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Old November 24th, 2005, 04:12 AM   #341
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Australia's Qantas To Decide On Jetstar Int'l Next Month
22 November 2005

MELBOURNE (Dow Jones)--Australia's Qantas Airways Ltd. (QAN.AU) will decide next month whether to expand its cut price domestic airline onto international routes, a Jetstar spokesman said.

Jetstar's management has already pitched an international model to Qantas' board, which will decide whether to back the idea at its December meeting, the spokesman said.

"We have put forward a proposal that we believe could assist Qantas increase its market presence inbound and outbound," the spokesman said.

Melbourne-based Jetstar, which began operations in May 2004, flies to 18 Australian destinations and next month begins flights between Christchurch in New Zealand and four Australian cities.

Jetstar's Airbus A320s have a range of about five hours, suitable for domestic and trans-Tasman flights.

Jetstar International would need an allocation of some of the long-haul aircraft Qantas is preparing to purchase, the airline spokesman said.

He wouldn't say whether the proposed Jetstar International carrier would operate alongside of or replace Qantas' existing discount international carrier Australian Airlines.

Qantas said in August it will upgrade its fleet by buying or leasing between 60 and 100 new wide-body aircraft from Boeing and/or Airbus.

Qantas has already placed an order for 12 super-jumbo A380s, the first of which is to be delivered in mid-2007.
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Old November 24th, 2005, 04:13 AM   #342
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Australia's Qantas sees risks on ownership rule
By Daniel Morrissey

SYDNEY, Nov 22 (Reuters) - Qantas Airways Ltd. , the world's ninth-largest airline, said it was unsure whether a foreign ownership cap would be scrapped, after the Australian government kept restrictions on Telstra Corp. Ltd. .

The government, which in August kept a foreign ownership limit of 35 percent on Telstra, the country's biggest phone company, is close to finalising a review of its aviation policy.

"We're not too sure how that will go given the arguments about Telstra," Chief Financial Officer Peter Gregg told reporters after speaking to a business forum. "Clearly we believe there's no real reason for Qantas to have these constraints anymore."

Australian laws restrict foreign ownership of Qantas to 49 percent, with single foreign investors allowed up to 25 percent and foreign airlines a maximum of 35 percent of Qantas' shares.

Rural members of the conservative coalition government as well as farming lobby groups had opposed raising Telstra's foreign ownership restrictions to 49 percent from 35 percent.

Negotiations last week over a new aviation treaty between the European Union and the United States did not resolve the issue of foreign ownership restrictions in those two huge markets.

Gregg said there was "little implication" for Australia to be drawn from the unresolved EU and U.S. foreign ownership issues.

"Australia has to be looked at in its own rights," he said.

Shares in Qantas closed 1.6 percent lower at A$3.71 on Tuesday in a broader market that finished 0.67 percent weaker and after U.S. crude oil futures edged higher.

With the airline industry struggling from higher fuel prices, Gregg told the Financial Services Institute of Australasia the Qantas board had given management the flexibility to hedge up to 100 percent of its jet fuel demand over the next two years. He said Qantas had hedged 70 percent of its jet fuel demand at about $51 a barrel of crude oil for the year ending June 30, 2006 and had also hedged almost half of its refining margin.

"We think as long as demand in China remains as strong as it is, I think there is going to be pressure on fuel prices," Gregg said. "But clearly there's a speculative bubble in the price.

"We've seen some of that dissipate. Longer term we wouldn't think that fuel would fall much below $45 a barrel. Just when that might occur is a very hard one to assess."

Qantas has been slashing costs as part of a three-year A$1.5 billion ($1.1 billion) "sustainable future" plan that ends in June 2006. The cost-cutting plan was extended in August by a further two years to extract a further A$1.5 billion in savings.

"I'm pretty confident Qantas is in good shape," said Gregg, although he reaffirmed the company's outlook that it expected its 2006 profit would be lower than the record 2005 profit.

Senior management expected the Qantas board in December to approve its domestic budget airline Jetstar to fly international routes to Asia, but it would not compete with its Qantas-branded full-service international carrier, said Gregg.
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Old November 25th, 2005, 01:55 AM   #343
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Air Paradise Owner Apologises for Airline Collapse

KUTA, Bali, Nov 24 Asia Pulse - The Balinese owner of collapsed airline Air Paradise International has apologised to thousands of stranded passengers and Australian holidaymakers, who were today scrambling to secure flights home.

Tourists were mostly good-humoured as they queued for over an hour to snare seats with rival carrier Qantas, which has agreed to honour Air Paradise tickets until December 16.

However, passengers unable to travel by the deadline were not so understanding.

Araminta Ingram, a British woman who lives in Bali with her Australian partner, said she spent more than $US3,500 ($US3,499) on 10 tickets to Australia for flights over the next six months.

"I feel very let down," she said amid plans to demand her money back.

"We have made a point of using Air Paradise over Australian Airlines and Garuda because we live in Bali and wanted to support the island's own airline.

"But they hassled me so much for the money and never gave me any indication anything was wrong."

In a phone message sent around Bali, airline owner and heavyweight Bali businessman Kadek Wiranatha said closing the airline was the hardest thing he had ever done.

He blamed a drop in tourists after Bali's October 1 triple suicide bombings, which killed 20 people including four Australians. Air Paradise's Indonesian operations manager was among the injured.

"To all my friends, I try, try and try very, very hard and I put everything I have, my life and family, on the line for bringing tourists to Bali.

"But the Bali Bomb 2 destroyed everything," he said.

