Qantas readies low-cost airline for Tasman route

The Qantas low-cost offshoot Jetstar is preparing to start flying the Tasman, after less than a year of Australian operations.

The airline, set up to counter the Australian success of Virgin Blue, may start flying the highly competitive route to New Zealand next year. Australian media reports of a September start date for a Jetstar on the Tasman seemed "a bit aggressive" said spokesman Simon Westaway, but he did suggest the airline would be flying to New Zealand soon. Details were still being finalised.

It is thought unlikely the Jetstar move will be part of any attack on Air NZ, but an attempt to copy the sort of cost-cutting it has pioneered on the Tasman.

Air NZ's Tasman Express was a way of driving costs down as low as possible, while still trying to keep high-paying passengers on board.

Goldman Sachs JB Were's head of research, Peter Sigley, said it was only a question of time before Qantas introduced Jetstar on the Tasman.

In Australia, Jetstar flies in much the same way as Air NZ's Freedom Air. High-yielding business routes, such as those between Sydney, Melbourne and Brisbane, are flown by Qantas but leisure flights - those leaving during working hours, or going to holiday spots - are flown in Jetstar planes.

It has a "free seating policy" where instead of allocating seat numbers, coloured tags are handed out at check-in. Three groups are then called on to board, each picking their own seats. Check-in closes 30 minutes before take-off and anyone who is late must pay for a new flight.

Flights do not connect with other international services and inflight food and drink must be bought.

Air NZ, stymied last year in its attempts to form a price and schedule-fixing arrangement with Qantas, has been talking with the Australian airline about ways of co-operating that would not anger competition authorities.

Both airlines are waiting for the full decision of Australia's Competition Tribunal before formalising a deal to share as much as is allowed.

They are likely to be chasing a "codeshare" arrangement, where prices are not fixed between the two, but ticketing and scheduling are.

If Qantas wants to start codesharing, it cannot let quality levels become too different , so a new Tasman Jetstar service is likely to be more like Air NZ than Freedom.