On 16 November 2006, Qantas Group announced that its value based airline Jetstar will replace Qantas Airways services from Cairns to Nagoya and Osaka from mid-2007.

The Chief Executive Officer of the Qantas Group, Mr Geoff Dixon, said the Jetstar cost structure and product offering was much better suited for the routes.

Mr Dixon said Australia faced tough competition for the Japanese tourist, an issue exacerbated by the depreciation of the yen against the Australian dollar.

"Replacing daily Qantas B767 services with Jetstar A330 services between Cairns and Nagoya and Osaka will improve the economics of the route by around $40 million," he said.

"With Jetstar operating these flights in addition to its recently announced Osaka-Brisbane-Sydney services, the Qantas Group will be boosting capacity to Australia from western Japan by 30 per cent."

Mr Dixon said under the new schedule, Jetstar, using new A330-200 aircraft, would operate:

• six times a week between Cairns and Nagoya from 2 August 2007;
• four times a week between Cairns and Osaka from 8 September 2007; and
• daily Osaka-Brisbane-Sydney services from 25 March 2007.

"The Group's B767 Nagoya and Osaka services are currently being operated by Australian Airlines staff, based in Cairns, under the Qantas banner.

"The Australian Airlines B767 Cairns base will continue to operate," Mr Dixon said.

He said Qantas would increasingly concentrate on the Tokyo market, where there was a higher business travel component than Osaka and Nagoya.

"As we have said before, we intend to grow both Qantas and Jetstar in international markets, but we must match the appropriate cost structure and style of service to individual markets.

"While Qantas continues to be a major leisure travel provider, under its current costs, it requires a significant business base to sustain profitable operations on some key international routes."

Mr Dixon said under the new timetable, Jetstar and Qantas would offer 55 services a week to Japan, plus seasonal services to Sapporo.

The Qantas services will be:

• 11 services a week between Tokyo and Sydney using A330 aircraft featuring the award-winning Skybed in Business Class and audio and video on demand (AVOD);
• three A330-300 services a week between Tokyo and Melbourne, also featuring Skybed and AVOD;
• three Tokyo-Perth B767-300 services; 14 services a week between Tokyo and Cairns;
• a daily codeshare service between Tokyo and Brisbane operated by Japan Airlines; and
• seasonal services between Cairns and Sapporo, twice a week, between December2006 and March 2007.