The article below from NYTimes.com has been sent to you by psa188@xxxxxxxxx /--------- E-mail Sponsored by Fox Searchlight ------------\ THE DREAMERS - IN SELECT CITIES Set against the turbulent political backdrop of 1968 France when the voice of youth was reverberating around Europe, THE DREAMERS is a story of self-discovery as three students test each other to see just how far they will go. THE DREAMERS is now playing in select theaters. for more info: http://www.foxsearchlight.com/thedreamers/index_nyt.html \----------------------------------------------------------/ Two Airlines Vie to Rule the Skies of Australia March 18, 2004 By KAREN MIDDLETON CANBERRA, Australia, March 17 - Two days after Sept. 11, 2001, as stranded passengers littered airports across the globe, travelers in Australia received a crippling second blow. After a long decline, Australia's second-biggest airline, Ansett, collapsed. The two events cracked open Pacific aviation and precipitated a ferocious battle for Australia's skies. Qantas Airways, the country's first and largest commercial airline, remains the dominant player in what is still essentially an airline duopoly. But its privileged position - though fully privatized in 1995, it is still referred to as the national carrier - rankles increasingly vocal international rivals. And the domestic No. 2, Virgin Blue, is an upstart run by a Briton, Sir Richard Branson, and jointly owned by the Patrick Corporation, an Australian transportation group. The fight has caused some air fares to fall sharply. "Australia has two major airlines now, but it's very different to the Tweedledum-Tweedledee duopoly that used to exist," David Huttner, Virgin Blue's head of strategy and communications, said. "We're giving Qantas a much tougher run." Qantas's chief executive, Geoff Dixon, agreed that Virgin had made a place for itself, adding, "They worked hard to get where they are." Several carriers link smaller towns, but Qantas and Virgin Blue monopolize the big-city routes. In May, they will be joined by Qantas's new Jetstar unit, which will have cheap seats and the goal of grabbing business from both bigger carriers. Australians number just 20 million, but they fly a lot. According to Peter Harbison, managing director of the Center for Asia Pacific Aviation, a consultancy based in Sydney, about 5.5 million passengers traveled the Sydney-Melbourne route last year, compared with 3 million passengers on the most heavily traveled United States route, between New York and Los Angeles. After deregulation in 1990, a cozy, unofficial alliance between Qantas and Ansett was exposed to real competition for the first time. Despite immense good will from consumers weary of high fares, no low-cost newcomers survived in the big-city market until Mr. Branson's deep pockets arrived a decade later. Ansett's collapse gave a dream start to Virgin Blue, a basic no-frills service that offers some frills at extra cost. Now approaching its fourth birthday, Virgin Blue has grown from 2 jets and fewer than 300 employees to 40 aircraft, more than 3,000 employees and 30 percent of the domestic market. It was listed on the Australian Stock Exchange in December, and forecast a $150 million profit for the year ending March 31. The shares are up about 5 percent this year; Qantas's are up 7.6 percent. Virgin Blue did have a setback this month. After it voluntarily reported lapses in its maintenance recordkeeping, the Civil Aviation Safety Authority of Australia began requiring its aircraft to be within an hour of an airport at all times and said new aircraft would not be licensed until the problem was fixed. Both the agency and the airline said there was no immediate safety risk, but the restrictions are expected to delay Virgin's plan to add five aircraft. Virgin Blue's market-share dogfight with Qantas has tumbled across the Tasman Sea to New Zealand, where its new Pacific Blue subsidiary has sent fares plummeting. To meet the Virgin challenge, Qantas is starting up Jetstar. Flights begin May 25 with an introductory offer of 100,000 seats to certain destinations for 29 Australian dollars (less than $22). Virgin quickly countered what Mr. Huttner called a "stunt," offering the same price on twice as many seats. "We'll see your 100,000," he said, "and we'll raise you 100,000." Almost all 300,000 seats sold within days. Jetstar will begin operating up to 88 flights a day, growing to 116 by August. Virgin boasts of 280 flights daily. Mr. Dixon, Qantas's chief, predicted that the new venture could increase the market as a whole by 20 percent, but he acknowledged