Flying on a shoestring, Backpackers Xpress set to take off
Source: SYDNEY, March 8 AAP
Published: Monday March 8 2004, 4:00 PM
They say the trouble with the aviation industry is that when things are down nobody hears you scream but if the going's good, everyone joins the party.
And the party started jumping this week, with Formula One Minardi team boss Paul Stoddart raising the prospect of another domestic low cost carrier (LCC), while others have their minds set on new routes.
Australian international low cost carrier Backpackers Xpress (BPX) is on the hunt for aircraft to fly to a number of international budget traveller destinations by the end of 2004.
The Brisbane-based group, chaired by former Sunstate Airlines owner Bevan Whittaker, is aiming to conduct flights from the UK city of Manchester, via New Delhi and Bangkok, to Melbourne.
A company spokeswoman said today the group was "half way through" negotiations for an Air Operator Certificate and is hoping to begin flights during the last quarter of 2004.
The planned 473-seat all-economy layout will include karaoke, dance competitions, pizza and a personal DVD service with over 300 titles to choose from.
The airline has held discussions with Singapore Airlines (SIA) over the sale or lease of a small number of Boeing 747-400 aircraft, with analysts now speculating the relationship could broaden.
"With BPX in the final stages of business planning, we understand that SIA has taken a keen interest in the venture and may become an equity partner," Goldman Sachs JBWere transport analyst Anthony Srom said.
SIA South West Pacific public relations manager Stephen Forshaw told AAP the airline now had a small number of B747-400s which were not currently operational and as such, were available for sale or lease.
"Backpackers Xpress approached SIA with a view to sourcing through lease or sale a number of Boeing 747-400s and we have been involved in some discussions on the basis of the possibility of a commercial transaction to that effect," Mr Forshaw said.
"As to other possibilities, that's speculation on the part of others."
Any alignment between SIA and BXP raises interesting questions on access to the lucrative route from Australia to the west coast of the United States, on which SIA and Cathay Pacific are currently barred from flying.
"Should SIA become involved, we believe this may give BPX the confidence to establish trans-Pacific flights given the USA is the second largest inbound backpacker market for Australia," Mr Srom said.
"Though not directly aimed at the business market, this extra capacity could be detrimental to Qantas' economy traffic volumes.
"Consequently, it would not surprise us if Qantas entered discussions with BPX with the aim of preventing SIA establishing an indirect beachhead in the Australian market."
Qantas currently makes 14-15 per cent of its total profits on the Australia-US route, which in turn ties up 12-13 per cent of its flying assets.
However, Mr Srom expects that, should the BPX business become operational, the threat posed to Qantas is relatively small due to the highly differentiated product offering and maximum intended fleet size of four to five B747s.
Meanwhile, Mr Stoddart over the weekend reignited prospects of another domestic LCC in Australia, having shelved his plans last November in order to watch Qantas offshoot Jetstar and Virgin Blue fight it out.
His airline OzJet would operate with a fleet of BA146s from October, hoping to use Essendon and Moorabbin airports in Melbourne, Bankstown in Sydney and Archerfield in Brisbane.
Mr Stoddart said he was looking for a 100-seater, no-frills budget airline that would deliver point-to-point service.
Investment house UBS said in its Daily Market Wrap that while the launch of OzJet might create some temporary weakness in the Qantas share price, it was unlikely to greatly affect it in the long term.
"The launch of OzJet might create some weakness in the Qantas share price which UBS Research would view as a buying opportunity ... but we do not believe OzJet will be a viable competitor to Qantas," it said.
Virgin Blue head of commercial operations David Huttner said he didn't expect any demonstrable impact from OzJet, should it get up, adding that BA146 planes were out of date and suffered from a low despatch reliability.
"Also, it our understanding that the airports that he spoke about were closed to commercial jet services and certainly if that has changed, we would like to have a look at them ourselves," he said.
"Nine out of ten airlines around the world fail in their first year but that doesn't seem to stop people from trying."
There must be something in the water down here.