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Old March 23rd, 2005, 09:26 AM   #141
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Now, Virgin and Jetstar race for corporate pie
Miles Clarke
23 March 2005
Australian Financial Review

The budget airlines are discovering that to attract business they have to offer more than just cheap tickets, writes Miles Clarke.

With the summer holiday makers safely home, the airline bosses are hoping to attract more business travellers in their efforts to build market share.

The main tussle is between Virgin Blue and Jetstar, with both airlines playing down their low-budget carrier ethos in recent weeks in order to secure a larger slice of the corporate pie.

Jetstar now offers customers who pay a premium for a flexible (JetFlex) ticket the opportunity to add to their Qantas frequent-flyer points, a benefit aviation commentator Peter Harbison, of the Centre for Asia Pacific Aviation, says is a major drawcard.

"Many travellers are quite obsessive about their frequent-flyer points and if there's a choice of carriers they'll opt for the one offering the points."

Virgin also has shifted its position on business travellers with its new Blue Plus fares allowing a money-back refund (with a $30 administration charge), or a full credit for a flight within 12 months of the original booking, where the passenger has failed to check in or cancelled their flight.

According to Harbison, air tickets have become a consumer commodity in much the same way as mobile phones, and the budget carriers have reached a position where they can't trawl for new customers by price. With the domestic air-travel market growing only by 4 to 6 per cent a year, they need to increase their business-travel base, which offers a better yield.

"Virgin is evolving and adapting to market conditions. It might have the appearance of a budget carrier, but effectively it's becoming a hybrid, with a mix of services.

"They've built their business by getting more people flying, but they're hitting the wall in that area and need to find new customers."

While neither of the budget carriers is prepared to divulge their percentage of business travellers, Virgin Blue admits it has more than 1000 corporate travel accounts and is encouraging companies not to lock themselves into exclusive airline contracts but rather have a "preferred-carrier" status, to leave room for flexibility.

"We are demonstrating how companies can use 'best fare of the day' policies and preferred-carrier arrangements to remain in control of their travel spends and at the same time command the privileges they enjoyed under exclusive deals," says Heather Jeffrey, head of corporate affairs for Virgin Blue.

The airline carries in excess of 35,000 passengers a day.

Virgin's tilt towards the full-service model extends well beyond the refund on unused tickets and in some instances surpasses the heady days of the Qantas/Ansett duopoly.

Blue Plus ticket holders get free entry into the airline's Blue Room lounges in Sydney, Brisbane and Melbourne, priority check-in, seating in the "suit zone" towards the front of the aircraft, 32 kilograms of checked luggage, and the ability to change the name of the traveller, the flight time or the date without penalty.

The busy Sydney-Melbourne route has about 50 flights a day, providing a departure every 15 minutes at peak times of the day.

While reluctant to divulge the level of business traffic it's attracting, Jetstar says on certain routes it carries as much as one in five passengers on business-related travel.

Says Simon Westaway, manager corporate affairs for Jetstar: "Within our existing 30-route network, many routes across the 15 destinations we now fly, such as direct Newcastle-Melbourne and Newcastle-Brisbane, Brisbane-Mackay, our outbound/inbound services in Tasmania and the fast-growing Gold Coast market, are by the very nature of Jetstar being a point-to-point carrier, attracting sound and growing levels of business clientele."

The airline is also protecting its flexible ticket holders from the unseemly scramble for seats which occurs with its unassigned seating system. JetFlex passengers receive an orange pre-boarding card which allows them to board alongside families with young children and the elderly.

"This new boarding process has been well received by our business and corporate travel base since its implementation. The coloured boarding pass process and treatment of JetFlex passengers adheres to Jetstar's low-cost principles whilst offering a valuable new benefit to choose an early seat on an aircraft,"says Westaway.

Jetstar flies 880 services to 15 destinations weekly and customers who are Qantas Club members continue to use the lounge facilities where offered. The Gold Coast has six daily flights to Sydney, with many commercial travellers opting for Coolangatta over Brisbane airports, says Westaway.

Flight tips
Many travellers will opt for the carrier offering frequent flyer points.
Virgin Blue admits that it now has more than 1000 corporate travel accounts.
Blue Plus ticket holders get free entry into the airline's Blue Room lounges.
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Old March 23rd, 2005, 05:57 PM   #142
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Virgin profit warning puts Patrick in tail spin
By SCOTT ROCHFORT, SYDNEY
23 March 2005
The Age

VIRGIN Blue Holdings' standing among investors has slumped to a new low after the airline issued its third profit warning since August, saying it could face $US70 million ($A89 million) in extra fuel costs in the year to March 31, 2006.

The airline contends the move does not constitute a profit downgrade.

The warning comes just four days after Patrick Corp secured a 50 per cent stake, with Virgin Blue suddenly lowering its defences and recommending "short-term" shareholders accept Patrick's $1.90-a-share takeover bid.

The warning also coincided with a U-turn from independent expert Grant Samuel, which said Virgin Blue shares could trade below Patrick's $1.90 offer once the bid lapsed. It is only three weeks since Grant Samuel valued the airline's shares at between $2.43 and $2.90.

