Claims by Qantas CEO (and former Jetstar CEO) Alan Joyce that the latter is not going to be allowed to compete directly with the former are contradicted by the airline group’s published timetable for this month.

By 30 October most Jetstar flights between Melbourne and Sydney are scheduled to shadow Qantas Cityflyer jets within minutes including so called peak and off-peak travel times.

These are flights using the Qantas terminal at Melbourne’s main airport at Tullamarine, not the punitively remote and inconvenient Avalon shed near Geelong, which by month’s end loses most of its flights on Australia’s busiest domestic route.

The reason for the Jetstar onslaught against its parent are obvious, and were first reported by Crikey and Plane Talking in July.

The Singapore Airlines-controlled Jetstar clone, Tiger Airways, raises its frequency on the Melbourne-Sydney route to nine each way each day from this Sunday, and at a time when the Cityflyer product is under pressure from the effects of the financial crisis on the big corporate accounts, Qantas needs to protect its profitable and expanding budget brand.

Fending off Tiger with flights using Avalon to access the Melbourne market is not an option for Qantas, which has been forced to counter the emergence of the Singaporean carrier as an ambitious trunk route operator.

An undeclared four-way fight is now underway on the Melbourne-Sydney route, starring Jetstar v Qantas as well as versus Virgin Blue and Tiger.

Next week with minor variations, there will be a total of 148 flights in either direction each working day between the country’s two largest cities, comprising Qantas (66), Virgin Blue (48), Tiger (18) and Jetstar (16).

By the last Friday of the month, and after Jetstar drops most of its Sydney-Avalon (near Geelong) capacity, the route is scheduled to see 162 flights, comprising Qantas (73), Virgin Blue (52), Jetstar (19) and Tiger (18).

What happens next seems to depend on how quickly Tiger will deploy capacity on other trunk line routes.

The puzzle so far is Tiger’s fare-setting policy, which involves giving away most of its seats months in advance for little more than the $19 or so in compulsory taxes and levies it has to pay for each seat between Sydney and Melbourne and then trying to charge more than Jetstar or Virgin Blue for last minute bookings.

Insiders in Qantas and Virgin Blue seem comforted by Tiger screwing up its yield opportunities in that manner, but other observers think that Tiger is deliberately sacrificing its short term earnings to make a name for being cheap and that it will soon migrate into a more lucrative undercutting of the cheaper flexible or business friendly fares of its competitors by enough dollars to win over some of their more price-conscious frequent flyers.

One way or another, the Melbourne-Sydney gold mine in the sky is closed, and getting business travellers to pay more than $300-400 for a 70 minute flight is going to become an increasingly absurd proposition.

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Peter Fray
Peter Fray
Editor-in-chief of Crikey
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