Australia gets a new budget airline

Air Australia launches in Brisbane

Australia's newest airline launches in Brisbane, with Strategic Airlines changing its name to Air Australia and promising direct routes to the US and China.

A new budget carrier flying passengers both domestically and to regional tourist hotspots has been launched today in the wake of Qantas's grounding crisis.

Until now primarily a charter company, Strategic Airlines said it would add more routes to its existing line-up and rebrand itself "Air Australia", with jets sporting the green and gold livery usually associated with the nation's sporting teams.

The Air Australia design, produced by Virgin Blue designer Sean Cummins, features a distinct gold and green boomerang motif with a grey secondary colour.

Small boomerangs are featured on the planes' wing tips.

"Strategic Airlines will retire its name, red white and blue brand and full service business model commencing from 15 November 2011 to become Air Australia, a new international and domestic low-cost carrier," the firm said.

The move comes after tens of thousands of Australians were stranded over the weekend when flag carrier Qantas grounded its whole fleet worldwide amid a row with unions, doing serious damage to its reputation.

The first Air Australia flight will also take off on November 15, and the new brand will absorb Strategic's routes to Bali in Indonesia and Thailand's Phuket, before launching a new service to Honolulu in December.

The island destinations are extremely popular with Australian tourists.

The airline will also continue Strategic's flights from Brisbane and Perth to key mining destinations at Port Hedland and Derby, in the minerals-rich Kimberley region, chief commercial officer Damien Vasta said.

Domestic services will start between Melbourne and Brisbane, he added. The airline also plans to fly between Brisbane and Darwin.

Air Australia will next month add a second Airbus A330 to its fleet, which also contains three A320s, and Mr Vasta said it would target up to five flights a week to Bali and as many as three a week to the other foreign ports.

The airline officially launched its brand and staff uniforms this morning, just days after Qantas's dramatic grounding.

Chief commercial officer Damien Vasta denied the launch's timing was linked to the Qantas chaos but said it did "establish I think to the Australian travelling public that they want competition".

"They need to see that there's options out there because they don't want to be dependent on one airline. Because, as you know, things do happen that stop airlines from flying," he said.

"And we certainly want to be better positioned to be able to meet any demand shortfall."

Chief executive and founder Michael James said the firm's name would draw more attention to the fact the airline was 100 per cent Australian owned and operated.

The budget airline will allow customers to check their first bag free as a point of difference to its competitors.

It is also looking into introducing a frequent flyer program which would be similar to rewards offered in the US and "less complex" than most Australian programs.

"We want to come up with a scheme where, say, you fly nine times and you get your tenth flight free," Mr James said.

Steering away from the corporate market, he said the airline was not trying to pull passengers off Jetstar or Qantas but offer customers a different service.

"We're not effectively trying to take on Jetstar what we are trying to do is maximise under-serviced or non-serviced routes," he said.

"We're focusing on the second and third largest capital cities in Australia which haven't, before us, had those services at all."

Brisbane-based Strategic was founded in 1991 as an air freight broker and had its breakthrough as a defence contractor for the Australian government transporting troops and cargo to the Middle East between 2005 and last year.

Mr Vasta said the company had been able to grow its commercial business from contract work and began passenger flights in 2009.

Air Australia will offer a low-cost model that includes baggage in its ticket price but requires passengers to pay for meals, refreshments and entertainment.

Mr Vasta said the soaring Australian dollar was the main driver of the low-cost airline industry, with international travel now increasingly affordable for a wider range of people and often cheaper than holidaying at home.

Mr Vasta said the airline employed over 300 staff but planned to increase that number "ten-fold" within the next ten years.

Taking a thinly veiled shot at Qantas, Queensland MP and aviation enthusiast Paul Lucas praised the company for having its fleet serviced in Australia, creating local jobs.

"I just say to established airlines, whether it be Qantas or anyone else, don't think you have a monopoly on being Australian," he said.

"This new airline is 100 per cent Australian owned, it's been operating for the past two years flying people to many places in Asia, into Honolulu soon.

"These are people who employ Queenslanders, they create jobs in the tourism industry, they service the mining, this is all quality.

"No one in the aviation industry can think they can take it for granted."

The airline has not been without its problems. In June, the airline left passengers stranded in Phuket for up to a week after a problem with one of its planes. The airline had to charter another aircraft to get passengers out.

The airline has also been under pressure to make money from its commercial operations after losing its $30 million contract with the Defence Force this year amid a police investigation.

Qantas's rivals, including AirAsia X - the long-haul affiliate of Malaysia budget carrier AirAsia of which Richard Branson's Virgin Group owns a stake - stepped in with discount fares and extra capacity to help marooned passengers.

Singapore this week launched long-haul budget carrier Scoot, amid thriving rivalry for Asia's growing ranks of middle-class travellers.

- with AFP