Citing the recent rise in Singapore jet fuel prices for its change in tune, Grant Samuel argued the price of aviation fuel had risen 10 per cent since the release of the Virgin Blue Target's Statement in late February.

But with analysts already warning of the impact of higher oil prices, there are suspicions about the airline's motives for the announcement. One is that Patrick boss Chris Corrigan could end up with more Virgin Blue shares than he needs, given he has hinted he wants only to secure control of the airline.

With the offer not closing until April 1, the downgrade could prompt shareholders - even Virgin Group, with 25.6 per cent - to accept the offer.

Patrick shares fell 24 � to $6.15 yesterday on fears the transport operator could end up with more of a poorly performing airline on its balance sheet. Virgin Blue shares were steady at $1.90.

But Virgin interim chairman David Ryan dismissed suspicions about the timing of the downgrade.

He said that unlike institutional shareholders, Virgin Blue's 15,000 mostly retail shareholders were not up to date on the movements of commodity prices such as oil. He said the announcement was appropriate "particularly given that aviation prices hit an all-time record high on Friday last week".

However, it has taken only a five-day jump in jet fuel prices for Virgin and its independent experts to cut drastically their $2.43-$2.90 target price to Patrick's $1.90 offer.

Virgin also disputed that the announcement amounted to a profit downgrade.

"A profit downgrade would be called a profit downgrade and would be specifically designed (to signal) a change for the full year," spokeswoman Heather Jeffery said.
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Old March 25th, 2005, 05:57 PM   #143
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Malaysia air battle looms on kangaroo route
26 March 2005
The Courier-Mail

MALAYSIA Airlines is to take on Qantas and British Airways on the Australia-London "kangaroo route" and will spend RM700 million ($A238.8 million) upgrading its first and business class cabins.

The airline is refurbishing 17 Boeing 747-400 and 17 Boeing 777-200 aircraft for its long-distance flights in a bid to capture a greater market share of the global high-end traveller market.

Malaysia Airlines is the third largest foreign airline in Australia and services the Australia-UK route daily.

Assistant general manager/product development and services Encik Azmil said the kangaroo route was very important to the airline.
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Old March 25th, 2005, 05:58 PM   #144
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Soaring fuel costs set to spark airfare hike
Peter Morley
26 March 2005
The Courier-Mail

IF you are thinking about flying south for a weekend escape, chances are you had better book and go now.

The days of super-cheap domestic airfares appear to be numbered, as spiralling fuel costs force airlines to raise their prices.

Virgin Blue, whose hedging arrangement expires at the end of this month, has already signalled that record high aviation fuel bills will have to be offset -- most likely by a new fuel levy.

Qantas flyers may get a little more leeway because of the organisation's forward fuel purchasing arrangements, but inevitably it also will have to pass on the higher costs to its mainline operation and discounter Jetstar.

"There are going to be additional surcharges imposed -- that is a certainty," Aviation Centre for Asia Pacific spokesman Ian Thomas warned yesterday.

"Virgin has made that fairly clear, and the other airlines will not hold back once one company moves."

Both Qantas and Virgin confirmed that customers who paid now would not be slugged with any surcharges that emerged later in the year.

There is also some hope for the discount flyers who chase the $10 tickets.

According to industry insiders price tension between Qantas headed by Geoff Dixon and Virgin -- now controlled by Patrick tough man Chris Corrigan -- will lead to relatively stable fares.

"There is enough price tension in the Australian market that flying will remain relatively affordable, but there will not necessarily be the excesses of the past," one observer said.

"The major players will circle each other, each worried about putting up prices ahead of the other."

And there should be no need for the airlines to beat each other around the head any more.

"That is what the showmen entrepreneurs at Virgin did when they started up," another insider said.

"They poked and prodded Geoff Dixon's cage so often with a stick that suddenly he bent the bars and was out there with his hands around their neck. That is how Jetstar came about."

Mr Thomas doubted that there would be "any great adjustment" in fare structures, although pricing strategy might change because of Mr Corrigan's unhappiness with big discounting approaches.

"I think you will find a more moderate approach to pricing competition, although you will still see very sharp fares at particular times of the year when demand is at its lowest," he said.

"Mr Corrigan's main aim is to improve returns from the market in general, but to especially increase profitability of the business market."

Tourism leaders were unconcerned at speculation the days of ultra-cheap air fares were over.

Tourism and Transport Forum spokeswoman Caroline Wilkie said although regional centres across the state had benefited enormously from low airfares in recent years, bargains were still readily available.

"Fares will still remain competitive because airlines are keeping their costs low," she said.

Queensland Tourism Industry Council chief executive Daniel Gschwind said he doubted air fares would revert to the levels experienced seven or eight years ago.

"Clearly we always knew the $10 and $20 air fares were not going to be a long-lived thing," he said.

