Air fares go to ground in price war, by Alexandra Smith, Transport Reporter
(Credit: The Sydney Morning Herald)

Just when it seemed air fares were as low as they could go, Virgin Blue has sparked a new fare war, introducing $1 internet tickets - plus $30 taxes and surcharges - for flights between Melbourne and Adelaide.

Not to be beaten, its competitor Jetstar yesterday followed with $1 fares between the same two cities, but because Jetstar flies to Avalon rather than Melbourne Airport, the surcharges and airport taxes are just $23.

The two airlines, and Jetstar's parent, Qantas, have been battling it out for several weeks, each trying to beat the other by advertising very low fares - last week it was $9 - but not including the additional charges.

The war is likely to continue, with Virgin Blue promising that its daily sale, which it calls "happy hour" because the cheapest fares are only available between 1pm and 2pm, was here to stay.

Despite yesterday's low-key sale launch, kept quiet so Virgin Blue could handle the additional website traffic, more than 1000 $1 internet fares were sold, double what it expected.

A Virgin Blue spokeswoman, Amanda Bolger, said the changing daily destinations would not be advertised on the internet because the fares were designed to suit travellers who decided where to go based on price, not location.

"It's a bit like a treasure hunt. People browse through the fares online everyday," Ms Bolger said. "It's really for people who are looking for a romantic weekend away, and they may find somewhere like Adelaide and decide to go there."

But Ms Bolger said tickets would not be as low as $1 every day, and taxes and surcharges would vary depending on which airports the flights used. There is also a $2 per person each-way credit-card charge.

Ms Bolger said the happy-hour sale was a "global aviation first", designed to give travellers "a bargain any day of the year, not just at off-peak times when it suits the airline".

A Jetstar spokesman, Simon Westaway, conceded the airline followed suit because it was focused on remaining competitive, but warned it would not simply follow the lead of its rival.

As Jetstar and Virgin Blue went head-to-head in a fare battle, fierce criticism was directed at Qantas following comments by its chief executive, Geoff Dixon, that the airline could not afford to be all-Australian because its competitors were employing staff overseas to cut costs.

If international benchmarks were followed, more than 7000 jobs could be moved overseas, he said. Last night he confirmed the airline was considering moving thousands of jobs offshore.

"We have said for the past three years that we must source more people overseas and that our continued growth of jobs in Australia depended on that."

Mr Dixon said the airline was looking at a range of possibilities, including joint ventures, "which would, if they came to fruition, involve new jobs being created in both Australia and other countries". He said that regardless of any decision about overseas jobs, the airline had no plan for wholesale redundancies.

Commenting on Mr Dixon's earlier statement, the assistant national secretary of the Australian Services Union, Linda White, said they had created a sense of fear because the airline could potentially move a "limitless" number of jobs offshore.

Ms White said 10,500 Qantas staff received postal vote forms yesterday for the latest workplace agreement, but many would question whether to accept it.

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