Qantas's new no-frills carrier will provide a fighting brand to offer cut-price fares on routes where the airline needs to defend its turf against Virgin Blue or any aspiring entrants.
Qantas is targeting a cost base for the new carrier similar to, or lower than, Virgin Blue's.
It will compete alongside the main Qantas brand. And while it has been labelled a "leisure" airline, it won't be confined to leisure traffic routes. It will also be used on prime corporate routes like Sydney-Melbourne, where there is demand for bargain fares.
Qantas gave scant detail on the proposal. But as a clue to the potential scale of the operation, leisure traffic accounts for about 25 per cent of Qantas's domestic business, which equates to a fleet of about 33 aircraft. The new carrier is likely to operate Boeing 737s, as does Virgin Blue.
Qantas's aim is to establish the airline under more flexible and less costly industrial agreements.
But it needs to navigate carefully around industrial relations laws, which require that if a company sets up a new service provider to replace an existing service, existing terms and conditions are transferred to the new company. To avoid this, Qantas is positioning the new carrier as a growth vehicle.
-- Do you guys think this airline will be succesful? I Think if they do start an LCC, Qantas will probably use its older 737s. I wonder what will be Virgin Blue's response to this news. Lets here your opinions.