"But those fares have not driven the tourism growth in recent years and as long as we have multiple airlines there should be price stability."
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Old March 25th, 2005, 05:59 PM   #145
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It might take magic to get airline flying
By SCOTT ROCHFORT, SYDNEY
26 March 2005
The Age

PAUL Stoddart is facing an uphill battle to have OzJet in the air by late August, with the carrier yet to lodge a formal application with the safety regulator to operate services and yet to sign several key commercial agreements it claims it already has.

The Civil Aviation Safety Authority (CASA) is expected to scrutinise OzJet's plans to operate 30-year-old Boeing 737-200s, and it could take up to a year for the airline to get the certificate it needs to run an airline.

OzJet chief executive Hans van Pelt has dismissed talk that the airline is behind schedule.

He said the airline's timetable to establish itself at its new Adelaide base and start services within five months was "moving ahead nicely".

As for delays in OzJet gaining its certificate, he said: "The people saying it are completely unaware of when we first (met) CASA and when we got the balls rolling."

But a CASA spokesman recently said it would take at least six months for OzJet to get its certificate. Virgin Blue took 10 months to get its certificate in 2000.

"OzJet is now in the throes of appointing the final people to run the airline," van Pelt said, referring to a chief pilot, head engineer and maintenance controller.

Stoddart recently returned to Britain before ending talks with liquidators KordaMentha over the purchase of four BAE 146s from the failed Ansett.

OzJet, meanwhile, claims on its website that it has a "partnership with Ansett Aviation Engineering Services". But this appears premature.

The former Ansett maintenance division has yet to sign any agreement to maintain OzJet's proposed fleet of 10 aircraft, including the four previously owned by Ansett.

At a media conference in Sydney last week, van Pelt said OzJet had three of the former Ansett BAE 146s undergoing heavy maintenance "D" checks in Melbourne, indicating the company already owned the aircraft.

But he appeared to contradict himself on Thursday when he said a contract to buy the BAE 146s was "close to being finalised".

Despite OzJet still failing to show any evidence that it might get approval to fly by August, van Pelt said: "I'm yet to meet a person that says that this isn't going to work."

But there are many who doubt OzJet's chances of survival.

"I would have thought the model was vulnerable, to say the least," Ian Thomas, a director of the Centre for Asia Pacific Aviation, said.

Thomas said the key problem was OzJet's focus on business travellers, in that it would be chasing a market tightly guarded by Qantas and aggressively pursued by Virgin Blue.

Virgin, which has just issued its third profit warning since August, is desperate to stem falling yields and its reliance on price-sensitive budget travellers by lifting its proportion of business travellers.

Virgin recently launched its corporate "Blue Plus" fare, giving passengers fully flexible refundable tickets, free entry to Blue Room lounges and priority check-in. Virgin's attempts to crack the corporate market are expected to become more aggressive when Patrick Corp boss Chris Corrigan takes control of Virgin next month.

"There's not a lot of room in the market for a new entrant," Thomas said, adding that any airline willing to take on Virgin Blue, Jetstar and Qantas would need to have extremely deep pockets.

OzJet, backed by Dutch group Muermans, says it has $70 million.
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Old March 27th, 2005, 09:05 AM   #146
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Pledge to use cheap flights
By Megan Doherty
21 March 2005
Canberra Times

ACT Treasurer Ted Quinlan has pledged that the Government will try to use Virgin Blue and OzJet flights when they are cheaper, despite it signing a travel contract with Qantas. Opposition treasurer Richard Mulcahy said Qantas would take over as the provider for ACT Government travel from this Friday. ''I think it is important that the [Economic Development] Minister [Mr Quinlan] spells out what this means for other air companies flying in and out of Canberra when it comes to public service flight bookings,'' Mr Mulcahy said. ''I don't have a problem with the service offered by Qantas. What I do want is an assurance from the minister that the new contract does not mean that business is automatically sent to Qantas.'' Mr Quinlan said he understood the deal with Qantas meant savings across the board for the Government but did not exclude it from using the cheapest flight on the day, including those offered by Virgin Blue and OzJet.

He said Mr Mulcahy was trying to show the Government ''how to suck eggs''. The Government would be supporting the other airlines whenever possible.

Nevertheless, Mr Quinlan said Qantas' service was attractive because of its higher number of flights. Neither Virgin Blue nor OzJet operate a Canberra-Sydney route. He said the Government had made a commitment to ensure at least 15 per cent of public servant flights were on Regional Express Airlines, which had since left the Canberra market. When Rex folded its Canberra flights, it publicly thanked the ACT Government for its support, but slated the Federal Government for not doing the same. Mr Mulcahy said he was not after a percentage commitment from the Treasurer. ''But what I do want is an assurance that a new ACT Government travel contract with Qantas is not carte blanche bookings with Qantas for every public service flight,'' he said. Mr Mulcahy said it was vital there was competition in the ACT market after the demise of Ansett, Impulse and Rex. ''For Canberrans to be able to receive air travel at a reasonable price, it is vital that public service flights are not automatically given to Qantas when there may be a cheaper airfare with Virgin Blue or OzJet,'' he said. ''The ACT Government has a large role to play in ensuring air travel in and out of Canberra is competitive for Canberrans and tourists alike.''
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Old March 28th, 2005, 11:54 PM   #147
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Qantas under threat
By Sarah Jones
27mar05

MALAYSIA Airlines is set to take on rivals Qantas and British Airways in the lucrative Australia to London "kangaroo" route, spending $238.8 million upgrading its first class and business class cabins.