"Please accept my sincere apologies for the suspension of API, it really was the worst decision I had to make in my life."

Apart from Air Paradise, Wiranatha owns a mini-empire of hotels, restaurants and bars including the Paddy's Bar targeted in the October 2002 nightclub bombings that killed 88 Australians among 202 victims.

Dressed in bikinis, sarongs, boardshorts and tank-tops, up to 100 Australians started queuing for tickets as soon as the island's tiny Qantas office opened.

"It was a bit messy this morning, but I spoke to the manager and some of the passengers and once we got through the people on the Perth flights, things got more organised," Australian consul-general Brent Hall said.

Queues were expected to grow in coming days.

Melbourne woman Liz Kooyman said she just felt sorry for bomb-hit Bali.

"People can get really wound up, but Bali's doing it really tough, you can see the desperation on the streets," she said.

Adelaide couple John and Anne Suttie said they were happy to get the same departure date they had with Air Paradise.

"Qantas has been excellent," John said. "It's just really sad for Bali, another nail in the coffin."

Another Adelaide tourist Karl Sayegh said he held no hard feelings against Air Paradise and would continue to holiday on the island.

"The only hint we got (of the collapse) was maybe that they didn't serve us as many drinks as we wanted," he quipped while keeping the crowd amused with jokes.

The airline's collapse after just two-and-a-half years has shattered Bali's tourist industry, already struggling after a 37 per cent fall in arrivals last month.

"It's a huge blow," said Robert Kelsall, Bali Hotels Association chairman.

Handicraft seller Ketut Widia was braced for a bleak period ahead.

"Without Air Paradise, who will bring people to Bali?" he said at his tiny Legian shop.

"My business is already down more than 50 per cent, what hope have we got now?"
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Old November 27th, 2005, 06:16 AM   #344
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Police arrest three Australian airport workers on drugs charges

SYDNEY, Nov 26 (AFP) - Two Australian airport workers with access to secure areas of Sydney airport were granted bail Saturday after being arrested and charged with supplying illegal drugs.

Baggage handler Paul Richard Barnett, 23, and ramp loader Khaled Allouche, 33, appeared in Parramatta Bail Court on two and three counts of supplying a prohibited drug respectively.

Co-accused baggage handler Michael Speechley, 41, faced a Sydney court on similar charges Friday.

Australia Federal Police arrested the men following a month-long investigation and allege they could have been able to remove items from the airport before they were inspected by Customs officials.

The three are accused of carrying out drug handovers within secure areas of the airport and throughout metropolitan Sydney.

Speechley, who works at the international terminal of Sydney airport, has also been charged with supplying drugs.

The court heard that Barnett allegedly arranged to supply Speechley with 100 tablets, currently being analysed, which are believed to contain ecstasy.

Police alleged that Allouche supplied narcotics to Barnett and Speechley, including about 300 dollars (220 US) worth of amphetamines to Speechley at work.

Speechley is also accused of receiving narcotics from Barnett and paying cash to Allouche for them.
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Old November 28th, 2005, 04:35 PM   #345
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INTERVIEW: Australia's OzJet May Consider IPO In 3 Yrs
By Barbara Adam
28 November 2005

MELBOURNE (Dow Jones)--Australia's newest airline OzJet may follow bigger rivals Qantas Airways Ltd. (QAN.AU), Virgin Blue Holdings Ltd. (VBA.AU) and Regional Express Holdings Ltd. (REX.AU) onto the stock exchange.

OzJet Tuesday begins flying Australia's busiest air route between Sydney and Melbourne with three Boeing 737s and founder Paul Stoddart said his target is to gain a 1.8% marketshare on that route.

Stoddart forecasts OzJet will break even in year one, turn a A$20 million profit in year two and then possibly sell shares in an initial public offering in year three.

"If we achieve our first two years of our business plan as predicted, then in year three an IPO wouldn't be out of the question," he told Dow Jones Newswires in an interview on Monday.

Stoddart is seeking success in Australian skies as increasing competition and high fuel costs hurt his European Aviation business, which is selling its four 747s because they're no longer viable.

The Melbourne-born entrepreneur sees more opportunity in Australian aviation than in Europe.

"There's 300 competitors to our airline in the U.K.," Stoddart said.

"There's three - or only two if you count Jetstar as part of Qantas - in Australia."

In the early 1990s, Stoddart founded U.K.-based European Aviation, a charter company that's also one of the world's largest suppliers of spare parts. Last month, he sold the Minardi Formula One racing team, the smallest team in the world's most expensive sport, to Red Bull.

OzJet is targeting business and public service travelers with fares that will match competitors' full-fare economy rates. A return Sydney-Melbourne fare will be A$650 although the airline is offering an introductory one-way fare of A$200 between the two cities.

"Our break-even load factor is 50%, which is pretty modest," Stoddart said. "With the discount introductory fares the break-even factor is 65%."

OzJet will add destinations to its route in March until its network covers Melbourne, Sydney, Canberra, Brisbane, Perth and Adelaide and its fleet numbers 10 737s.

The new airline will have minimal impact on Qantas and Virgin Blue, according to ABN Amro analyst Anthony Srom.

"It's a very very niche market they're after," Srom said. "If it's going to have an impact on anyone it would be Qantas and they'd probably make it up through lower costs."
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Old November 30th, 2005, 07:14 AM   #346
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Australia launches business class-only airline
By MERAIAH FOLEY
29 November 2005

SYDNEY, Australia (AP) - As other airlines cut frills and perks, a new business class-only airline in Australia is trying to attract corporate high flyers with spacious leather seats, free alcohol and hot meals served on real china.

