Sydney-based full service, all economy class leisure carrier, Australian Airlines, is thinking of tapping into the corporate incentive travel market before year end.
Acting CEO, Ms Andrea Staines, said the market was one that suited the business model of the carrier.
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Australian Airlines
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Inception: October 2002
Headquarters: Sydney
Owners: Wholly owned by Qantas Airways Limited but operated independently and managed separately.
Proposition: Full service, all economy class, leisure airline
Inflight service: free f&b and multilingual entertainment, duty-free shopping available
Schedule: Between Nagoya and Cairns; Osaka and Cairns; Fukuoka and Cairns; Singapore and Cairns; Taipei and Cairns; Hong Kong and Cairns; Cairns and Gold Coast; Sydney/Melbourne-Bali (direct flight from Sydney to Bali available since July); Sydney-Kota Kinabalu, Sabah (Australian Airlines is the first airline to provide non-stop services to Sabah, from Australia); Bali-Singapore; Singapore-Kota Kinabalu-Gold Coast.
Fleet: The carrier started with four Boeing 767-300 aircraft, and is expected to increase its fleet to 12 aircraft by 2004.
Business model: Air fares are at market prices. It seeks to increase profitability by keeping its costs low through cutting many of the extras that those models provide. By offering only economy class, it does not spend on the frills that come with business or first class.
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Ms Staines said: “We fly to leisure destinations ideal for incentive trips and we have full services such as dedicated group check-in arrangements. However there will be no separate department set up to oversee this market.
“We want to stay as lean as possible and so we intend to work with already established channels such as travel agents. There are no plans to come up with anything extra from what we already provide unless it is warranted.”
While many traditional airlines are expecting to finish the year with either lower or the same profit levels compared to last year, Australian is budgeting a profit.
The difference between Australian’s model and that of other full-service carriers is that although its air fares are at market levels, it keeps its costs low by cutting many of the extras provided by its traditional counterparts.
Ms Staines claimed that as a result, Australian was able to keep its operating costs at 25 per cent lower than parent company, Qantas.
“Half of our cost savings comes from being all economy. By not having a business or a first class, we save on having things such as airport lounges, frequent flyer programmes and the type of meals that people who fly in those classes expect.
“We fly to leisure destinations where there is hardly any business traffic. Some of these routes were where Qantas had lost money on. Our focus will continue to be on the leisure market, because if there is enough business cabin travel, Qantas will fly it.”
Other cost saving measures include double catering for two sectors so that it does not have to pay twice the f&b handling costs. With lower operating costs, the carrier is able to offer non-stop international services to leisure destinations others could not afford to.
