as $77 to drive home its dominance over Ansett Mark II and Virgin Blue.
The carrier also revealed it would spend $1.5 billion on 17 new aircraft, some discounted in price by more than a third by desperate manufacturers.
Qantas's aggressive growth plan contrasts with moves by other international carriers, which have slashed hundreds of thousands of jobs, cut routes and grounded planes in the aftermath of the September 11 terror attacks on the US.
Announcing the move yesterday, chief executive Geoff Dixon denied the fares were an attack on Ansett Mark II, saying Qantas had no desire to put Ansett out of business "in any way, shape or form".
Mr Dixon said: "We're not seeking more than 65 to 70 per cent of the market. I think we have a right to try and get that in the current circumstances. We will move back from the 80 or 90 per cent we have now as other carriers come on market."
A spokesman for the Ansett administrators said the airline, which is restructuring after collapsing in September, was considering its response to the lower fares.
The administrators said they had not seen a bid from Melbourne millionaires Lindsay Fox and Solomon Lew, despite speculation the two might unveil today their plans for the airline.
The pair have convinced Transport Minister John Anderson to divert his VIP jet to Melbourne for a press conference this morning.
Mr Dixon said Qantas was simply returning to the situation that existed before Ansett's collapse, with the new fares, as low as $77 one way until at least December, aimed at stimulating the market.
"It's in our interest to grow this market as much as we can ... it's in our interest to stimulate the market, and that's what we intend doing," he said.
The new aircraft will begin arriving in January and will be joined by two planes each month. They are in addition to a previous order for wide-body A330, Boeing 747 and Airbus A380 superjumbos as part of the airline's 10-year refleeting plan.
Manufacturers are offering big discounts, as high as 45 per cent, to stimulate the market.
Two of the new aircraft will be Dash 8 regional planes, and Qantas will decide next week whether the remaining 15 will be single-aisle Boeing 737-800s or Airbus A320s.
They will be funded by a $300million ordinary equity placement to domestic and foreign institutions. Existing shareholders will also be entitled to invest up to $3000 through a special placement plan.
The narrow-body aircraft all will be economy-class configuration, with at least 165 slimline seats and possibly as many as 180, giving Qantas a fleet of 40 aircraft capable of flying all economy class. Only 6 per cent of the airline's customers now fly business class.
Qantas will also save money because the new aircraft reduce the average fleet age to below 10 years and give it the flexibility to accelerate the retirement of older planes.
The move sent out a clear message to potential rivals "that anyone who is interested in this market will know exactly what they are getting", Centre for Asia Pacific Aviation managing director Peter Harbison said.
While Qantas has survived the international downturn better than other airlines, it has been forced to reduce international capacity by 10 per cent and has had a surge in cancellations since the start of US attacks in Afghanistan.
Mr Dixon said this would result in staff reductions in some areas but not necessarily a net loss of Qantas jobs.
He would like to see a wage freeze at Qantas over the next 12 to 18 months, and would seek productivity gains from unions in a meeting next week.
"I think it's very prudent for everybody, the unions, our own employees, the management and the company, to realise that the next 18 months or two years will be absolutely vital to this industry," he said.
But unions said Qantas was being opportunistic, given its market dominance.
Qantas also revealed it was likely to bring forward to April the start date of low-cost international carrier Australian Airlines. Mr Dixon said the new carrier was on track despite the international downturn.
By STEVE CREEDY
October 19, 2001
QANTAS will start flooding the domestic market this weekend with 1 million discount fares as cheap as $77 to drive home its dominance over Ansett Mark II and Virgin Blue.
The carrier also revealed it would spend $1.5 billion on 17 new aircraft, some discounted in price by more than a third by desperate manufacturers.
Qantas's aggressive growth plan contrasts with moves by other international carriers, which have slashed hundreds of thousands of jobs, cut routes and grounded planes in the aftermath of the September 11 terror attacks on the US.
Announcing the move yesterday, chief executive Geoff Dixon denied the fares were an attack on Ansett Mark II, saying Qantas had no desire to put Ansett out of business "in any way, shape or form".
Mr Dixon said: "We're not seeking more than 65 to 70 per cent of the market. I think we have a right to try and get that in the current circumstances. We will move back from the 80 or 90 per cent we have now as other carriers come on market."
A spokesman for the Ansett administrators said the airline, which is restructuring after collapsing in September, was considering its response to the lower fares.
The administrators said they had not seen a bid from Melbourne millionaires Lindsay Fox and Solomon Lew, despite speculation the two might unveil today their plans for the airline.
The pair have convinced Transport Minister John Anderson to divert his VIP jet to Melbourne for a press conference this morning.
Mr Dixon said Qantas was simply returning to the situation that existed before Ansett's collapse, with the new fares, as low as $77 one way until at least December, aimed at stimulating the market.
"It's in our interest to grow this market as much as we can ... it's in our interest to stimulate the market, and that's what we intend doing," he said.
The new aircraft will begin arriving in January and will be joined by two planes each month. They are in addition to a previous order for wide-body A330, Boeing 747 and Airbus A380 superjumbos as part of the airline's 10-year refleeting plan.
Manufacturers are offering big discounts, as high as 45 per cent, to stimulate the market.
Two of the new aircraft will be Dash 8 regional planes, and Qantas will decide next week whether the remaining 15 will be single-aisle Boeing 737-800s or Airbus A320s.
They will be funded by a $300million ordinary equity placement to domestic and foreign institutions. Existing shareholders will also be entitled to invest up to $3000 through a special placement plan.
The narrow-body aircraft all will be economy-class configuration, with at least 165 slimline seats and possibly as many as 180, giving Qantas a fleet of 40 aircraft capable of flying all economy class. Only 6 per cent of the airline's customers now fly business class.
Qantas will also save money because the new aircraft reduce the average fleet age to below 10 years and give it the flexibility to accelerate the retirement of older planes.
The move sent out a clear message to potential rivals "that anyone who is interested in this market will know exactly what they are getting", Centre for Asia Pacific Aviation managing director Peter Harbison said.
While Qantas has survived the international downturn better than other airlines, it has been forced to reduce international capacity by 10 per cent and has had a surge in cancellations since the start of US attacks in Afghanistan.
Mr Dixon said this would result in staff reductions in some areas but not necessarily a net loss of Qantas jobs.
He would like to see a wage freeze at Qantas over the next 12 to 18 months, and would seek productivity gains from unions in a meeting next week.
"I think it's very prudent for everybody, the unions, our own employees, the management and the company, to realise that the next 18 months or two years will be absolutely vital to this industry," he said.
But unions said Qantas was being opportunistic, given its market dominance.
Qantas also revealed it was likely to bring forward to April the start date of low-cost international carrier Australian Airlines. Mr Dixon said the new carrier was on track despite the international downturn.