But whether luxury airline OzJet can survive will depend on how successfully it can entice corporate clients away from the dominant airlines' frequent flyer programs, an aviation expert said Wednesday.

The brainchild of former Formula One race team owner Paul Stoddart, OzJet took to the skies this week with just eight daily flights between Australia's two largest cities, Sydney and Melbourne, and limited weekend service.

Fares are expected to cost around 325 Australian dollars (US$240) one-way for the 90 minute flight, compared to about A$409 (US$302) for a one-way business class ticket on OzJet's main rival, Qantas Airways.

"Whether ... that will entice some people away from the corporate contracts that Qantas has or entice the individual away from their own personal frequent flyer programs will remain to be seen," said Andrew Miller, the chief executive of the Center for Asia Pacific Aviation.

Miller said Qantas -- Australia's largest airline -- currently has about 85 percent of the corporate market and around 3.8 million frequent flyers.

The country's second largest airline, Virgin Blue, has also launched a new frequent flyer program, Miller said.

"Personal frequent flyer programs for the individual are quite a set of handcuffs in terms of the individual's ability to switch airlines," he said.

OzJet's limited flight locations could also prove problematic, Miller said.

"Clearly, when OzJet are only flying between two cities, it doesn't cover the whole network and they're not in a position to offer city coverage in a way that either Qantas or Virgin Blue can," he said. "So whether there's role for this niche product ... in Australia still remains to be seen."
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Old November 30th, 2005, 09:53 PM   #347
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Virgin tells Qantas it's a New World
STEPHEN BARTHOLOMEUSZ
1 December 2005
The Sydney Morning Herald

VIRGIN Blue has, for the first time, publicly articulated its revised strategy. While unlikely to set off any alarms at Qantas, it does provide an insight to how Virgin Blue plans to broaden the tussle for market share and yield, and its own view of its competitive advantages.

The strategy was presented to a conference of senior Virgin Blue managers yesterday, with the main points published in the Centre for Asia Pacific Aviation's weekly report on low-cost carriers (LCCs).

In it, Virgin Blue talks about the evolution of such carriers. When the LCC phenomenon was new, there were few carriers, little overlap between their markets and a focus on developing new routes or contesting routes with high-cost incumbents. They were highly differentiated from legacy carriers and were distinct propositions - in value and product.

More recently, as markets have become more crowded, LCCs have started to cross swords with each other and with LCCs like Qantas's Jetstar, established by legacy carriers.

"The problem with the 'baby LCC' strategy is that it does nothing to address the situation where LCCs directly take on legacy carriers in core trunk markets competing for higher-yielding business travellers, which will increasingly be the case," the airline said.

The paper said legacy carriers had relied on network strength and product differentiation to garner a yield premium to offset their cost disadvantage.

"But what happens when a new type of carrier begins to offer the same features that drive the yield premium, yet maintains a significant cost advantage?"

As Virgin Blue says, this isn't a hypothetical question because Virgin Blue itself is doing precisely that. It describes the new version of LCC as a "New World Carrier" and says it is probably the leading example of the new type of LCC.

What differentiates Virgin Blue from most LCCs is that, thanks to the demise of Ansett, it is a network rather than point-to-point carrier. It offers national coverage, multi-sector boarding passes, through-checked baggage, international and regional inter-line and codeshare arrangements plus the frills of airport lounges and now a frequent flyer program.

It is a low-cost version of a full-service airline which offers the frills that are paid for either separately or by trading off incremental increases in its costs for significant gains in yield.

Virgin Blue's big advantage over Qantas is the productivity of its assets and people - an advantage that Qantas can't attack because of legacy industrial relations, aircraft and systems. Provided Virgin Blue remains disciplined, it can trade off costs and yield at the margin and seek to expand its market share faster than its capacity growth - at Qantas's expense.

Qantas has, of course, responded to Virgin Blue by launching Jetstar. On some routes the start-up character of Jetstar has allowed Qantas to circumvent its legacy issues. Only about 20 per cent of Virgin Blue's capacity, however, competes directly with Jetstar - the rest is directed against Qantas and, as Virgin Blue drifts slightly upmarket in its product offerings, represents an increasing threat to Qantas's yields.

Jetstar does give Qantas an ability to compete with Virgin Blue in the discount travel market and also ensured that it closed the door on any aspiring LCC trying to enter the market with a true non-frills product. Ironically, however, without the risk that it would be leaving its own back door open to a lower-cost LCC, Jetstar allows Virgin Blue to make that drift upmarket and target Qantas's core business traveller market.

Virgin Blue says the initial competition between the LCCs was largely a "land grab" in short-haul markets, with the profits of incumbents almost incidental victims. Now the turf has been largely staked out, and limits to the profits at the low end of the market have become apparent, they would target the yields of legacy carriers by contesting both the premium and budget ends of the market with a low-cost and value-added product off one platform. The ambition of New World Carriers was to achieve LCC cost bases with legacy carrier yields.

The apparent Virgin Blue declaration of war doesn't signal any sudden eruption in the market, either through a massive increase in capacity or an outbreak of large-scale discounting. Rather, Virgin Blue is backing its ability to enhance its product and siphon more than its fair share of the growth in the market and steadily improve its load factors and yields at Qantas's expense.

It doesn't want to do anything that would force Qantas to re-draw its "line in the sand" and throw its profits at the upstart. Qantas has its international business to help sustain a destructive price or capacity war.

Even if Virgin Blue attracted the entire growth in passenger volume, it would take 15 years or more for it to hold half the market - which gives Geoff Dixon and his successors time to continue to reduce the Qantas cost base and finesse the relationship between the various Qantas offerings and Jetstar.

