July 09, 2007

One dollar of airline competition

Qantas offshoot Jetstar has made available 10,000 $1 fares to members of its email subscriber database, who had to respond to the offer within a two-hour window.

An aviation analyst predicts the price war will hot up. Virgin Blue is expected to launch a low-cost offshoot within weeks.

"Tiger's entry is going to stimulate the market very significantly and everyone will be winners – consumers, the tourism industry and the economy," said Peter Harbison, chairman of the Centre for Asia Pacific Aviation.

Tiger chief executive Tony Davis said that "Tiger Airways is delighted to offer these exciting new domestic routes, linking our growing home base in Melbourne and the Gold Coast, Mackay and Rockhampton, with low fares which seriously challenge the advertised fares of our competitors," as reported at NEWS.com.au.

Mr Davis said Tiger was injecting 500,000 seats into the Queensland market and would be "here for the long haul". He said Tiger was able to offer cheap fares and still make money because of its low-cost business model.

Jetstar offer a low cost of Melbourne to the Gold Coast fare on its website. Jetstar has matched the Darwin price and is selling Melbourne-Gold Coast sets for $10 less than its nascent competitor. Today's $1 ticket sale was not the first of its kind by Jetstar, but marked the escalation of what's likely to be a long battle for market share of Australia's domestic airways, with passengers the only certain winner. (from The Age)

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