Airlines go shopping ahead of ticket price war

AUSTRALIAN air travellers are a step closer to a cut-price ticket bonanza after foreign airlines signed for up to $14 billion in new planes in the past few days at the Paris Air Show.

Big orders by airline operators such as Emirates, Tiger Airways, Fly Asian Express, Thai Airways and Etihad Airways will put pressure on Qantas as they all battle it out to get passengers into their new 525-seat super jumbos and smaller planes.

The biggest challenge is likely to come from Emirates, which is ramping up its already fast-growing Australian operations.

The Dubai-based airline, which recently received permission to increase its flights into Australia from 49 to 84 a week, has signed up in the past few days for another eight of the Airbus A380 super jumbos, making for 55 planes on the order books.

Other orders for new aircraft that will combine to increase pressure to cut ticket prices include orders from Tiger Airways, which ordered 30 Airbus 320s with an option for another 20 planes; Fly Asian Express, a budget airline operating out of Malaysia, which ordered 15 Airbuses; Thai Airlines, which ordered eight planes; and Etihad, which signed up for 12.

Flight Centre's Haydn Long said the planned increased number of flights and new carriers in the market meant consumers would be the big winners.

"Generally the new carrier will want to make itself known and comes out with some really good offers, and the established carriers obviously want to compete very actively, and they tend to come out with offers of their own," Mr Long said. "They're bigger planes, there's more seats on them, they're more comfortable and people can expect some pretty good deals."

Qantas will face increased competition on local and international routes.

Singapore Airlines-backed Tiger Airways, which has just signed a $3.1 billion deal for 50 planes, will have five operating on domestic routes before the end of the year.

Offering dirt cheap fares in direct competition with Qantas' Jetstar, Tiger will ramp up the number of flights on domestic routes and in the longer term offer cheap fares on international routes.

But the rash of new plane orders and the likelihood of cut-price fares over the next few years is not affecting Qantas' share price at this stage.

Shares closed on Friday, down nine cents to $5.70, just 14 cents below their $5.84 record high.

JPMorgan transport analyst Matt Crowe said: "Qantas has been dealing with not just Emirates but other carriers who are eyeing off their market. It does present challenges for them; they're not new, but they are challenges."

By Christopher Webb
Read more on the source at: The Age