VIRGIN Blue says its plan to begin flights to New Zealand and the South Pacific from October could drive down airfares by more than 30 per cent, and Qantas believes its US service could reach pre-September 11 levels by the end of the year.
As more details of Virgin's plan to fly to Vanuatu, Fiji and New Zealand emerged yesterday with the release of the airline's application to fly the routes, Qantas said it would increase capacity to the US by up to a third.
Virgin has asked the International Air Services Commission for 1260 seats per week to Fiji, 720 seats per week to Vanuatu and unlimited capacity to New Zealand.
It said some capacity to Fiji and Vanuatu would be used from October with the rest to be used within 12 months.
But it warned that its plan for New Zealand depended on getting "a satisfactory outcome" on the proposed Qantas-Air New Zealand alliance.
The Brisbane-based airline argued in its submission that its entry would stimulate markets, bring tourism benefits to Australia and give consumers airfares from 10 to 30 per cent cheaper.
Virgin chief executive Brett Godfrey said yesterday the international savings could be even greater, pointing to a comparison between the airline's $355 Sydney-Perth lead-in fare and Qantas's Sydney-Fiji lead-in fare of $645.
"Most of the routes that we've been looking at are duopoly routes and, in some ways, monopoly routes," he said. "Whether you are flying on us or on the incumbent, you would expect prices to fall."
Mr Godfrey said Virgin's plans to start flying in October depended on it getting the necessary bilateral approvals.
The airline could use new 177-seat Boeing 737-800 aircraft with slightly more leg room and may not fly under the Virgin brand, which was owned internationally by Virgin Atlantic.
Qantas executive general manager of sales and marketing John Borghetti played down the Virgin move, saying Qantas believed its case for the alliance stacked up on its own.
"They've been saying for a long time that they wanted to operate trans-Tasman so it's no surprise," he said.
Mr Borghetti said the Qantas boost to US services would see Australia-Los Angeles flights rise from 25 to 28 a week on June 30 and to 30 by early August.
He said a good market response could also see an additional three flights in October, bringing the route back to pre-September 11 frequencies.
He believed the increase in demand was due to Americans changing their travel plans away from Europe and Asia.
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