Qantas officially killed off its failed Australian Airlines brand this morning with spin that would do Warney proud. Geoff Dixon didn’t own up to Australian Airlines failing, instead:

The Qantas Group today took a major step in its two-brand strategy with the announcement of Jetstar’s proposed international route network from November 2006.

The Chief Executive Officer of Qantas, Mr Geoff Dixon, said as part of the strategy to focus on two strong brands – Qantas and Jetstar – the Australian Airlines brand would cease to exist from July 2006.

See, it’s not that Australian Airlines didn’t work, it’s just that Jetstar does. Less charitable souls might instead think the Qantas track record in launching new brands is one win from three starts – Jetstar is running, but Australian Airlines is dead and the Singapore-based low cost carrier continues to limp heavily, bleeding from the hip-pocket.

Today’s announcement was well-leaked to The Oz‘s Steve Creedy who also recorded Australian Airlines’ slide from its 2002 launch goals of handling the routes that were marginal for Qantas:

Its lower cost base also failed to prevent a 2005-06 first-half loss before interest and tax of $6.9 million. That compared with a profit of $8.5 million in the first half of 2004-05. Capacity fell by 1.9% after the airline cancelled flights to Bali and suspended services to Sabah, in east Malaysia, while traffic fell by 7.2% and passenger loads dropped 3.9 percentage points.

Qantas’ share price lately would seem to indicate the market has been having a major rethink about the Roo’s outlook. After starting the year with a run above $4, Qantas is down in the mid-$3s, opening at $3.55 this morning. Oil prices aren’t helping any airline, but it’s possible investors are also reassessing all the spin.

I saw a graph of domestic market shares from Melbourne Airport last week – it gives the clear impression all Jetstar’s growth has come from Qantas. Virgin Blue’s share now is pretty much what Ansett’s used to be while Qantas and Jetstar combined add up to the old Qantas. On such balances can duopolies become reasonably comfortable.

Peter Fray

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