The airline is refurbishing 17 Boeing 747-400 and 17 Boeing 777-200 aircraft for its long-haul flights in a bid to capture a greater market share of the global high-end traveller market.

Malaysia Airlines is the third-largest foreign airline in Australia and flies Australia-UK daily.

Assistant general manager product development and services Encik Azmil said the kangaroo route was very important to the airline, with the new service aiming to snatch market share away from Qantas and British Airways.

"Overall, we are looking for very good growth, especially with the launch of the front-end product," he said.

"We look to be at the same level (of pricing) as that BA and Qantas are getting and we will be looking at that very closely."

Mr Azmil said the airline had a superior product to its rivals in both first and business classes.

"We now have the third generation of flat beds whereas BA has first generation and Qantas would probably be second," he said.

"For now, we have set the new benchmark."

The first fully refurbished B747-400 will touch down in Australia on April 1, with all planes scheduled for completion by mid-2006.

Malaysia Airlines chairman Dato' Dr Munir Majid described improving the company's fleet was a "never-ending process and the competition is relentless".

"It (the upgrade) is about taking on the top-end of the market, to compete more effectively with the best airlines in the world," he said.

The airline is also scheduled to roll out a new fleet of twin-deck Airbus A380s from 2007.

The new and improved aircraft have fewer seats and more room in both cabins, as well as upgraded customer service and equipment, and an inflight entertainment system complete with SMS and e-mail capabilities.

Marketed as "an experience redefined", the airline has installed an 80-inch seat and flat-bed facility in the first class of the B747-400 aircraft and 58-inch seat with new "third generation" angled flat beds in the business class of both the B747-400 and the B777-200.
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Old March 29th, 2005, 12:30 AM   #148
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Virgin shut out of federal travel
JASON KOUTSOUKIS, POLITICAL CORRESPONDENT, CANBERRA
28 March 2005
The Age

DISCOUNT airline Virgin Blue has been shut out of the $230 million-a-year market for Federal Government travel business.

An investigation by The Age has revealed that government departments are flouting orders to obtain the cheapest air fares.

Last year Virgin Blue received a paltry 0.43 per cent share of Government business on domestic flights. Qantas sucked up the lion's share of Government business (84 per cent), with the rest going to smaller regional and charter airlines.

Qantas received $140 million of domestic Government business and $84 million spent on overseas travel.

Virgin Blue's share amounted to just $717,875, almost 200 times less than Qantas'.

Virgin Blue executives are unhappy that most Government travel is booked through Qantas Business Travel, a wholly owned subsidiary of Qantas.

Virgin Blue's general manager for corporate affairs, Heather Jeffery, said it was remarkable that Virgin Blue had about 30 per cent of the domestic travel market - 40 per cent of that by business travellers - but only about 0.4 per cent of Government business.

"The figures speak for themselves," Ms Jeffery said. "If this was the travel-spend breakdown of a budget-conscious multinational, there'd be a much closer look at responsible procurement managers and travel booking processes, as clearly there's little value-based travel occurring.

"Considering that there are obligatory 'best fare of the day' purchasing policies across the public service and the fact that Virgin Blue often has the best fare of the day on a national network of 300 daily flights . . . something isn't translating."

Ms Jeffery said the Queensland public service's "diligent application of 'best fare of the day' policy" had cut its annual travel spending by 20 to 30 per cent.

Virgin Blue chief executive Brett Godfrey has in the past expressed strong concern that almost all Government travel is booked through Qantas Business Travel.

Of the 15 government departments for which The Age was able to obtain travel budget figures, the Defence Department appeared the most biased towards Qantas. Of $110 million spent by Defence on domestic air fares last year, $92 million went to Qantas and $234,695 to Virgin Blue.

The Department of Foreign Affairs and Trade spent only $940 with Virgin Blue last year and $1.7 million with Qantas.

More than 96 per cent of the Attorney-General's Department's $6.2 million domestic travel spending went to Qantas and 0.76 per cent to Virgin Blue.

Figures for Treasury and the Department of Transport and Regional Services were unavailable.

Another concern raised by Virgin Blue executives is that public servants are reluctant to fly Virgin Blue because they do not want to miss out on Qantas club and lounge perks.

The degree to which departments favour Qantas is in breach of repeated attempts by Finance Minister Nick Minchin and Transport Minister John Anderson to force departments to spread Government business more evenly.

In July 2003 the Commonwealth's top public servant, Peter Shergold, wrote to the heads of all government departments and agencies ordering them to review travel processes and restating the Government's policy that all departments seek the best fare of the day.

