Qantas lite little threat to Air NZ

By DANIEL RIORDAN

Air New Zealand may be under immediate threat from Qantas on most fronts, but the Australian carrier's new discount international arm does not appear to be one of them.

Qantas announced on Tuesday that Australian Airlines would start flying on October 27, operating off a cost base about 30 per cent lower than its parent's international brand.

The new airline will fly routes Qantas doesn't fly because they are uneconomic for the full cost carrier.

Initially, Australian will fly four Boeing 767-300s between Cairns and Osaka, Fukuoka, Singapore, Taipei, Hong Kong and Nagoya, with daily connecting flights between Cairns and Coolangatta on the Gold Coast.

Over the next two years the fleet will be expanded to 12 planes, with new international destinations and flights to all of Australia's capital cities added.

Air NZ spokesman Mark Champion said the Qantas move did not affect the airline's planning. Air NZ managers were developing new strategies, and one of their options was to turn part or all of the airline into a discount carrier. UBS Warburg aviation analyst Timothy Ross said while it might be cheaper to fly to places such as Singapore and Hong Kong on Australian rather than Air NZ, travellers also had to consider the extra time taken to get there by having to fly the dogleg through Cairns.

* Air NZ is to increase its seat capacity in and out of Christchurch by 5 per cent from July compared with the same time last year. The changes include replacing an ageing 106-seat Boeing 767-200 with a 122-seater Boeing 737-300 on the Auckland-Christchurch route.

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