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When a domestic flight costs more than one-way to LA

The Age, 21 May 2012

If you want to get the morning plane from Sydney to Mount Isa tomorrow, it will cost more than the going rate to Los Angeles. Of course, the comparison is spurious: if you wait until the afternoon the flight will cost only $600 about one-way – a little less than the best LAX fare.

Cities and towns that have been left for dead when they're deemed unable to sustain airline competition can be expensive places to leave when it comes time for holidays or a visit to the rellies.

For the past decade, many in Mount Isa have had to take to the roads at holiday time: it has just been too expensive to fly, like it was to and from many destinations under the old duopoly between Qantas and Ansett.

When Virgin Australia returns to Isa in August, it reckons its year-round best fare of $289 one-way to Brisbane will be around 27 per cent cheaper than Qantas's best until now.

Of course, since VA's announcement on Friday, the Qantas rate has come down to $305 one way. Isn't it marvellous what a little genuine competition does for prices?

But Mount Isans will still be doing their sums before they leave their cars in the garage and head for the airport. The new going rate is anything but cheap: $600 return is more than double the best rate on similar routes like Brisbane-Cairns (1388 kilometres versus 1572 to Isa), where Virgin's fares start at around $135 one-way for travel booked a month ahead.

The biggest company in Mount Isa also did its sums: if it could get a competitor to Qantas into the market, it could save tens of thousands of dollars a week moving around its staff and suppliers.

And so Virgin did a deal with miner Xstrata – not to shift all its business from Qantas to Virgin, just some of it, which is enough to give the airline the viability it needs to run a weekday service to Mount Isa, initially using its smallest jet, the 104-seat Embraer E190 (soon to been seen with just 92 seats with a dedicated Business section at the front).

The 6am weekday departure from Brisbane won't connect for travellers from other states, which means the airline has an interest in increasing frequencies to provide a second departure time. Montgomery says the airline also wants to put the roomier Boeing 737-800 (like Qantas's) on the route in future.

"There's a commitment from Xstrata to assist us, but it's not being underwritten so community support will be crucial," Montgomery told ABC radio in Mount Isa.

That's a reference to the community support that the fledgling Virgin Blue failed to receive in 2001 when it stepped in to replace the lost Ansett services after the airline's collapse.

Qantas effectively ran the little Virgin Blue challenger out of town when the national carrier decided to introduce double-daily services to Brisbane on top of Virgin's flights. Something had to give and it was Virgin; it was one of only a handful or routes the airline has ever vacated.

There was nothing especially unique in Qantas's behaviour: nothing good ever happens as a result of a monopoly and Qantas has engaged, in Montgomery's words, in "10 years of gouging" Mount Isa, the way most airlines around the world do if they have a monopoly.

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