Ansett collapse bad news for airfares

Australian air travellers face higher fares, fewer discount seats and a return to a two-airline market after the withdrawal of the Tesna bid to buy Ansett Airlines.

Ansett’s administrators will close the airline on Monday night March 4 after Tesna’s Solomon Lew and Lindsay Fox pulled out of the deal blaming ongoing hitches preventing the sale going through.

While it was doubtful whether both Ansett and Virgin Blue could both survive in the long term up against a dominant Qantas, the Tesna purchase of Ansett offered consumers the prospect of a fare war in 2002.

On the major routes between Australian capital cities a renewed bout of airfare competition was in store as Ansett tried to claw back lost market share.

If Ansett shuts its doors for good as now appears inevitable, the result will be a negative for Australian air travellers. While discount airfares are still expected to be offered by both Qantas and Ansett, discount fare levels can be expected to rise and the number of seats offered at discount prices will no doubt be fewer.

However, InfoChoice does not foresee a return to the old duopoly market conditions that existed for decades before the arrival of true competition.

Virgin Blue appears to be committed to its low-fare, low-cost model which has delivered cheaper flying without the trimmings.

Also, the internet has changed forever the way excess seating capacity is sold. The Net provides an efficient low-cost sales channel for the airlines which allows some proportion of tickets to be sold cheaply.

Cheap tickets will still be there, but consumers will have to hunt harder to find them.