Yet even Dr Shergold's own department ignored his directive. Last year the Department of Prime Minister and Cabinet directed just 3.3 per cent of its travel budget to Virgin Blue, while 83 per cent went to Qantas.

Both Virgin Blue and Regional Express have stopped flying the Canberra-Sydney route because they have been unable to attract Government business.

A spokesman for Senator Minchin said although the raw figures suggested Qantas was being favoured, the reality was different.

"A lot of it goes down to available schedules and to the routes that Qantas flies. The fact that Virgin Blue no longer flies the Canberra-to-Sydney route has hurt them significantly. But the Government is absolutely committed to the policy of finding the best fare of the day," the spokesman said.
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Old March 30th, 2005, 06:24 PM   #149
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BRISBANE - Sound levels same if runway farther away
Peter Morley
30 March 2005
The Courier-Mail

RESIDENTS would find it difficult to detect any difference in aircraft noise levels if Brisbane's planned second runway was moved further away from their homes, a report has found.

Since the $500 million parallel runway was proposed, Federal MP Wayne Swan has argued the suburbs of Banyo, Boondall, Northgate and Nudgee would experience unacceptable noise levels.

To minimise this, Brisbane Airport Corporation wants to build the second runway closer to Moreton Bay but maintain the 2000m separation from the existing strip so more planes can take off and land using the bay.

Mr Swan believes residents in his Lilley electorate would get further relief if the separation was reduced to 1525m -- extending the gap between homes and the new strip.

The corporation called in engineers Parsons Brinckerhoff, who monitored the noise footprint of planes using the existing strip and used the information to model what happened when the new runway was 1525m and 2000m to the west.

The company concluded that the noise difference was "barely detectable" or "just detectable", depending on flight paths.

Airport corporation spokesman Mark Willey said: "We were asked to prove the difference between two runway locations and we have.

"Noise increases modelled at sensitive receiver sites in neighbouring communities range from 0 decibels at which the human ear is unable to detect any difference to 4.2 decibels, which is described as being just detectable an increase."

Mr Swan said the findings confirmed there could 1525m between the runways, providing some relief to his constituents living mainly to the west of the airport.

"I still believe the corporation can do this and will be keeping up the pressure to achieve this end," he said.

His advice from sound engineers was that rather than being "just detectable", the noise reduction from a 1525m separation was "quite significant". He said some of the methodology used in the survey was "bizarre".

Mr Willey said residents would be invited to experience first-hand any difference in noise levels in the separation differences.

Adoption of the 2000m concept was vital for maximised use of Moreton Bay for simultaneous landings and take-offs, an approach that would minimise noise experienced by other Brisbane residents living under flight paths.
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Old March 31st, 2005, 06:48 PM   #150
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Emirates says cap no longer fits
Steve Creedy, Aviation writer
31 March 2005
The Australian

IN a move destined to give Qantas executives sleepless nights, Emirates is lobbying the Australian Government to lift a cap on the number of flights it can operate to Australia.

The rapidly growing Dubai-based carrier yesterday doubled its flights to Sydney on some days with the addition of a Boeing 777-300 flight to Dubai via Bangkok three times a week.

It will move to double daily Sydney-Dubai flights from May 1 and double daily flights to Perth from October, filling its quota under the existing air services agreement of 49 weekly flights.

But Emirates senior vice-president commercial operations Asia and Australasia Richard Vaughan said yesterday business was booming in Australia and the airline saw significant growth opportunities.

Mr Vaughan confirmed that Emirates lobbyists were already "in that well-worn path to Canberra".

"Tim Clark, our president, made a statement a few months ago that we haven't finished yet," he said.

"And we're not coming in for the sake of coming in, we believe there's a market both ways, both outbound and inbound."

A spokesman for Transport Minister John Anderson said he believed there had been recent discussions with Emirates about the cap.

He said the Government would consider the issue as time wore on but it was not currently under active consideration. "With these things it's invariably a staged process ... we introduce things and then we look at it again after that," he said.

Even if Emirates cannot immediately secure more flights, it will be able to increase the number of seats it flies to Australia as it starts taking delivery of its big fleet of Airbus A380s next year.

"Our delivery is in October 2006 and Sydney will follow London as the second destination and Melbourne will be not far behind it," Mr Vaughan said.

"We won't flood the market with capacity where the market doesn't warrant it but ... for us, buying the A380 gives us extra capacity into places that are slot restricted."

The double daily service to Sydney will also see Emirates significantly increase capacity between the NSW capital and New Zealand.

Airbus A340-500 aircraft flying non-stop from Dubai will terminate in Sydney from May and the bigger Boeing 777-300ERs coming via Bangkok will fly on to New Zealand.
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Old April 1st, 2005, 05:28 PM   #151
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Emirates moves in on Tasman routes
By SCOTT ROCHFORT, SYDNEY, with AAP
1 April 2005
The Age

EMIRATES Airlines is planning to deploy its Airbus A380 on flights from Australia to Auckland next year, a move that will add to the glut of seats over the Tasman and frustrate attempts by Air New Zealand and Qantas to turn a profit on the route.

