Qantas Refutes Lack of Capacity Claims

Sydney, 15 November 2005

Qantas Chief Financial Officer Peter Gregg said comments made yesterday by Tourism Minister Fran Bailey that opening up the Pacific route would boost inbound tourism were not supported by fact.

Mr Gregg said Qantas services between Australia and America during the 2004/05 financial year operated with more than 400,000 empty seats.

"With more than 200,000 empty seats in each direction last year it is ludicrous to suggest there is insufficient capacity on the Pacific route," Mr Gregg said.

"Furthermore, with the addition of services to San Francisco in March 2006, the total number of return services that Qantas offers to mainland USA will be a record 39 flights a week.

"Qantas also adds supplementary services to cater for increased demand during peak periods as we did during June and July this year and will be doing during January and February next year."

Mr Gregg said the relatively flat growth in demand by US visitors was reflective of recent US outbound travel trends more generally and exchange rate movements.

"It is these same exchange rate effects that have seen a dramatic increase of 14.6 per cent in travel by Australians to the US over the past 12 months to September - something that would not have been possible if there was a shortage of capacity."

Mr Gregg said history had shown the Pacific route was not viable with more than three carriers competing.

"Numerous other carriers already have the rights to fly between Australia and America but choose not to or have abandoned the route," he said.

"Significant competition already exists among Qantas, United Airlines and Hawaiian Airlines and as home country airlines these operators have a vested interest in, and commitment to, developing tourism and continuing to grow traffic between Australia and America.

"In addition, Air New Zealand, which operates substantial capacity on the route, is not to be ignored as a competitor.

"Singapore Airlines' determination to operate on the route, however, is not about developing tourism, and they well know that it is not a path to profit. It is about a strategic attack on one of Qantas' most important routes."

Issued by Qantas Corporate Communication (Q3355)