Qantas picks A320 for JetStar
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Dixon said Jetstar will begin flying in May next year.
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SYDNEY, Australia (CNN) -- Australian carrier Qantas has named its new low-cost domestic airline JetStar and has opted for Airbus A320 aircraft.
Qantas CEO Geoff Dixon said Monday the airline's board had approved an initial order of 23 A320s for the low-cost carrier, which will start flying in May with 14 Boeing 717s that Qantas already owns.
The 177-seat A320s will join the fleet in June. Over time, JetStar will move to an all A320 operation.
Dixon would not put a value on the Airbus deal other than to say the aircraft cost $50 million each, implying a total cost of about $1.15 billion before any discount or extra costs for spare parts.
JetStar is designed to combat the increasing success in Australia of Virgin Blue, the discount carrier started by Richard Branson's Virgin Group in September 2000.
According to Sydney-based analyst the Centre for Asia Pacific Aviation, low-cost airlines are the new model for Asia, with their ability to service previously "uncommercial" point to point operations.
The Centre says it expects most national airlines in Southeast Asia will be operating a low-cost subsidiary by mid-2004.
In the past three years, Virgin Blue has built its Australian market share to about 30 percent. It became the No. 2 airline in Australia after the collapse in late 2001 of Ansett Airlines, the Australian domestic subsidiary of Air New Zealand.
Virgin Blue is about to list on the Australian Stock Exchange, with an initial public offer that values the airline at up to Aust. $2.3 billion ($1.6 billion).
Its owner after the float will be the Australian transport and logistics group Patrick Corp., which will have a 45 percent stake. The Virgin stake will fall to about 30 percent.
Qantas, which is owned 17 percent by British Airways, said in August it was looking at starting a low-cost leisure carrier to service domestic routes.
Dixon said Monday that Australia's domestic leisure market was growing rapidly and now represented more than 60 percent of all passengers.
"JetStar will concentrate on growing this market with value fares while opening up new destinations," he said.
Dixon said Impulse Airlines, the regional carrier it bought in early 2001, would be the operator for JetStar, which has start-up capital of about A$100 million ($72 million).
Dixon noted that the Airbus A320 was already used by two of the world's most successful low-cost carriers, Jetblue and EasyJet. He said Jetstar would have a minimum 23 aircraft by mid-2005 and could acquire more as it grows.
Qantas launched its international leisure carrier, Australian Airlines, in October 2002.
Qantas shares are 0.3 percent higher at A$3.34 Monday afternoon.