Since launching flights to Auckland in August 2003, Emirates has already been partly blamed for compounding the erosion of yields and excess airline seats on the route. Now the Dubai-based airline says any of the giant Airbus planes it flies into Sydney and Melbourne will continue their scheduled services to fly on to Auckland.

Emirates is set to take delivery of the first of its 45 A380s, which can seat more than 500 passengers, in October 2006, and has chosen London, Sydney and Melbourne to be the aircraft's "premium routes".

Emirates' head of commercial operations for Asia and Australasia, Richard Vaughan, said he believed there was enough demand for long-haul travel from New Zealand to justify flying an A380 into Auckland. The airline claims that it only has to fill 40 per cent of its seats to be profitable over the Tasman, given it makes money from freight services.

Despite complaints from Air NZ and Qantas about carriers such as Emirates dumping capacity on the Tasman, Centre for Asia Pacific Aviation managing director Peter Harbison said: "The impact of Emirates over the Tasman is overrated."

Air NZ a played down a report in New Zealand's Dominion Post that said it was seeking a code-share and capacity sharing agreement with Qantas, to bypass rejection of their planned alliance by competition regulators on both sides of the Tasman.

Patrick Corp managing director Chris Corrigan has the majority share of Virgin Blue Holdings but he will have to wait if he wants all of the airline.

Sir Richard Branson's Virgin Group, which owns 25.57 per cent of the airline, refuses to endorse Patrick Corp's $1.1 billion takeover bid. "Virgin Group would like to reiterate that it has no intention of selling any of its shares under the Patrick Corp offer of $1.90 per share," it said.

Patrick Corp said its takeover offer, which expires at 7pm tonight, was final. Centre for Asia Pacific Aviation consultant Ian Thomas said Patrick Corp had effective control of Virgin Blue. -- With AAP
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Old April 1st, 2005, 05:29 PM   #152
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Warning of skills shortage crisis
Steve Creedy, Aviation writer
01 April 2005
The Australian

AUSTRALIA's aviation industry faced a potentially crippling skills crisis as well as serious worries about the availability of capital and declining infrastructure over the next decade, a new aviation industry group has warned.

Echoing recent comments by the Business Council of Australia, the Australian Aviation Council (AUSAC) has called for urgent government action to formulate a policy to address looming industry problems.

AUSAC secretary Gary Lawson-Smith said AUSAC had approached the BCA, which warned last week that Australia's infrastructure was at a crisis point, and would urgently seek to work with state and federal governments on the issue.

He accused the federal Government of lacking a strategic aviation policy and said it did not even have empirical data on some critical issues.

"It just worries me -- and it worries a lot of people -- that we should form some sort of group here and get on to seek some sort of strategic policy," he said.

"What are we waiting for?"

The call comes after an inaugural AUSAC summit in Melbourne last month brought together representatives of major industry groups, airlines and the defence force to discuss problems facing aviation in the next decade.

Topping the list of concerns was the looming skills shortage, particularly among pilots and maintenance engineers.

The summit heard that aviation industry growth across Southeast Asia was creating a surge in demand that coincided with an ageing industry population, where the average age of licensed aircraft engineers was in the mid-fifties and the average professional pilot was aged in the late-forties.

The Centre for Asia Pacific Aviation (CAPA) has conservatively estimated that an additional 94,000 staff would be needed in the Asia-Pacific region over the next decade and that this greatly exceeded projected supply. At the same time, cost restraints mean apprentice intakes in civil and military aviation were at all-time lows.

AUSAC president John Siebert labelled the skills shortage "a major threat to the continued viability of the aviation industry in this country".

Captain Siebert said the threat existed from the general aviation end of the market to the major airlines and the defence forces.

"Training professionals in these areas can take anything from four to seven years," he said. "As an industry we need to come to grips with this looming problem before it comes endemic."

An analysis presented to the conference by CAPA managing director and AUSAC director Peter Harbison also singled out infrastructure and capital investment as major issues for the industry over the next decade.

Mr Harbison warned that the importance placed on costs tended to push back long-term strategic goals and that change was accelerating faster than most people realised.

He argued that the fragile nature of airlines and associated activities meant low financial returns from training and other facilities, as well as for air navigation providers and for smaller airports.

He predicted that infrastructure problems would emerge progressively, with smaller centres getting affected first.

Mr Harbison warned that growing international competition and the removal of government protection meant major international airlines were unable to deliver adequate financial returns to attract investors.

But with mergers thwarted by nationalism and regulatory restrictions, airlines faced a choice of shutting down or re-nationalisation.

General aviation also faced a "slow and painful death" as it was progressively less able to attract investment and as the current generation of pilots, trainers and engineers retired.

Other issues raised by the AUSAC conference include the development of less prescriptive and less costly industry regulatory standards, and the need to improve management skills in general and regional aviation.

Delegates also discussed the need for improved industry co-ordination to more effectively lobby on issues such as tax incentives to encourage investment in new equipment.

AUSAC's board plans to meet at the end of this month to discuss its next move.

