AUSTRALIA is to have a new domestic airline - VivaJet - to rival Qantas and Virgin Blue, both of which are slashing unprofitable regional routes to combat soaring fuel prices.

VivaJet, based in Melbourne, is expected to start operations in November, promising a “better” service with complimentary light meals and drinks and cheap fares.

It is believed that two former Qantas executives are advising VivaJet.

The Sydney-based Centre for Asia Pacific Aviation (CAPA) said the new airline planned to start passenger and cargo services later this year, using the 70-seat Embraer E-170 and 90-seat E-190 regional passenger jets (E-Jets), 72-seat ATR-72 turbo-props and a Airbus A300 Freighter aircraft.

Virgin Blue was the first to introduce E-jets on the east coast and Canberra services late last year.

VivaJet will be headed by Cenap Kathyaoglu, who has been in the tourism and aviation industry for more than 20 years and helped to develop several companies in Europe and the US in the highly competitive airline sector.

The new airline is defying soaring fuel prices, falling consumer confidence and the volatile equity market.

VivaJet has been registered as a private Australian company in Melbourne since 2006 and is backed by German investment partners.

It faces a major hurdle to break the stranglehold that Qantas and, more recently, Virgin Blue have gained on the premium business market in Australia.

VivaJet is expected to launch with four E-190s, followed by one E-170, with plans for an extensive network covering Melbourne, Sydney, Brisbane, Canberra, Adelaide, Hobart and the Gold Coast.

An informed source said that at least eight Embraer aircraft may be leased by VivaJet, a Brazilian maker renowned for its cost-effective approach.

Slot allocation has been granted at all destinations, but the airline will progressively roll out its network, with an initial focus on Sydney, Gold Coast and Melbourne.

However, what has not been revealed is which airports the airline will operate from.

Some suggest it may use Sydney’s Bankstown.

CAPA said the airline had plans to deliver a standard of domestic air travel “never experienced before in Australia. And all this on a low-fare basis, including complimentary meals and drinks”.

The last airline to offer premium services and low prices was Ozjet.

It lasted less than six months, with many routes having more flight attendants than passengers.

In fact, the only successful major start-up in the past two decades was Virgin Blue, which flourished after the collapse of Ansett Australia in September 2001.

Also on the radar is the Indonesian carrier Lion Air, which plans to commence operations later this year using a fleet of six extended-range B737-900ERs.

Lion will hold 49 per cent of the new company, which is to be 51 per cent owned by Brisbane-based Australian charter operator, SkyAirWorld.

Initially, the airline is looking at international routes to Indonesia and Southeast Asia, but is also considering operating some domestic destinations.

Source: Teresa Ooi and Geoffrey Thomas,  The Australian News

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Virgin Blue has unveiled how it intends to offset continuously growing fuel prices, first with an immediate fares hike, dropping four planes and cutting flights.

Services affected will be once weekly Sydney–Proserpine and the direct thrice weekly Darwin–Melbourne, from July and August respectively.

“No staff redundancies are necessary as a result of these initiatives,� Virgin Blue has pledged.

Pacific Blue and Polynesian Blue services will not be affected.

Fares will lift domestically around Australia by an average of $5 across more than half of available services, effective immediately.

The new world carrier has also announced a management salary freeze for the upcoming financial year.

Virgin Blue will withdraw four aircraft from the domestic network, though it is unsure whether this will be deployed elsewhere in the group or sold off.

The company also warned that it was still considering other cost-saving options.

“It’s not a case of planning interim measures to offset a spike in the cost of fuel, all airlines must come to terms with a new reality in our industry,� said Brett Godfrey, Virgin Blue CEO.