The real beast within the giant Airbus A380 airliner emerged overnight with plans for an obscure French colonial carrier, Air Austral to buy two of them in an 840 seat all economy configuration.

Air Austral has major ambitions in the Australian market, which it starts serving with Boeing 777-300ERs this April.

But just how big its other plans for Australia are has now become much more apparent. This is not just about flying to Paris the long way via the sleepy outpost of St Denis on the island of La Reunion in the Indian Ocean, but about realising the potential of the giant Airbus for ultra cheap long haul low cost services.

Almost everyone in the airline game has been waiting for someone to decide to use an A380 to do what Ryanair, and locally Jetstar and Tiger, have been doing in domestic cheap flights.

Pack them in, and divide the fixed costs of the airliner between more passengers, so that you radically expand the market from a position of price leadership.

What Jetstar has achieved by putting 180 seats in its domestic A320s that full service carriers used to fly with 130 seats (apart from causing crippling discomfort to full sized passengers) shows the power of the low cost airline model.

Until recently Emirates and Jetstar had been the prime candidates for high density low fare A380 flights to Australia sometime in the future.

Emirates starting talking up the use of 640 seat versions of its A380s for flights to secondary cities like Adelaide four years ago, for fares of less than $1000 return. It had the German backpacker market specifically in mind, given that it is already the major Australia-Germany carrier, and that those visitors generally averaged three months in Australia, travelled widely, and couldn’t care less what airports they used because they were coming for leisure rather than business purposes.

Then it went cool on the idea. After which Jetstar mentioned in a low key manner on several occasions that the A380 ultimately had huge potential as an instrument of low cost mass tourism stimulation.

But there is an additional angle to the Air Austral plan. It hasn’t talked of using them to Australia, but between France and La Reunion, where it is developing, implausibly, an Indian Ocean version of Singapore’s Changi airport, with connections between Australia, South Africa, the Seychelles, nearby Mauritius and Marsailles, among others.

For Qantas and Virgin Blue’s V Australia subsidiary, this has implications. The Johannesburg route is a good earner for Qantas, and Virgin Blue has already been given approval to compete on it using V Australia flights from late this year, after it has muscled in on the Qantas dominated routes to Los Angeles.

Air Austral could really upset both carriers, although Qantas does have 20 A380s on order and options or purchase rights for at least another 16.

The economies of scale of the A380, with very low fuel burns per passenger in high capacity formats, make it a competitive sledge hammer.

An Indian ocean rival to Changi or Dubai could be just what Australian tourism needs in order to develop new mass markets and inspire renewed competition, and the last thing the established carriers would want.

Peter Fray

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Peter Fray
Editor-in-chief of Crikey