Fri "Melbourne Age"
Qantas outflanks Pacific Blue on NZ routes
By Scott Rochfort
January 23, 2004
The likelihood of a long airline war across the Tasman grew yesterday after Qantas announced the expansion of its New Zealand domestic network, just one week out from Pacific Blue's first scheduled trans-Tasman flight.
Sending its most combative message yet to the Virgin offshoot, Qantas said it planned to commence flights from Wellington and Rotorua into Pacific Blue's home base of Christchurch on April 1.
But, as Pacific Blue is not expected to commence domestic flights in NZ
until late 2004, analysts said it was Air New Zealand that stood to lose the most from the competition.
As it is, Pacific Blue is cutting it thin in gaining the necessary permission to fly into New Zealand, as the airline has yet to obtain a NZ
Air Operators Certificate. It is scheduled to make its first flight between Brisbane and Christchurch next Thursday.
However, Virgin's David Huttner said he was confident the airline would get the necessary approval after its first "proving flight" early next week.
By late March, Pacific Blue expects to be flying trans-Tasman flights from Sydney, Melbourne, Brisbane, Cairns, Hobart, Launceston, Townsville and Perth into either Christchurch and/or Wellington.
Qantas is expected to unveil the route structure for its low-cost offshoot, JetStar, within days, before the airline's first tickets go on sale via the internet in mid-February.
With the airline scheduled to start operations in May with a fleet of 14 Boeing 717s and three Airbus 320s, analysts expect JetStar to follow the same route structure as Qantas's existing fleet of B717s before it builds up its fleet of A320s.
Centre for Asia Pacific Aviation managing director Peter Harbison said: "What we're really looking at is Impulse 3, if the existing Impulse in Qantas was Impulse 2 with another 10 seats.
"So, there are a whole lot of routes already where Impulse has been operating and you can assume that will continue but (with) more aggressive pricing."
Qantas's B717 fleet currently services Sydney, Melbourne, Brisbane, Newcastle, Launceston, the Gold Coast, Cairns, Maroochydore, Mackay, Hamilton Island, Rockhampton and Mount Isa.
Given the healthy growth outlook for the domestic aviation market, UBS analyst Steve Wood said now was the ideal time for JetStar to start operations.
"Qantas is running 80 per cent load factors and Virgin is running slightly above that; the market will easily absorb the JetStar capacity," he said.
Qantas shares hit a three-month high of $3.62 yesterday, before closing 2¢ higher at $3.60.