Steve Creedy, Aviation writer

December 09, 2005

THERE may be cheaper fares, but there will be no free lunch for economy passengers when Jetstar International launches.

The new airline, expected to start operations to destinations in Asia and the Pacific with 10 wide-body aircraft by early 2007, has canned the fare-inclusive meals as it moves to keep costs down to a minimum.

Only those prepared to pay the extra bucks to upgrade to its premium economy ``Starclass`` will get the feed that has become a staple of international travel. Economy passengers will have to buy their nosh on the plane or pre-purchase it via the airline`s website.

Passengers will also pay for drinks and entertainment provided through a new generation of the digEplayers similar to those introduced on some Jetstar domestic routes.

Jetstar chief executive Alan Joyce said the airline`s research showed savvy travellers were prepared to pay for food and drinks to get the lowest possible ticket prices.

``People will see the type of low fares internationally that I think we`ve become famous for domestically,`` he said.

Asked about seating, Mr Joyce said Jetstar International would be competitive with other international carriers.

Economy passengers would be offered a 31-inch seat pitch, equivalent to a Qantas 747, and Starclass passengers given a 38-inch seat pitch, equivalent to Qantas business class. Starclass customers would get higher baggage allowance and priority boarding.

Other features include assigned seating and baggage transfers for international connections on selected airlines. Travellers in Starclass or buying higher priced jetflex tickets will earn frequent flyer and status credit points

Jetstar tops agenda as Qantas spends billions

Steve Creedy, Aviation writer

December 07, 2005

THE Qantas board today faces its most important meeting since it was privatised several years ago, as it considers multi-billion-dollar recommendations crucial to its future as a global carrier.

The board is expected to approve the carrier`s plan to take on offshoot Jetstar International and thereby create the world`s first global low-cost carrier as early as next year.

It will also look at a fleet-renewal plan, for up to 100 aircraft and worth $15-$20 billion, although it was not clear yesterday whether it would be in a position to decide on the hard-fought battle between rival manufacturers Airbus and Boeing.

Both manufacturers are understood to be taking the battle to the wire, making last-minute revisions of their offers.

Details of the decisions are eagerly awaited by analysts keen to get a clearer view of the carrier`s strategy.

``It`s really laying out the future for Qantas for the next 10 years,`` said Centre for Asia Pacific Aviation senior analyst Ian Thomas. ``So, from that point of view, yes, it is really significant for them.

``It essentially sets not only the fleet structure, but also the airline structure for the future.``

The fleet decision is in addition to $18 billion already being spent by Qantas, up to 2010, on aircraft such as the double-decker A380.

Qantas, which is confident it can fund the new acquisitions from operating cash flow, is looking not just for the cheapest deal but the one which best suits its mission.

The competition sees Boeing`s ultra-long-range 777-200LR pitted against the Airbus A340-500 and its fuel efficient A350 squaring up to Boeing`s 787 Dreamliner.

But it is the Jetstar decision that is likely to generate the most industry excitement.

At the weekend, Qantas chief executive Geoff Dixon indicated that Jetstar International could ultimately amount to as much as 20 per cent of the Qantas Group`s international flying.

The two-class carrier will be aimed at international routes within 10 hours of Australia that are not viable for the mainline operation.

These will include routes from which Qantas has withdrawn in recent years, such as Taipei and Seoul, as well as leisure destinations such as Phuket.

Qantas would like to start operating the new international carrier by the end of next year, or the start of 2007.

Analyst Mr Thomas said Qantas would use Jetstar International as both a defence and an offense, to position it strategically for the future.

``In parts of Asia now, we`re seeing the development of longer-haul low-cost carriers,`` he said.

``It`s only a matter of time before these sorts of carriers impinge on Qantas`s key markets and, really, it`s positioning itself to tackle these sorts of operations.

``And the only way it can do that is to lower its costs quite significantly

Jetstar to start long-haul service

By Brendan Swift

December 08, 2005

PASSENGERS flying on Jetstar`s new long-haul flights will be forced to pay extra for on-board meals, parent company Qantas said today.

Budget airline Jetstar will expand its services into long-haul international flights by January 2007, with all the features of a low-cost flight including meals served at an extra charge.

Qantas chief executive Geoff Dixon said its Jetstar subsidiary would initially target routes between Australia and Asian and Pacific cities before later adding European and other flights.

However, Mr Dixon said Qantas` main operations would remain the group`s primary focus.

``Our aim for the group is to expand within our traditional markets with Qantas and to expand in new markets with the most suitable product, be it Qantas or Jetstar,`` he said.

``At all times Jetstar`s international services will complement Qantas` mainline international operations, with an emphasis on inbound and outbound leisure routes,`` he said.

Qantas said Jetstar`s international product would feature an expanded range of meals and snacks, including hot meals and local cuisine, which would be complimentary in StarClass (business class) and available for purchase in economy class.