that Jetstar would inevitably cannibalize some Qantas business. Since Jetstar started booking passengers, Qantas has canceled some flights after May. Passengers may transfer to cheaper Jetstar flights, but they will earn no frequent-flier points. Mr. Dixon, announcing Qantas's half-year results on Feb. 19, said Jetstar would do well against a "very, very nimble competitor" in Virgin Blue, adding, however, "Our main game is Qantas." Qantas took the discount path internationally last year, establishing a low-cost unit, Australian Airlines, to fly to Asia from the tourist city of Cairns. With global tourism still struggling from the SARS virus, avian flu and fear of terrorism, Qantas's passenger revenue fell 4.8 percent in the six months ended Dec. 31, compared with the period in 2002, though it recovered much lost ground in the second three months. Cost-cutting and strong domestic operations helped profits rise 1.5 percent, to 358 million Australian dollars ($266 million). International travel accounts for 40 percent of the airline's earnings, and some government protection on one precious route - between Australia and the West Coast of the United States - helps offset the fare scramble at home. On that route, its nonstop service has just one rival, United Airlines. No other American airline flies the route, and carriers based elsewhere need special agreements to fly from Australia directly to the United States, which the Australian government will not negotiate. (Air New Zealand is the only exception, but it does not fly this route.) Mr. Dixon said it was "nonsense" to suggest that Qantas enjoyed unfair protection. The airline, he said, has more than 46 rivals worldwide, 66 percent of them partly or wholly government owned - including the most vocal aspirant to an Australia-United States route, Singapore Airlines. Besides, he said, Qantas has spent about 7 billion Australian dollars ($5.6 billion) in building up the United States market. "Some day," he added, "all of these markets will open up." In the current tough climate, however, the government says that more competition could threaten Qantas's survival. Australia has "one of the freest aviation markets in the world," said Paul Chamberlin, spokesman for Australia's transport minister and deputy prime minister, John Anderson. "But at the same time," Mr. Chamberlin said, "we have a national carrier, and we've already had one major airline collapse in this country." Some industry experts contend there should be more competition now, and they are joined by the tourism minister, Joe Hockey. Australian Tourism Commission research shows that the region's high profile and perceived safety have made it an attractive international destination, adding to the pressure to open the United States route to more airlines. There are trans-Pacific options, including some discounted prices, for those willing to make a stop. Air New Zealand, for instance, recently offered a round trip between Sydney and Los Angeles via Auckland for under 1,000 Australian dollars ($797). The more usual fare is almost twice that or more. But options are limited, especially for people living away from the main gateways. "I bounce back and forth between the U.S. and Australia quite a lot, and I'm always on the look for bargains," said Shane Fox, a Texas businessman based in Cairns who regularly travels across the Pacific. "You've got to look pretty good." He says he usually flies a Japan Airlines six-hour nonstop from Cairns to Tokyo, where he connects with a 12-hour nonstop to Dallas, as an alternative to taking the Sydney-Los Angeles flight, which is 14 hours not counting connecting flights and layovers. Mr. Huttner of Virgin Blue said his airline had no interest in the route - at least not yet - but it did hope to attract some international travelers dissatisfied with Qantas's domestic connections. Its mainstay is the domestic clientele, however, and its larger aim is to get more people traveling. "Five years ago in Australia, if your personal assistant went away for the weekend with their partner, you'd start wondering if you were paying them too much," Mr. Huttner said. With domestic fares so low, this is no longer the case. http://www.nytimes.com/2004/03/18/business/worldbusiness/18ozair.html?ex=1080619860&ei=1&en=62a4dbfd2731f95b --------------------------------- Get Home Delivery of The New York Times Newspaper. Imagine reading The New York Times any time & anywhere you like! Leisurely catch up on events & expand your horizons. Enjoy now for 50% off Home Delivery! 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