Travellers the big winners as battle for the skies heats up

A wing and a prayer: Qantas

Travellers will continue reaping the benefits of the intense competition between airlines - both on domestic and international routes - which is showing no sign of ending.

''Customers want competitive airfares all over the world,'' Air NZ chief executive Christopher Luxon said. He was commenting after Qantas unveiled the axing of 5000 jobs and $2 billion of cost cuts as it seeks to revive its fortunes.

Qantas chief executive Alan Joyce said on Thursday the airline would defend its share of the domestic market, which is at the core of ensuring its viability.

Rivals Virgin Australia and Tiger Airways are boosting services, which will keep pressure on fares.

Qantas ''would not resile'' from maintaining a 65 per cent share of the domestic market in the face of the 18 per cent rise in the capacity of Virgin and Tiger over the past 2½ years, with these two airlines planning a further 5 per cent boost to capacity, Mr Joyce said.

He said Qantas continues to make money on its domestic services, especially since it has more than 80 per cent of the corporate market.

Qantas had a ''frequency and network advantage'' on its domestic services, while Jetstar had a ''scale advantage … you lose that advantage to your peril.''

The head of the country's largest travel agency, Graham Turner, of Flight Centre, said baby boomers were still spending on overseas travel, and fares were at record lows due to intense competition between Middle Eastern and Asian airlines.


''The airlines have to be on the ball if they want to fill up the big planes. The consumer has never had it so good,'' he said this week.

As part of its fleet rationalisation program, Qantas will reduce to seven from 11 the number of plane varieties in its fleet as it strives to cut costs. Increasingly, Qantas passengers will fly on the A320, which can carry up to 180 passengers and the Boeing 787 Dreamliner, which can carry about 330 passengers.

More Boeing 747s, long the workhorse of the international network, are to be retired over the next few years. Only some of these reconfigured aircraft will be retained.

Also to disappear this month is the 150-seat Boeing 737-400 and, over the next few years, the 250-seat Boeing 767 and 300-seat Airbus A330 from the Jetstar fleet.