Fears for cheap fares as Impulse forecasts loss

Just two months after forecasting a $3.6m profit for the current financial year, Impulse Airlines now says a loss is on the cards, a danger sign for domestic air travellers enjoying the fruits of competition over the past six months.

The airline has blamed the effect of a weak Australian dollar on fuel prices, the full takeover of Hazelton Airlines by Ansett and the pressures of competition for the turnaround in its prospects. The company had also forecast a net profit of $38m for the year to June 2002 along with plans to list on the stock exchange, which now must be in doubt.

One of the two new players taking on Qantas and Ansett on domestic routes, Impulse has recently been taking the lead in making thousands of seats available on key east coast routes at substantial discounts.

Fares of $37 one-way Sydney-Melbourne and $50 Sydney-Canberra have forced Qantas and Ansett to release a limited number of seats at the same price while Impulse and Virgin Blue have together fostered similar competition between Sydney and Brisbane.

With Virgin crying foul to the ACCC over what it sees as Qantas' attempt to dump capacity on Adelaide routes, the new entrants are showing signs they're feeling the pinch. Without the major corporate backing enjoyed by Virgin Blue, Impulse is the more vulnerable.

Impulse's announcement earlier this week that it would divert services from the Sydney-Melbourne route to Hobart routes is a further sign of the difficulty of taking on the big two head on.

The best travellers can do is continue doing what they are already doing; flying a lot more than they used to, readily embracing the Impulse and Virgin ‘no-frills' alternative and pressing Qantas and Ansett for their limited numbers of discount tickets.