It is unlikely the hyperactive Dixon could contemplate either sharing the domestic market evenly with Virgin Blue or waiting until Virgin was entrenched in his core high-yield segments. The launch of Jetstar and the aggressive segmentation of its Qantas offerings have already been quite radical responses to the threat Virgin Blue poses.

If Virgin Blue is right and its New World Carrier model is a foretaste of the next generation of LCC competition for the legacy carriers, Qantas's continuing attempts to defend its home market will be monitored anxiously, not only by its shareholders but around the globe.
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Old December 2nd, 2005, 01:34 AM   #348
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OzJet flights cut back
Scott Rochfort
2 December 2005
The Sydney Morning Herald

AUSTRALIA'S newest domestic airline, OzJet, has been forced to cancel a quarter of its flights between Sydney and Melbourne just two days after its launch due to a lack of patronage.

The airline's founder, Paul Stoddart, conceded it had cancelled two of its eight return flights yesterday.

"There is no point flying flights during the day with a couple of people on them," Mr Stoddart told the Herald. The two flights were in the early and mid-afternoon, a time normally quiet for business traffic.

"We just rang the people up and said, 'Would you like to go on an early or late flight?' There was no hassle in it."

Mr Stoddart, however, insisted all was going to plan despite OzJet also being forced to cut fares to fill seats. The airline has cut the price of its standard one-way fares from $305 to $249 from next week until January 31.

He said he knew the business class airline would struggle with a slowdown in corporate travel in December and January.
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Old December 3rd, 2005, 07:17 AM   #349
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Emergency Landing In Australia
9 Passengers Hospitalized

2 December 2005

BRISBANE, Australia (AP)--Nine passengers on a Virgin Blue (VBA.AU) flight were hospitalized after their plane made a rapid descent because of a cracked outer windscreen, officials said Saturday.

"The nine people affected had typical decompression stuff like nose bleeds, head aches, nausea," Queensland Ambulance Spokesman Michael Franks said.

The Boeing (BA) 737, carrying about 100 passengers from Townsville in northeast Australia to the east coast city of Brisbane, made the descent late Friday night after suffering a cracked outer windscreen, the Australian Associated Press reported.

The plan then made an emergency landing at Brisbane Airport, it said.

Virgin Blue did not immediately return calls seeking comment.
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Old December 4th, 2005, 07:28 AM   #350
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Qantas considering international flights for its domestic carrier Jetstar, CEO says
3 December 2005

SYDNEY, Australia (AP) - Qantas Airways is considering allowing its budget domestic carrier Jetstar to spread its wings and fly to international destinations, Qantas' chief executive said Sunday.

Geoff Dixon told Australian Broadcasting Corp.'s Inside Business that the Qantas board will next week discuss the possibility of Jetstar beginning international flights.

"We haven't announced the routes," he said, but added they initially would be within eight to 10 hours of Australia -- putting them in the Asia-Pacific region.

Dixon said the plan would not hit Qantas' operations as Jetstar would fly routes that the national flag carrier does not operate on.

"Routes that either Qantas has withdrawn from in the past 10 years or may have withdrawn over the last year or so and also new routes" will be targeted, Dixon said. "Certainly we want to try and find ones that Qantas and Australian carriers don't fly to."

If the board approves the plan, Jetstar could begin international flights within a year.

Jetstar took to the Australian skies in May 2004 to compete with British tycoon Richard Branson's cut-rate domestic carrier Virgin Blue. It offers unreserved seating, food only if purchased, smaller than normal seats and reduced spaces between rows.
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Old December 4th, 2005, 08:27 PM   #351
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New Jetstar division to be given its wings
Scott Rochfort
5 December 2005
The Sydney Morning Herald

THE Qantas board is expected to approve the launch of Jetstar International on Wednesday and allow a $20 billion order for up to 100 long-haul aircraft.

By the end of next year Jetstar International is expected to start flying to destinations within 10 hours of Australia, which could include cities such as Seoul, Taipei, Ho Chi Minh City and several leisure spots in South-East Asia. Europe and the US could come later.

The new airline will form a major plank in Qantas's five-year plan to slash $3 billion from its cost base by mid-2007.

It is understood Qantas wants to run the offshoot with a cost base 40 per cent lower than its mainline operations. It will operate from all mainland state capitals.

It has been speculated that Qantas could repaint its four A330-200s for the launch of the airline and lease additional jets.

But Qantas's fleet order this week could provide a bigger clue as to Jetstar International's medium-term outlook and size.

In an interview on the ABC's Inside Business program, Qantas chief executive Geoff Dixon played down the notion of Jetstar International ever rivalling the Qantas mainline in size.

He said it would probably represent no more than 20 per cent of Qantas's international operations.

Qantas is deliberating whether to buy 300-seat Boeing 787s or Airbus 350s for the low-cost offshoot. It is expected the other tranche of the order - ultra long-range Boeing 777-200LRs or Airbus A340-500s - will go to Qantas's mainline operations.

Fuel prices could also be discussed at the board meeting.

While the price of jet fuel has fallen in recent weeks, Qantas is expected to face higher costs after January 1 because fuel hedging contracts are expiring. Qantas has hinted it could raise its fuel surcharge next year.

Another issue for discussion could be the fate of what has been dubbed Qantas's problem-child, Singapore-based Jetstar Asia.

Qantas has already sunk more than $50 million into the venture and its patience is said to be running out.