Shaw Stockbroking analyst Brent Mitchell said the carrier is likely to move its less profitable international routes to the lower cost Jetstar.

``The key routes (Qantas) is probably likely to retain are the Kangaroo route (Australia to the UK), the North American route and high profile routes such as Hong Kong and most of the Japan routes,`` he said.

The new airline may target destinations such as Seoul, Taipei and Ho Chi Minh City after Jetstar`s local arm began its first international flights to New Zealand earlier this month.

But Mr Mitchell said the strategy, which began with the launch of Jetstar in May last year to compete with Virgin Blue in Australia, could possibly force a decline in Qantas` passenger numbers.

``There`s an initial increase in traffic and numbers flying but to get beyond that initial impact does end up in cannibalisation,`` he said.

``(But) the services they`ve pushed into there have been the lower profit services anyway so the margins haven`t declined that much in percentage terms.``

Qantas said it expects Jetstar to be operating a fleet of 60 narrow and wide body aircraft across its domestic and international network within five years.

The airline is also on track to operate its full Airbus A320 fleet of 23 aircraft for domestic and trans-Tasman operations by mid-2006.

The Qantas board is expected to approve up to 100 long-haul aircraft purchases worth around $20 billion, as well as any new aircraft for Jetstar`s international operations, at a special meeting on December 14.

Qantas shares closed two cents stronger at $3.74.

Global Jetstar prepares shopping list

Steve Creedy, Aviation writer

December 09, 2005

JETSTAR will have a combined international and domestic fleet of 60 aircraft within five years as it embarks on a bold course to set up the world`s first global low-cost airline.

Qantas chief executive Geoff Dixon confirmed yesterday that the new international arm of its successful low-cost offshoot had been given the green light and would begin international operations no later than January 2007.

The greenfields operation will initially operate 10 aircraft on point-to-point routes of six to 10 hours between Australia and destinations in Asia and the Pacific.

It plans to use its lower cost base - more than 40 per cent below Qantas - to offer discounted fares and develop new markets not viable for the mainline operation.

Routes will be announced in the middle of next year but destinations already flagged as possibilities include Seoul, Taipei and Phuket.

It is also expected to expand its range within five years to two-stage flights to Europe and ``other destinations`` likely to include the US. The new airline will have both an offensive and defensive role as it tries to arrest the slide in Qantas`s share of the international market to and from Australia from 45 per cent in 1977 to below 30 per cent.

The strategy is to boost both brands and recover some of that lost market share, and to better serve the inbound and outbound leisure markets.

``We have strong belief in Qantas, and I think we`ve proven it domestically that it is hard to serve in an economic manner the great variety of markets that we find,`` Mr Dixon said. ``So we are determined to have two streams in the Qantas group.``

Mr Dixon said Jetstar`s international services would complement the mainline international operations and concentrate on inbound and outbound leisure markets.

He said Jetstar would have the opportunity to fly to destinations already served by Qantas but from ports other than those served by the main airline.

``I don`t know that it will be flying against Qantas in any market at all, so the cannibalisation thing doesn`t come up,`` Mr Dixon said. The new airline would also work closely with Jetstar Asia on opportunities in the intra-Asian market.

But Mr Dixon emphasised that the expansion would not in any way be at the expense of the Qantas full service domestic and international operations.

``Our aim for the group is to expand our traditional markets with Qantas and to expand in new markets with the most suitable product, be it Qantas or Jetstar,`` he said. ``The Qantas mainline operations are, and will remain, our primary focus.``

What kind of planes the new airline will fly will depend on a decision on the Qantas group`s $15 billion to $20 billion fleet plan, expected to be released next Wednesday, for up to 100 new planes.

The board had been due to make a decision this week, but last-minute offers from manufacturers Boeing and Airbus meant officials needed more time to crunch the numbers.

Mr Dixon said the decision would centre on the choice between the next generation of fuel-efficient 300-seater aircraft, the Airbus A350 and Boeing 787.

Jetstar chief executive Alan Joyce said the new airline - which he will also head - would eventually operate the A350 or 787 aircraft.

He said plans for an interim fleet to be used until the new aircraft became available after 2008 and 2010 depended on next week`s purchasing decision.

Either way, Jetstar would benefit from the savings generated by the overall fleet deal.

``If you were a start-up Jetstar with no relation to Qantas, you`d never get the kind of deal Qantas is getting for purchasing these aircraft,`` he said.

``So the ownership costs will be a lot less than other carriers.``

Mr Joyce said the airline would boost its domestic fleet with Airbus A320s or 321s from 2007 and it could easily reach 30 aircraft in the next five years.

It also had firm orders for 10 international aircraft as well as options for up to 20 others.

But he believed expansion at Qantas meant Jetstar was unlikely to exceed the 20 per cent of the total group operations mentioned last weekend by Mr Dixon.

Mr Joyce said Jetstar would add 55 people to its Melbourne headquarters immediately and would add hundreds more jobs to fly the first 10 aircraft