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SYDNEY - Qantas Airways has signalled a 'whatever it takes' attitude to defending market share and will cut fares and expand its fleet ahead of the looming airfare war.
The group's low-cost offshoot, Jetstar, made 10,000 one dollar fares available on several regional routes from Sydney, Melbourne, Brisbane and Adelaide to its email subscribers today.
Jetstar chief executive Alan Joyce pointed to Jetstar's existing A$39 ($43.26) Melbourne-Gold Coast fare to show how vigorously the Qantas group would defend its 65 per cent market share.
"We're the only carrier that's introduced single-digit airfares -- other carriers have promised it, but we have a one dollar airfare that went on sale today with 10,000 seats, we've had three dollar airfares with 30,000 seats," Mr Joyce said.
The Singapore Airways-backed Tiger announced its own low fares from Melbourne to Queensland, offering A$49.95 tickets to the Gold Coast and A$59.95 to Rockhampton and Mackay.
Tiger chief executive Tony Davis rejected suggestions that the low-cost entrant was reacting to Jetstar.
"It's the others who are running around like headless chickens," Mr Davis said.
"You've got to ask who's reacting to who? Anyone can offer a gimmick fare for a couple of hours to a selected group of users."
A Virgin Blue spokeswoman dismissed the offerings from both competitors.
"Whether it's Tiger or Jetstar, we know a good PR stunt when we see one and we hope they sell all their fares at A$1 or A$49," the spokeswoman said.
"Virgin Blue introduced low fares to this market seven years ago."
Mr Joyce said he was adamant his airline would provide the sort of 'low-fare leadership' Tiger CEO Tony Davis was unaccustomed to.
"If I were him I wouldn't be scared of it, we're not scared of competition. We're certainly focusing on what we have to do, which is maintaining our position of fare leadership."
Today's fare announcements coincided with a Qantas decision to significantly expand capacity.
Qantas announced on Saturday it would buy 20 more Boeing 787 Dreamliners than originally anticipated, taking its total purchase to 65.
The first 15 Dreamliners will be used to expand Jetstar's international fleet.
But from 2010 they will revert to Qantas for use on domestic routes, Mr Joyce said.
"Longer term, to meet the domestic growth, bigger aircraft like the 787s are needed and that was always the plan," Mr Joyce said.
Peter Harbison, director of the Centre for Asia Pacific Aviation, said moving the 787s to domestic routes was a clear warning to competitors that Qantas would defend its domestic market share.
"Flooding the market is a dramatic way of putting it, but it's very much a consideration they have," Mr Harbison said.
"The domestic market is by far the most important for Qantas, it's where they make most profits and it's where they can protect their market more easily.
"In terms of being serious about keeping that 65 per cent and letting the opposition know that you're serious, it's one of the considerations Qantas has in expanding these orders."
Mr Harbison could also foresee use of the A-380 -- Airbus' gargantuan double-decker jumbo jet -- on low-cost domestic routes, given its ability to carry as many as 850 passengers.
Unlike Australia's last serious airfare war in the early years of the decade, all players would come out intact and consumers would benefit, Mr Harbison said.
"Ansett was a dinosaur waiting to die, an old fashioned airline that didn't cut the mustard in terms of operational effectiveness," he said.
"But the airlines in the market now are very, very lean, right up there with world's best."
- AAP