The 44.5 per cent Qantas-owned airline last week appointed its third chief executive, Neil Thompson, since it started flying nearly a year ago.

The airline has struggled to gain traffic rights into key routes into China and Indonesia.

It has also struggled to fully utilise its fleet of Airbus 320s, some of which it has had to sublease to a Turkish airline. High fuel prices have compounded its woes.

Amid criticism that Qantas's gung-ho approach in Asia has put some in the region offside, Mr Thompson's appointment is seen as positive. Fluent in mandarin, Mr Thompson could help Jetstar Asia to finally crack the Chinese market.

The signing of an air services pact between Singapore and China last week could also help.

This allows "airlines of both countries to operate passenger and all-cargo services between China and Singapore with no restrictions on capacity, routing or aircraft type", a Singapore Government statement said.
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Old December 4th, 2005, 08:27 PM   #352
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OzJet cuts flights, old planes playing up
Scott Rochfort
5 December 2005
The Sydney Morning Herald

JUST five days after its first commercial flight, OzJet now not only faces a lack of passengers but mechanical glitches with its fleet of 737-200s.

It has emerged that the cancellation of two of the eight OzJet return services between Sydney and Melbourne last Thursday was not just the result of a lack of passengers, as cited by the airline's founder, Paul Stoddart.

The cancellation may also have been caused by mechanical problems with one of OzJet's 30-year-old 737s.

Mr Stoddart did not return the Herald's phone calls yesterday. An OzJet spokesman said he was unaware of any problem but said any comment should be left to the "owner of the airline".

It is understood the part of the wing flap which helps the plane slow down during landing, known as the slat actuator piston, had "let go" or failed on an OzJet 737.

This is not considered a serious safety issue nor an unusual event for an aircraft. However, it will no doubt be a major disappointment - and embarrassment - given Ozjet's claims that its fleet of three 737s were recently given a major overhaul in Romania.

At the launch of OzJet's first commercial flight last Wednesday, Mr Stoddart said the aircraft had had "D" checks, which involved 18,000 man-hours and the replacement of every moving component that needed replacement.

After the cancellation of the flights last Thursday, Mr Stoddart blamed it on the lack of midday and mid-afternoon demand. But on Friday OzJet resumed the flights that were cancelled on Thursday.

Mr Stoddart told the Herald last week that OzJet would decide whether to have flights at the weekend. Judging by the airline's website yesterday, OzJet has decided to scale back its services from eight to six return flights between Sydney and Melbourne today and tomorrow.

However, flights have been bumped back up to eight flights from Sydney to Melbourne on Wednesday but maintained at six in the other direction.

Despite saying OzJet only had a "couple" of passengers on some of its mid-afternoon flights, last week Mr Stoddart said the business-class-only airline was filling 43 per cent of its seats on average, about 25 seats for each of the airline's 60-seat 737s.

In another blow to the airline, which boasts that one of its advantages is its on-time performance, OzJet has so far proved a tardy performer in its first days of operation. For instance, at least two of the airline's flights were about 40 minutes late on Thursday on top of the two that were already cancelled.

The scaling back of OzJet's schedule could make it tougher for the airline to secure business and government travellers. Virgin Blue and Qantas fly a combined 100 return flights a day between Sydney and Melbourne and, on top of that, both have frequent flyer schemes and business lounges.

In a bid to draw more passengers, OzJet has cut its standard one-way fares from $325 to $249 until the end of January.

OzJet has previously stated it only needed to fill 50 per cent of its seats to break even, based on the $325 air fare.
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Old December 5th, 2005, 06:07 PM   #353
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OzJet switch to catch peaks
6 December 2005
The Age

FLEDGLING business-class airline OzJet will rejig schedules tomorrow to put more emphasis on peak morning and evening periods.

The company, started by former formula one team owner and OzJet chairman Paul Stoddart, has also stepped up efforts to get "bums on seats" by introducing a discount fare.

The $249 one-way fare to Sydney for the next two months pitches a return fare of $498 at less than half the $1136 Qantas walk-up business return fare.

The OzJet fare is even cheaper than Qantas' $530 Flexi-Saver return fare.

Mr Stoddart said yesterday OzJet directors hoped the new offer would encourage flyers to try the service during the quiet part of the business travel year.

The fare includes a carry-on allowance of three pieces weighing up to 20 kilograms, which avoids delays caused by having to put third pieces in the hold.

In the cabin, travellers sit on a leather-covered seat with extra leg room and enough width to read a broadsheet paper comfortably.

Travellers also are served hot meals on china at the appropriate times.

Mr Stoddart said people might not realise that the Tullamarine business car park was directly below OzJet's terminal gate.

"It's two minutes from the gate and costs $35 a day, the same as the day parking," he said.

It is the second discount fare offer from OzJet, which only started flying a week ago after winning its operator's certificate unexpectedly early.

"The first two months were always going to be bloody hard," Mr Stoddart said. The new flight schedules between Melbourne and Sydney, the company's only route, will take services out of the middle of the day and give OzJet more opportunities to win customers at peak times.

"There is not the same demand in the middle of the day," Mr Stoddart said. "That's fine. We have always been flexible about the schedule as we learn about the market."

Mr Stoddart said the flights in the middle of the day explained some of the patchy loads.
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Old December 6th, 2005, 02:09 AM   #354
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Qantas cuts commissions to agents
Tansy Harcourt
6 December 2005
Australian Financial Review

Qantas has cited fierce competition and continued high oil prices for its decision to slash commissions it pays to travel agents.

It is the second time in 12 months that Qantas has reduced fees to agents - a sector struggling to retain profit growth.