"AUSAC and all the industry want to work in a professional and constructive way with the Government to achieve an outcome," Mr Lawson-Smith said.

"And that outcome really is national policy that picks up all these types of things and lays down some decent timetables."
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Old April 2nd, 2005, 06:33 PM   #153
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Branson won't give up on Virgin Blue
Steve Creedy, Aviation writer
01 April 2005
The Australian

RICHARD Branson's Virgin Group yesterday has again expressed its determination to stay in Virgin Blue, saying it was confident the airline was well positioned to ride out current conditions.

In a statement to the Australian Stock Exchange, Virgin Group, which founded the airline but sold down its stake in the 2003 share market float, said it had no intention of selling any of its shares under the Patrick offering of $1.90, due to expire at 7pm tonight.

"Virgin Group believes Virgin Blue is well positioned for the current tough trading conditions with a very low cost base, a motivated group of employees and cash reserves in excess of $600

million," Sir Richard said.

"Since Patrick Corporation announced its initial offer on January 28, Virgin Group has purchased further shares on market increasing our shareholding to 25.57 per cent."

The statement came as Patrick announced it had 54.26 per cent of Virgin and had no intention of increasing its bid or extending the offer.

The shareholding means Patrick executive chairman Chris Corrigan has achieved his aim of control of the airline, although Virgin retains two directors: Virgin Management Asia Pacific's David Baxby and Virgin Group commercial director Patrick McCall.

Analysts are expecting a short-term fall in the airline's shares once the offer has expired. Yesterday the stock finished unchanged at $1.91.
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Old April 4th, 2005, 03:41 AM   #154
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Virgin Group's Branson plans to launch new Australian airline - report
3 April 2005

SYDNEY (AFX) - Virgin Group chief Richard Branson is considering launching his second Australian carrier this year, The Sydney Morning Herald reported, quoting Branson.

In Sydney to pledge his support for Virgin Blue Holdings Ltd after rejecting Patrick Corp's 1.90 aud a share offer for Virgin Group's 25.6 pct stake in the low cost carrier, the British entrepreneur said depending on aircraft availability, he hoped to get the international airline off the ground within the next nine months.

Branson said the cost of setting up the airline, which will focus on the US, China and Japan, would be 'considerable'.

'Whether we look at it with our Virgin Blue hat on or a separate hat on is still to be decided,' he said. 'My guess is that it will be likely to be separate from Virgin Blue.

'I think there's no shortage of people who would like to come in,' Branson told the newspaper, noting the airline would need to be 51 pct Australian-owned.

The newspaper said in a possible affront to Singapore Airlines, the 49 pct owner of Virgin Atlantic, Branson suggested the new airline should gain precedence over Singapore Airlines' bid to gain access to the Australia-Los Angeles route.

'I think the Australian government needs to decide - if there are other Australian airlines that want to set up and fly - whether it is better to give those Australian airlines the rights or whether to give Singapore Airlines the rights. Or whether to do both,' he told the newspaper.

Meanwhile, Patrick Corp's offer for Virgin Blue closed on Friday with the transport logistics group lifting its stake to 62 pct.

(1 usd = 1.30 aud)
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Old April 5th, 2005, 02:07 AM   #155
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Emptier aircraft, oil, hurt Qantas
Tansy Harcourt
5 April 2005
Australian Financial Review

Qantas suffered a continued weakness in its international business and a drop in loads for both domestic and international, February traffic figures released yesterday showed.

The worse-than-expected monthly statistics coincided with oil prices climbing to a new high. The two factors helped strip 2 per cent off Qantas's share price yesterday.

The price of oil soared to $US57.79 a barrel yesterday on speculation that producers might be unable to increase output in time to meet rising demand.

Stocks across the globe have slumped as oil costs have risen to as much as a fifth of airline expenses.

Qantas has some oil hedging unlike its rival, Virgin Blue but its latest traffic data showed that its aircraft have been flying less full than in February last year.

Domestic passenger numbers grew by 11.2 per cent in February, boosted by Jetstar's popularity. Domestic revenue passenger kilometres rose by 8.4 per cent and available seat kilometres by 9.6 per cent. However, the load factor dropped by 0.9 percentage points to 76.1 per cent.

Qantas's international traffic numbers fell by 1.7 per cent and the load factor dropped by 1.7 points, while RPKs rose by 2.1 per cent and ASKs by 4.5 per cent during February.

However, the fall in loads and drop in traffic on its international flights might be offset partially by rising airfares.

The first-quarter American Express Airfare Index for Asia-Pacific, released yesterday, showed first-class airfares from Australia jumped by 1.1 per cent from the previous corresponding quarter. Business-class fares rose by 0.5 per cent, full economy fares grew by 0.2 per cent and discount economy airfares increased by 4.5 per cent.

"The reducing gap between full economy fares and discount fares in the Australian market is a trend we are likely to see repeated around the region in the medium to long term as airlines seek to reduce the incentive for corporate customers to move away from the most flexible and highest-yielding economy fares," said Amex's head of consulting services for Japan Asia Pacific Australia, Robert Tedesco.

