Qantas fires fare war salvo

Aboard the Dreamliner down under

Come inside the Boeing 787 Dreamliner as it flies around Australia, part of its worldwide tour.

Boeing's latest model comes bearing good news for travellers.

Travellers can expect a drop in airfares on domestic routes over the coming months after Qantas vowed to step up efforts to repel stronger competition from arch rival Virgin Australia.

"I'm not going to let a chink in our armour appear anywhere," Qantas chief executive, Alan Joyce, said yesterday. "Having a disadvantage on frequency is like the iPhone not having a camera. It's something we will not allow to happen. There are going to be lower airfares out there."

Qantas and its budget offshoot, Jetstar, have stepped up their defence of their dominant share of the domestic market by increasing flight frequencies on east coast routes. Their assault is aimed at attacking Virgin from both the leisure and business ends of the market.

But the prospect of a fare war threatens to reduce the earnings of Australia's two largest airlines this year, which are already labouring under high fuel prices and weak consumer sentiment. Mr Joyce's challenge to Virgin came as Qantas showcased Boeing's next-generation 787 Dreamliner in Sydney and Brisbane yesterday as part of a "global tour".

Qantas is buying 50 of the more fuel-efficient aircraft, the first of which are due to be delivered to Jetstar mid-2013, almost five years late. Jetstar is still finalising its schedule but expects to have three 787s in service by the end of next year.

The Dreamliner's visit came during a week in which Qantas axed 535 engineering jobs and closed a heavy maintenance base at Melbourne's Tullamarine airport.

Qantas maintains the advent of new aircraft such as the Dreamliner means it will not require the same level of heavy maintenance as was needed for older planes.

Mr Joyce reiterated that Qantas was not moving engineering jobs overseas but that it was work that does "not exist any more".

"The job losses are a consequence of us making this huge investment in aircraft over the last five years," he said. "We have to adjust our operation to this new technology."

The first 15 787-8s destined for Jetstar will seat 313 passengers in two classes and be used to replace its twin-aisle Airbus A330 aircraft on international routes to Japan, Hawaii and Bali. A bigger version of the Dreamliner, the 787-9, will seat about 375 passengers.

"It is going to make a huge difference to the economics of international routes as the 707 and other aircraft types have done," Mr Joyce said.

Qantas is not due to receive its first 787 until 2014. They are likely to seat about 250 passengers across three classes, including business and premium economy.

The new planes feature increased humidity and cabin pressure aimed at helping passengers overcome jet lag.

Boeing says the 787 is 20 per cent more fuel efficient than other aircraft its size, and capable of flying more than 15,000 kilometres.

The writer travelled courtesy of Boeing and Qantas.