Rosy future for discount airfares

Qantas's announcement yesterday that it would develop a fleet of 40 of economy-class-only aircraft is the best news for price-conscious domestic air travellers since the industry was cast into turmoil by the collapse of Ansett.

While Qantas CEO Geoff Dixon did not admit it, the move signals the advent of a discount operation by the dominant carrier to take head on Virgin Blue and what will probably emerge as the new Ansett.

For Australian domestic passengers this means the sort of fare discounting they have grown used to on major routes over the last year will be locked in like never before.
A greater proportion of Qantas's domestic capacity will be economy class seats allowing it more room to compete at the budget end of the market with its rivals.

With Virgin Blue sticking to its two-level fare structure (full economy flexible & use-it-or-lose-it discount) and the best hope for Ansett seemingly as a streamlined budget carrier, it seems the stage is set for a solid return next year to a discounting on major trunk routes.

It remains to be seen at what level discount fares are offered and how many seats are offered at those prices but the immediate release of one million discount tickets by Qantas is a hopeful sign.

And in the longer term there remains a question over whether three airlines can survive when all are attacking the budget market – especially when one is as dominant as Qantas in the marketplace. Meanwhile, Qantas's commitment to discounting will depend a lot on its success in restructuring its workers' conditions to a more flexible basis.

Qantas releases 1m discount fares