New Qantas carrier to compete with Virgin

SYDNEY, Dec. 1 (UPI) -- Australia's biggest airline Qantas said Monday it would invest more than $1 billion in Jetstar, a new carrier to compete with Sir Richard Branson's Virgin Blue.

The Sydney-based airline said it ordered 23 A320 aircraft from Airbus at a cost of about $50 million each, reported the London Financial Times.

"It was a very, very aggressive tendering process and we are very pleased with the price we are paying for the aircraft," said Geoff Dixon, Qantas chief executive.

Qantas said Jetstar, its new Melbourne-based carrier, would target the domestic leisure market and start next year with 2,000 employees.

Virgin's Australian arrival in mid-2000 precipitated a price war resulting in Ansett, Australia's other full-service carrier, to collapse.

"Such is the growth in this (leisure) market that the carriers can survive and grow," Dixon said. "Jetstar can serve lower yielding routes where Qantas in its present form has difficulty making money."