The Qantas Counterfactual Paul Edwards 18 August 2003

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The Qantas Counterfactual Paul Edwards 18 August 2003

The Qantas Counterfactual Public Session Paul Edwards 18 August 2003 Counterfactual • strategySecure and develop Australasian home base. • Competitive position is essential. • Natural extension of Qantas long term commitment to New Zealand 4 International 4 Domestic. Domestic New Zealand• Qantas is in the relatively early stages of domestic New Zealand expansion. • Qantas has maintained some form of presence in domestic New Zealand for 10 years. 4 Preferred selling arrangement with Ansett New Zealand (1990) 4 Franchise arrangement with Tasman Pacific (2000) 4 Qantas operations (May 2001) Commitment to Domestic New • Expansion plans slowed due to events outsideZealand Qantas control 4 Collapse of Ansett Australia in September 2001. • Implementation of the counterfactual is already in progress. 4 Jetconnect established in June 2001 4 Received AOC in October 2002 4 Five-aircraft operation by November 2002 4 Sixth aircraft arrived in May 2003 4 Wellington base established June 2003 Reasons for growing in Domestic New • Need to protectZealand and build network profit. • Home market. • Need to build frequency. • Current revenue share does not match capacity share (“share gap”). Plans for Domestic • New fareNew structure already Zealand implemented. • Continue with plans to expand the business. • Review of product and network. • Discuss further in confidential session. Plans for the • Introduction ofTasman more efficient aircraft 4Operate all Auckland and most Christchurch services with wide-bodied aircraft 4Operation of some 737s using Jetconnect. • Review fare structure. • Discuss above and other international routes further in confidential session. Airline Planning Group New Zealand Presence Analysis Overview of ‘City Presence’ What passengers value • Competitive fares. • Minimum travel time to destination. • Schedule options 4 number of available destinations 4 frequency of flights 4 seat availability on preferred flight. City presence concepts • Increasing breadth and depth of service delivers benefits to the traveller through 4 better frequencies 4 increased number of destinations 4 access to more low-fare seats. • This is described as “city presence”. Value of greater city presence First Place Market Positions 90 80 70 60 are h 50 S al 40 u The airline which has the Act 30 greatest city presence achieves a 20 premium above its expected 10 share of city revenues. APG estimated this at 17%. 0 0 102030405060708090 Fair Share.

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