Qantas to drop India flights, defer A330s


Qantas CEO Geoff Dixon has warned of a deteriorating market for international aviation services

By CNN's Geoff Hiscock
Asia busines editor

SYDNEY, Australia (CNN) -- Australia's flagship carrier Qantas has become the latest airline to slice international operations, dropping its flights to India and deferring delivery of three Airbus A330 aircraft.

The airline said Wednesday it will stop flying to India from March 31. It now runs five return services a week from Sydney to Mumbai via Singapore.

Although Qantas is one of the few airlines in the Asia Pacific region to be operating profitably, its chief executive Geoff Dixon has warned recently it is not immune to a "sharply deteriorating" market.

Qantas chief financial officer Peter Gregg said the decision to quit India came after a review of its international network.

Gregg said the review process had been particularly important since the September 11 terror attacks and the military action in Afghanistan.

Qantas has already reduced flights to Rome, Johannesburg, Bangkok, Manila and Bueno Aires in recent months.

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Gregg said stopping flights to India would allow Qantas to switch Boeing 767 aircraft to domestic services.

As a result, Qantas would defer three Airbus A330 aircraft due to be delivered in mid-2003.

Qantas, which is 22 percent owned by British Airways, will start operating a low-cost subsidiary, Australian Airlines, later this year to several Asian destinations.

On the home front, Qantas has moved from 55 percent to about 85 percent of the domestic market following the collapse of its chief rival, Ansett, last September.

Discount newcomer Virgin Blue now has about 8 to 10 percent of the market, while a much-reduced Ansett has about 5 to 6 percent.

Ansett is due to be sold by its administrators to the Melbourne-based Tesna consortium at the end of February. If this sale proceeds, Tesna aims to win a 25 percent market share by offering full services on new Airbus aircraft.

But Sydney-based aviation expert Peter Harbison of the Center for Asia Pacific Aviation says the timing for the revival of Ansett is about as bad as possible.

While Qantas remains in a strong position for 2002, it has had to deal with a slowing economy and higher operating costs in the 2000-01 financial year.

Last August, the airline announced its first fall in net profit in six years, down by nearly 20 per cent to $215 million (Aust. $415 million) for the year to June 2001.

Qantas shares lost 2.1 percent Wednesday, closing 8 cents lower at A$3.71.