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August 2002 issue

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New low-cost airlines in Canada

Travel Update

Air New Zealand is another carrier that is embracing the no-frills strategy. It is launching Air New Zealand Express in October. The carrier says it is responding to passenger demand for lower fares, more choice and simplified booking and purchasing processes.

Three new airlines are to join the Star Alliance, the world's biggest grouping of international airlines. Asiana from South Korea, LOT Polish, Poland's state-owned airline and Spanair, based in Majorca and majority-owned by SAS, are to be integrated into the 14-member alliance during the next year.

Middle East Airlines has launched a three-times-weekly service from Beirut to Milan in Italy. It is hoping for good passenger numbers this year to boost its business, as the aftermath of September 11 led to just a one per cent growth in passengers in 2001. Regional traffic has held up well so far this year, and Nizar Khoury at the airline said, 'Our biggest market is Saudi Arabia. We are expecting a good summer from Arab travellers who used to fly to Europe and the USA.'

Maersk Air has added six new routes from Birmingham in the UK to Nice, Bordeaux, Toulouse, Athens, Geneva and Venice in Europe. Return fares start at UK£91 (US$132.5).

BMI British Midland is claiming that plans from British Airways (BA) to strengthen cooperation with fellow Oneworld partner Iberia are anti-competitive, as BMI operates the only current competition to the London-Madrid route. BA and Iberia are expected to ask for European Union approval to coordinate schedules to allow for easier transfer on to Iberia's South American services.

The UK's airport authority, BAA, is dropping its charges and investing US$88 million into a campaign to attract more direct international flights to Scotland. It operates three airports at Aberdeen, Edinburgh and Glasgow.

Singapore Airlines is strengthening its links with the Middle East. Three additional flights to Dubai from Singapore were launched in June. Michael Tan, Singapore's Executive Vice-President, said, 'Passenger traffic between the United Arab Emirates and Singapore has grown by more than 10 per cent in the last two years, and we foresee this upward trend continuing.'

Brazil's carrier, Transbrasil, is seeking a new investor to help finance its relaunch, which is hoped to occur sometime this year. The carrier has not flown since December last year when it was grounded, owing US$691 million. However, it retains its operator's licence and there are hopes that a relaunch is imminent. Transbrasil was once the third largest airline in Brazil, operating international services to the USA and Portugal.

US carrier, United Airlines, and discount carrier Virgin Blue, based in Australia, have agreed a code-share deal. Stephen Pearce, United's general manager in Australia, commented, 'This agreement means [United] is now able to offer customers access to all points in Australia with easy domestic connections and smoother transfers.'

New low-cost airlines are springing up in Canada, keen to follow the success of established low-cost operators such as Southwest Airlines in the USA. Three new or rebranded low-cost airlines have joined the marketplace, promising cut-price fares for travel within Canada.

CanJet, which collapsed last year when its parent company Canada 3000 fell victim to the downturn in bookings post-September 11, relaunched flights in June. 'We have attracted and assembled a highly experienced, service-oriented team, many of whom were with CanJet when it was launched in 2000,' said Kenneth Rowe, Chairperson of the company. 'We are delighted that CanJet will once again be able to offer passengers a low fare, high quality service.' Flights link Toronto, Ottawa, Halifax, Moncton and St Johns.

New budget airline, Jetsgo, has also been launched recently. The airline offers services between Toronto, Montreal, Halifax, Winnipeg and Vancouver. Based on the USA's Southwest Airlines, Jetsgo promises the cheapest fares in Canada, according to its Founder, Michel Leblanc. 'We are a simple airline to book, to board and to fly,' he said. 'We will have the lowest fares in the marketplace - no matter where we fly. If we go there, we will be the lowest.'

Meanwhile, Air Canada is launching a second no-frills subsidiary to complement Tango, which operates from Toronto to a number of destinations in Canada. Air Zip will offer a discount service for flights in western Canada and will be based in Calgary. 'Zip responds directly to fundamental changes in the airline industry, especially on short-haul routes, where fewer customers are looking for executive class and meals, but all are looking for low fares and friendly, professional service,' said Air Zip's President, Steve Smith. Tango and Zip are both wholly-owned subsidiaries of Air Canada.


Ryanair is thinking big

Ireland-based Ryanair, the low-cost carrier that flies 76 routes in 13 European countries, posted profits of US$142 million earlier this year - an increase of 44 per cent on 2001. Its astonishing perfomance, in a year blighted by the contracting of tourism sales worldwide following September 11, underlines the buoyancy of the low-cost aviation sector. Many airlines are now moving into this sector (see above), which has undoubtedly helped the language travel industry in Europe, with its cheap flights between many major European cities.

Michael O'Leary, Chief Executive of Ryanair, forecasts continuing growth of 35 per cent over the next two years and even lower fares for customers. Ryanair presently has seven bases, the largest of which is London Stansted in the UK. Another new base is expected in France, Italy or Scandinavia in the next two years.


Australia safeguards its tourism appeal

The Australian government has allocated an additional AUS$45 million (US$25 million) in its budget this year to aid the inbound and domestic travel industry.

This includes an additional AUS$24 million (US$13.3 million) in funding for the Australian Tourist Commission (ATC) over the next few years. According to Australia's Tourism Minister, Joe Hockey, the extra funding that the ATC receives will be used in part for specific marketing campaigns planned in Asia.

There are also plans to develop Cairns or Darwin into a major northern aviation hub to accommodate expected growth in arrivals from Asia. Hockey introduced a 10-year strategic plan for tourism earlier this year that looks to 'develop Australia's tourism future'. Hockey commented, 'The sobering effect of September 11 and the collapse of Ansett is that it has changed the tourism industry forever, and it's time everyone worked together.'