Apart from Australia, the Amex survey also found that several classes of airfares from Hong Kong, India, Malaysia and New Zealand had increased.

Mr Tedesco said soaring oil prices, the Boxing Day tsunami and the reduction in the number of first-class cabins had contributed to the rise in fares from many countries.
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Old April 5th, 2005, 08:31 PM   #156
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Brokers say Virgin Blue overpriced
Scott Rochfort
6 April 2005
The Sydney Morning Herald

Brokers remain gloomy on the short-term prospects for Virgin Blue despite the airline's share price rebounding on Monday after the closing of Patrick's $1.90 a share takeover bid.

After countering predictions its shares would slump well below $1.90 after the Patrick bid closed on Friday night, Virgin hit a high of $2.10 on Monday and fell 3c to $2 yesterday.

But most brokers have maintained their negative stance - with some valuations as low as $1.15 - primarily on the concern the airline is totally unhedged against the rise in fuel prices.

A Citigroup research note on Virgin, for one, was headed "Sky High Price Likely to Tumble".

Goldman Sachs JBWere cut its recommendations for both Virgin Blue and Qantas from a long-term "hold" to "sell" and upgraded its oil price forecast by 38 per cent for 2006 to $US55 a barrel.

Given Virgin Blue no longer has any fuel hedging in place, the broker slashed its net profit forecasts for the airline by 23.2 per cent to $118.8 million in the 12 months to March 31, 2006 and by 50.7 per cent to $98.9 million the following year.

The broker slashed Qantas's net profit forecasts by 1.4 per cent to $758.4 million in 2005-06 and by 12.2 per cent to $758 million for 2006-07.

Qantas shares fell to a five-month low of $3.40 yesterday before closing 6c lower at $3.42.

Aside from concerns over rising fuel prices, the fall was partly blamed on Virgin boss Sir Richard Branson signalling plans to establish an Australian international carrier within the next nine months.

Sir Richard said the airline would fly to China, Japan, and on the highly uncompetitive Australia-Los Angeles route, which generates 10-15 per cent of Qantas's overall profits.

Citigroup transport analyst Jason Smith downplayed the effect of Qantas facing more competition on a route where it carries three-quarters of the passengers.

Even if Singapore Airlines or Virgin did not enter the US route, Mr Smith said, the overall profit contribution to Qantas from the LA route would fall to nearer 6 per cent in the next three years as it grows its Asian and domestic operations.

A new carrier on the LA route, of which Sir Richard said he would own 49 per cent, would also take some time to affect Qantas. This is because under the present air treaty between Australian and the US, a carrier on the route can only offer four weekly services in its first year of operation. Qantas flies 34 direct services to Los Angeles each week.
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Old April 5th, 2005, 10:54 PM   #157
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Very interesting on how much the SYD to LA route for Qantas is such a big money maker (34 flights per week is an awful lot). Why don't Qantas offer flights to San Francisco.I think they would make excellent profits on that route as well. Many years ago Qantas offered nonstop flights from SFO to SYD using a 747SP. Then all of the sudden cancelled the route.

United Airlines is currently offering non-stop service with a 747-400 daily with a departure time of 9:45PM the same timeslot as the old Qantas service and United's planes are filled to the brim.
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Old April 6th, 2005, 12:12 PM   #158
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I think they will eventually service SFO again. Maybe when the A380's come online they might free up some 747's for the route?
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Old April 6th, 2005, 04:09 PM   #159
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34 B747-400 flights shared by two airlines. Now that is big money!
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Old April 6th, 2005, 05:57 PM   #160
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Melbourne Airport Starts Runway Widening Project

MELBOURNE, April 6 Asia Pulse - Work started today on a $A50 million ($US38.28 million) runway widening project which will give Melbourne the first airport in Australia able to accommodate the world's largest commercial passenger aircraft.

Over the next six weeks the airport's 3.7-kilometre north-south runway will be widened by 15 metres to cater for the massive wingspan of the new Airbus A380, which carry up to 555 passengers on its two decks, 100 more than the largest 747.

The A380 Super Jumbo is expected to begin landing and taking off at Melbourne from June 2006.

Launching excavation works today, Premier Steve Bracks said Victoria had the best growth in international tourism figures in the country.

Being the first city in Australia to be ready for the Airbus would give Melbourne a big advantage over its rivals, he said.

"We've done very well with direct flights from all round the world and we'll do well of course out of this project also," he said.

Last year international air traffic at the airport increased by 15 per cent while domestic traffic increased by 13 per cent.

The runway project is part of a A$220 million project to expand the capacity of the airport.

Melbourne airport chief executive Chris Barlow said there would be minimal disruption to airport operations as aircraft were redirected on to the east-west runway.

However passengers should be prepared for delays of up to 30 minutes during peak time.

Five of the international carriers at Melbourne airport have placed orders for the new aircraft which can fly almost 15,000 kilometres non-stop.

Construction is already underway at the international terminal building to install two new gates allowing passengers to board and disembark at both levels of the double-decker Airbus.
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