Shares in Australia's biggest travel agency, Flight Centre, plummeted 12 per cent to $9.06 after Qantas's announcement.

Qantas is "operating in an extremely challenging environment with fierce competition domestically and internationally, as well as continuing high fuel costs," said Qantas head of sales and marketing Rob Gurney.

Australia's biggest airline is looking to cut $3 billion of costs over the next three years to offset higher fuel prices and competition in the international market.

It has already announced plans to axe management positions, potentially move maintenance jobs offshore and expand its lower-cost base carrier, Jetstar.

The cost-cutting drive comes as Qantas mulls a $20 billion fleet replacement program. A decision on new aircraft is expected tomorrow, along with plans to expand Jetstar into international markets where fares are not high enough for Qantas to profit.

Until this year, Qantas paid out about $100 million in fees to travel agents annually. The airline has been working to significantly reduce that amount by moving to a system that rewards overall sales targets.

From April 1, Qantas will axe agents' commissions on flights across the Tasman and drop its commission on all other international flights from 7 per cent to 5 per cent.

At the start of this year, Qantas lowered trans-Tasman commissions from 5 per cent to 1 per cent, and other international routes from 9 per cent to 7 per cent.

Virgin Blue has just changed its fees policy, moving from a base-commission structure to an incentive-based payment to travel agents.

Qantas produced an 18 per cent increase in profit to a record $763.6 million in the year to June 30, but warned that increases in fuel costs would most likely result in a fall in profit this year.

A key plank in Qantas's strategy to offset fuel costs - which account for more than a quarter of operating expenses - is to accelerate its rollout of Jetstar, which can be more aggressive on airfares, even when oil prices are at near historic highs.

Jetstar has been working on a plan to sell airfares through Australia Post, as well as through agents, as a way of reducing costs. This plan, however, requires changes to state legislation which might not be granted.
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Old December 6th, 2005, 08:35 PM   #355
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Virgin bowls a googly over US route
7 December 2005
Australian Financial Review

Virgin Blue's late entry into the lobbying battle over competition on the trans-Pacific route between Australia and the United States has increased the chances the government will delay a decision on the issue until the new year.

A senior government source said yesterday that cabinet would next week discuss aviation policy and a push by Singapore Airlines to be allowed to compete against Qantas on the lucrative US-bound routes, which account for about 15 per cent of the airline's profit.

But the source said it would not be surprising if cabinet decided to keep the issue under consideration and assess the impact of opening the route to greater competition on Virgin's ability to expand its international operations.

Asked whether cabinet would make a decision on the issue, Prime Minister John Howard told journalists: "Not immediately."

Virgin has argued that if a new airline were to be given access to the Pacific route it should be another local carrier and that such a new Australian entrant should be insulated from competition from a major international airline like SIA for several years.

Virgin chief executive Brett Godfrey has met ministers and government advisers, including officials in the Prime Minister's Office, on the issue in the last two days.

This has complicated the picture for the government in balancing Qantas's commercial interests in maintaining a dominant position on the route against arguments that allowing SIA to compete would boost capacity and reduce fares for consumers.

Coalition MPs who support Qantas pushed the airline's case in the joint Liberal-National party-room meeting in Canberra yesterday.

Gold Coast-based Liberal MP Steven Ciobo said Australia should move eventually to an open skies aviation policy but the Pacific route was "one of the few aces up our sleeve when it comes to international aviation".

"Forcing Qantas to compete with other airlines that have different cost bases and significant financial support from their governments is manifestly unfair and would be in opposition to Australia's national interest," he said.

But those in government pushing for more competition on the route will gain ammunition from new international tourism figures to be published today.

The figures will show relatively subdued growth in the latest 12 months of around 3 per cent in arrivals of visitors from the US.

The right of airlines to fly on international routes is determined by bilateral international air services agreements negotiated between governments. The Singapore government has asked its Australian counterpart to renegotiate the existing bilateral agreement to give its national flag carrier, SIA, the right to fly from Singapore to Australia and then on to the US west coast.

Last month, Transport Minister Warren Truss said he expected the government would make a decision on the issue within the next few months.

Some industry lobbyists are expecting a decision next week as it is the last scheduled cabinet meeting for the year.

An interdepartmental committee of bureaucrats chaired by the Department of Transport and Regional Services is understood to have completed its review of Australia's international aviation policy about two weeks ago.

KEY POINTS

Virgin's interest has complicated matters for cabinet.

Cabinet is discussing aviation policy and the Pacific route.

But some industry lobbyists are expecting a decision next week.
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Old December 7th, 2005, 07:08 AM   #356
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Australia's Qantas mulls giant aircraft order: reports

SYDNEY, Dec 7 (AFP) - The board of directors of Australian flag carrier Qantas Airways met Wednesday amid expectations they may launch a new international strategy that could involve ordering up to 15 billion US dollars of new aircraft.

Industry sources said Qantas was considering ordering Boeing 777's or rival Airbus A340 aircraft for use to destinations within 10 hours flying time of a base, which could be outside Australia but within Asia.

The aircraft would go to Qantas budget offshoot Jetstar and be aimed at markets which Qantas has withdrawn from in recent years, such as Taipei and Seoul, as well as leisure destinations such as Phuket in Thailand.

A Qantas spokesman would only say that a statement on the board's plans would be made at the appropriate time.

The industry sources said Qantas was keen to expand on its successful Jetstar domestic operation in Australia, launched in 2004, and capture a greater share of the growing leisure market in the Asia-Pacific region.

They said Wednesday's board meeting was of the most significant in 10 years for the airline as Qantas establishes a plan for growth in the decade starting 2010.

