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Qantas Launching Cut-Price Carrier

December 1, 2003

SYDNEY, Australia (AP) _ Australia’s Qantas Airways said Monday it will launch a new cut-price domestic carrier called Jetstar in May and that it has ordered 23 Airbus A320 planes for the airline.

Jetstar is aimed at competing with no-frills Australian domestic carrier Virgin Blue, and its launch will likely set off a price war on highly competitive Australian domestic routes.

Qantas said at its annual general meeting in October that it would launch a low-cost domestic carrier but gave no further details.

``The domestic leisure market is growing rapidly and now represents over 60 percent of all passengers,″ Qantas Chief Executive Officer Geoff Dixon said Monday. ``Jetstar will concentrate on growing this market with value fares while opening up new destinations.″

Jetstar will begin selling seats in February 2004 and start flying in May, using 14 Boeing 717s currently operated by Qantas subsidiary Impulse Airlines.

The first Airbus A320 will be delivered in June next year and Jetstar will progressively move to an all A320 fleet, Qantas said. Dixon said that while the initial order is for 23 A320′s, more aircraft could be acquired as Jetstar grows.

Further details of the airline’s route network and fare structure will be announced in January.

Qantas shares dropped by 2 U.S. cents to $2.37 following the announcement.

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