OzJet Launch - Australia's Business Class Airlines

Submitted by Share Trading on 29 November, 2005 - 11:43

Today is OzJet's first day of commercial flights and as of 24 hours ago the fledging carrier had sold some seats for its peak morning and evening flights.

But next week it doesn't have a single booking for flights in the middle of the day.

There are more cabin staff than customers, in fact.

"I'm not stupid - if it's not being supported we'd take a view after six months," is all Mr Stoddart would say on how long he would cover the airline if bookings did not pick up.

It is a stark contrast to the website-melting wave of demand that accompanied the launch of Jetstar and the promotional prices Virgin Blue offered when its rival started flying.

But then this is a very different product to the dirt-cheap airfares that Jetstar and Virgin Blue used to lure first-time flyers and leisure travellers to the skies.

OzJet is an all business-class airline that promises airfares roughly in line with a fully flexible economy ticket on Qantas and Virgin Blue, plus greater hand luggage allowances and check-in up to 15 minutes before departure.

Its target market, according to Mr Stoddart, is likely to be the business traveller in a hurry who wants a fully flexible ticket, room for lots of extra hand luggage, and who probably has a gripe with Qantas.

"There are people that like to fly business class but won't fly Qantas. They are currently flying with Virgin Blue and they are potential OzJet customers . . . it's a business-class service at economy pricing," he said.

Eventually, the airline plans to charge $325 to fly one-way between Sydney and Melbourne, though its introductory fare of $200 is likely to be extended if demand remains low.

In terms of price, the OzJet offer appears compelling. A next-day flight from Melbourne to Sydney costs $265 on Virgin Blue's top economy ticket, while Qantas's fully flexible economy ticket costs $374 and a business-class seat $568.

Mr Stoddart is not predicting OzJet will trigger an all-out price war, though he does claim Qantas has dropped its business-class airfare by a third between Melbourne and Sydney, the only route his airline is currently flying.

Even without the price wars that surrounded the start-ups of Virgin Blue and Jetstar, the timing couldn't be much worse for OzJet. The airline is launching itself as a business-class airline just as much of corporate Australia goes to the beach for Christmas. Throw near-record high oil prices and the recent push by Virgin Blue into the corporate travel space and it doesn't augur well for OzJet's first few months of flying.

The airline is starting out with three planes, one of which will be used as a spare, and has plans to add an extra seven aircraft by August next year, by which time it hopes to add services between Sydney and Brisbane, Melbourne and Canberra, and Melbourne and Adelaide.

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