Last weekend Qantas chief executive Geoff Dixon indicated that a new subsidiary named Jetstar International could ultimately account for as much as 20 percent of the Qantas Group's international flying.
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Old December 8th, 2005, 01:45 AM   #357
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Australia's Qantas: JetStar To Fly Long-Haul Routes
7 December 2005

SYDNEY (Dow Jones)--Australia's Qantas Airways Ltd. (QAN.AU) said Thursday it will expand its Jetstar domestic budget carrier to international routes.

Qantas Chief Executive Geoff Dixon said in a statement Jetstar would begin international operations with 10 aircraft by January 2007, flying point-to-point services between Australia and Asian Pacific cities. [ 07-12-05 2300GMT ]

The Qantas board, which Wednesday failed to reach a decision on whether to award a A$15 billion to A$20 billion aircraft contract to Boeing Co. (BA) or Airbus Industries (ABI.YY), will meet again on Wednesday, Dec. 14, to further consider its long-term fleet replacement program, Dixon said in the statement.

"This meeting is expected to discuss and approve major aircraft purchases, including the new aircraft for Jetstar's international operations," he said.

Jetstar International's network may be expanded at a later stage to include two-stage flying to destinations in Europe. The new carrier will work closely with Qantas' majority-owned Singapore-based Jetstar Asia (JETSTAR.YY).

Jetstar's first destinations, to be announced mid-2006, will be within six to 10 hours flying time from Australia.

The Jetstar group was expected to operate a fleet of 60 narrow- and wide-bodied aircraft across its domestic and international network within five years, Dixon said.

"However, this expansion will not be in any way at the expense of the Qantas full service domestic and international operations," he said. "The Qantas mainline operations are and will remain our primary focus."

Jetstar International will be a two-class airline, with its StarClass offering a seat similar to Qantas' domestic business class seats.

Jetstar, which began flying in May 2004, will have a fleet of 23 A320s by mid-2006.

Sydney-based Qantas announced in August it intended buying or leasing between 60 and 100 new wide-bodied planes, with any purchase to be funded through operating cash flow.

The Qantas order will be the biggest aircraft order to be placed this year, with delivery of the first plane due after 2010.

Between 2000 and 2010, Qantas will have spent A$18 million on new planes, including the 23 Airbus aircraft ordered for Jetstar and an order of 12 Airbus superjumbo A380s.

Competition between Boeing and Airbus for the fleet replacement contract had been intense, and had prompted the "closest contractual race I have ever seen in my time in the industry," Dixon said Sunday.

Qantas, seeking more-efficient aircraft in the face of soaring fuel costs, is considering using Boeing's 787 and Airbus' A350 on medium-haul routes and the Boeing 777 and Airbus A340 on longer "hub-busting" routes.
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Old December 9th, 2005, 02:38 AM   #358
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Branson wants his baby back
Blair Speedy, Steve Creedy
9 December 2005
The Australian

VIRGIN Group boss Richard Branson says he will put together a consortium of investors to buy Virgin Blue back from Patrick Corp if Toll Holdings fails in its hostile bid for Patrick.

"It's my baby and it's been taken away. We want it back and we'll do everything we can to get it back," he said.

In Sydney to celebrate Virgin Blue's fifth anniversary this weekend, Sir Richard said he was confident Toll would succeed in its hostile bid for stevedore Patrick, which had a 62.4 per cent controlling stake in the airline after completing a takeover bid earlier this year.

Sir Richard is backing Toll's bid, under which Virgin Group could increase its stake in Virgin Blue from 25 per cent to 40 per cent by underwriting the sale of a 15 per cent stake in the discount airline.

Following a breakfast meeting with Toll chief Paul Little he said he was "absolutely sure" Toll would succeed in taking over Patrick, despite regulatory concerns over the effect of the merger on competition in the rail market.

"He knows most of what the ACCC are asking for and he feels he can deliver."

Last month, the Australian Competition and Consumer Commission (ACCC) released a preliminary view that the proposed takeover would lead to a substantial lessening of competition, but the regulator has not yet decided to oppose the merger and is carrying out further investigations.

Under the $4.6 billion hostile bid, Toll proposes to dilute Patrick's controlling stake in Virgin Blue to around 10 per cent and sell the shares to Sir Richard's Virgin Group.

"If for any reason they're not successful, I might have to put my hand deep in my pocket and get a few other people to put their hands deep in their pockets to have a look at it," he said.

"We would stay on as a minority shareholder, but we might want to find other ways of taking Patrick out."

Sir Richard also vowed to push ahead with a full-service international offshoot of Virgin Blue once the airline's ownership issues were resolved. Likely routes would include Los Angeles, Japan and possibly Hong Kong.

Sir Richard said the airline could start operations as early as next year with five widebody jets. "I would hope that if we can get the planes it will be later next year," he said.

However, he conceded it might not be able to carry the Virgin name because of the veto Virgin Atlantic equity partner Singapore Airlines had over the brand's use on other international carriers.

A decision by the Australian Government to give the Singaporeans access to trans-Pacific routes would also put a "massive question mark" over the plan.

Asked about the effect on Virgin's plans of Qantas moves to start up Jetstar International, Sir Richard expressed doubts about the Qantas offshoot's viability and predicted it would lose to a full-service Virgin product in head-to-head competition.

"I think that historically setting up a long-haul, low-cost carrier does not work," he said. "Every one of them has gone bankrupt -- People's Express, Freddy Laker, you name it."

