Please read this article which appeared in the Courier Mail this morning. You can get the article for proof of authenticity at
It basically says that Qantas may launch a low cost international airline to strike back at the strengthened Singapore Airlines/Air New Zealand alliance.
It will use Australian registered jets and will service routes that QF doesn't serve at a low cost such as Seoul and China from a low cost base such as Bangkok.
Qantas may launch no-frills airline
Geoff Easdown and Chris Milne
QANTAS is almost certain to proceed with plans for a new, no-frills offshore airline in a bid to strike back at a strengthened alliance between the Air New Zealand-Ansett group and Singapore Airlines.
The Australian flag carrier, which saw its share price plunge yesterday on competition concerns, would use the proposed budget carrier to exploit regional and Asian markets in which it can no longer afford to operate.
Qantas needs to add to its strategic arsenal after Singapore Airlines announced that it had secured a deal to increase its stake in Air New Zealand by injecting substantial cash into the reserves of the troubled carrier.
Qantas chief executive Geoff Dixon, in Canberra for a scheduled board meeting, yesterday attacked Singapore's plans to raise its Air NZ stake as a bid for regional dominance.
It is understood the Air New Zealand situation was discussed extensively during the board meeting.
Airline sources, including several Qantas officials, pointed to remarks Mr Dixon made to the Australian Institute of Company Directors in Sydney last week.
In that speech Mr Dixon said: "We are also looking at starting a new, low-cost international airline to fly to markets from which Qantas, in its current form, is unable to generate an acceptable return."
These markets are believed to include China and Seoul, from which Qantas withdrew services. A Qantas-funded budget airline using Australian registered jets and operating from a low-cost base in Asia, such as Bangkok, is seen by analysts as a plausible next move by the Australian carrier in any aviation poker game.
It would enable the proposed Qantas subsidiary to compete on the same terms as Ansett International, should Ansett benefit from a substantial cash injection from SIA via Air NZ.
Markets in both Australia and New Zealand reacted cautiously to the proposed SIA-AirNZ partnership. Shares in both Qantas and Air NZ took a battering.
Qantas shares, which had risen from a recent low of $2.43 to as high as $3.58 on hopes of an Air NZ deal, tumbled 28c before closing down 18c at $3.23. The fall wiped $235 million from its market value.
Air NZ, which will make a placement at $NZ1.31 a share to SIA, saw its Australian-traded shares lose 22c to $1.06. But the Kiwi carrier will have to overcome "significant and sensitive" regulatory issues on both sides of the Tasman to win approval.
Mr Dixon said Qantas would continue to lobby hard against the proposed SIA share placement in Air NZ and Ansett with political and regulatory authorities on both sides of the Tasman.
Australian Prime Minister John Howard said yesterday he would seek to ensure Qantas's legitimate interests were protected amid the current turbulence in the Australasian airline industry.
Air NZ boss Gary Toomey and acting chairman Dr Jim Farmer yesterday revealed that their plans to climb back to prosperity involved a major rights issue and a significant expansion of SIA's holding. It is believed the SIA stake could increase to as much as 49 per cent of the Kiwi flag carrier.
They said the rights issue, for an unspecified amount, was planned for later this year.
An angry Mr Dixon said Qantas felt the proposed SIA-Air NZ deal would give Singapore undue influence in the region.
"Issues raised by the plan transcend commercial considerations and go to the heart of competitive and regulatory issues," said Mr Dixon."It would be unprecedented for the Singapore Government to control its own airline, SIA, as well as Air NZ, Ansett Australia and Ansett International.
"This would not happen in any other part of the world. "
So what do you think?