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Virgin speeds up transtasman plans

By Nick Stride and Venkat Raman

Friday 25th July 2003

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In an abrupt about-face Virgin Blue has signalled it could start flying transtasman and domestic routes even before regulators rule on Qantas and Air New Zealand's alliance.

Only five weeks ago the carrier told the Commerce Commission the alliance question would have to be settled before its plans could be finalised.

In a fresh submission on July 21 Virgin said it "has taken steps to establish operations on the transtasman and domestic routes and is now confident it will be able to commence operations relatively quickly."

Given how much time has passed since the alliance has been under review, Virgin said, "the time-to-market factor is progressively becoming a less critical issue."

There were "reasonable prospects" it could be flying before the alliance authorisation process was finished.

Air travellers are already benefiting from renewed interest in the transtasman route.

Dubai-based airline Emirates launches a service on August 2 with inaugural return fares between Auckland and two Australian cities, Sydney and Melbourne, of $399, about 20% below current average rates.

Tickets at those prices are available only until the end of this month and Emirates' local chief Keith Longstaff vowed the airline would not plunge the transtasman into a price war.

Business and first class fares to Sydney will cost $920 and $1250 respectively while the Melbourne equivalents will be $1050-1300, with special conditions attached.

Thai Airways has also hinted it will expand its transtasman capacity but only with flights connecting to Bangkok and beyond.

Virgin has also shifted its position on its purchase of Air New Zealand's low-cost Freedom Air subsidiary, describing a deal as "desirable" but no longer critical.

One of its arguments had been that a Freedom sale would "remove the bullet from the gun."

Curiously it is now arguing that, as Qantas has replaced some transtasman flights with low-cost JetConnect capacity, there are now two bullets in the gun so a Freedom sale would be "a less effective means of addressing the proposed alliance's strategic conduct than previously thought."

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