Also, Virgin Atlantic yesterday said it hoped to boost premium-class passenger loads to Australia by offering more seats to London next year after moving unexpectedly into the black on its year-old Sydney-Hong Kong route.

The airline, which says it recorded a small profit in its latest six months, fills only about 55 per cent of its business and premium economy seats on its Sydney-Hong Kong routes.

Sir Richard agreed this was partly due to a bottleneck in Hong Kong, where high load factors on flights to London made it hard for Australians to get a through fare.

"The second Hong Kong-London service, which will be at a similar time, will certainly make a big difference and I think will be the icing on the cake as far as Sydney's concerned," Sir Richard said.
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Old December 9th, 2005, 02:39 AM   #359
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More mechanical problems cut OzJet flights
Scott Rochfort
9 December 2005
The Sydney Morning Herald

AFTER a bumpy first week in the air, Australia's newest domestic airline, OzJet, has encountered more mechanical problems which delayed two flights between Sydney and Melbourne yesterday morning.

The airline blamed the cancellation of a peak hour service out of Melbourne and another out of Sydney on a faulty "hydraulic pipe".

But OzJet founder Paul Stoddart hit out at the media's reportage of his airline's teething problems, saying journalists paid little attention when Qantas and Virgin Blue cancelled flights or had technical problems.

"If out of 100 flights a week you end up with one problem it's quite normal," Mr Stoddart said. He complained how a leaking hydraulic pipe could warrant media coverage while a cracked window on a Virgin Blue flight last week barely made it into the newspapers.

He questioned why the Herald was interested in a cancelled OzJet flight while he could "see cancelled [flights] from the opposition". At the time Mr Stoddart made the comment, around 10.30am, Qantas or Virgin Blue had cancelled no flights between Sydney or Melbourne yesterday.

According to the latest Bureau of Transport Economics figures for September, Virgin Blue cancelled 0.2 per cent of its flights, Jetstar 0.2 per cent and Qantas 1.2 per cent.

Mr Stoddart initially blamed the cancellation of four OzJet flights last Thursday on the lack of demand for midday services. The airline has since rejigged its timetable. However, last Thursday's delays were put down to one of OzJet's 30-year-old 737-200s having mechanical problems on a wing flap.

Mr Stoddart said OzJet knew it would always have a few teething problems and have a tough time attracting business passengers during December and January.

"We've really budgeted for the losses," he said. He declined to say how much the airline was losing.

OzJet's latest statements about its business plan staying intact do not explain why the airline has sharply changed its previously stated policy of not undercutting Qantas and Virgin Blue's fully flexible fares.

Last month OzJet said it was not planning to lower its ticket price below $305 one-way.

It is now selling one-way tickets for $249.
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Old December 10th, 2005, 12:27 AM   #360
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Virgin Blue wins fight over costs
10 December 2005
The Age

VIRGIN Blue has scored a big legal and moral victory over Sydney Airport after the Australian Competition Tribunal upheld the airline's appeal to have the Federal Government reimpose controls on pricing at domestic airports.

After a one-year wait, the Federal Court-administered tribunal upheld Virgin Blue's claim that Macquarie-controlled Sydney Airport had abused the Government's deregulation of airport pricing three years ago.

"We are satisfied that SACL (Sydney Airport Corp Ltd) has misused its monopoly power in the past, and that, unless the airside service is declared, competition in the dependent market will continue to be affected," the tribunal said in a summary of its findings handed down in Melbourne yesterday.

Airside service refers to all the charges relating to aircraft landing and docking.

The tribunal ruled that airside service charges should again be "declared", meaning pricing negotiations between the airport and airlines now need to be approved by an arbitrator, most likely the Australian Competition and Consumer Commission.

Melbourne Airport will not be affected by the decision, according to a spokeswoman.

The airport has had commercial agreements in place on usage charges with airlines, including Virgin Blue, since 2002 and relations had been harmonious, she said.

However, Virgin's Sydney win leaves the door open for airlines to demand re-regulation of other airports, including Melbourne, when current commercial agreements expire.

The tribunal, which is expected on Monday to hand down detailed reasons for its determination, rubbed salt in the airport's wounds when it said the move to base landing charges on an aircraft's take-off weight, as opposed to number of passengers, had "adversely affected low-cost carriers such as Virgin Blue as against full-service airlines such as Qantas".

It said the evidence was that SACL decided on its charging policy "because Qantas preferred it".

For Virgin Blue's managing director, Brett Godfrey, yesterday's decision was a sweet victory.

For three years he has protested about the airport, which he claimed had raised its fees by 97 per cent before its 2001 privatisation and by a further 52 per cent since.

"This is not about winning or losing, this is simply about having an arbitrator," Mr Godfrey said after the decision.

"This allows us to undertake real negotiations, not one-sided negotiations."

Qantas also welcomed the decision. "It provides us with a better position to negotiate terms and conditions for our operations at Sydney Airport and into the future," said Qantas' general manager for airports and catering, Grant Fenn.

"If commercial negotiations break down, we now refer a dispute to the ACCC for arbitration."

Sydney Airport expressed disappointment, but it noted that the decision related only to domestic airside service, which it said represented less than 10 per cent of the airport's revenue.

Sydney Airport chief executive Max Moore-Wilton said the airport's "domestic runway charge is already the lowest passenger-based charge in Australia".

A Macquarie spokeswoman said the decision was a disappointment, but the effect on Macquarie would be negligible. -- With ROD MYER

KEY POINTS

Virgin wins its three-year legal battle against increased landing costs at Sydney Airport.

ACCC will be given power to both approve and arbitrate airside service charges.
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