Following several short-lived attempts since the 1980s to start a third domestic airline, Impulse and Virgin Blue (VB) were launched in 2000. Their launch reduced fares to historically low levels. Qantas and Ansett dropped their fares to match start-up deals. As Ansett and Qantas had higher overheads, the fare reductions challenged Qantas
and induced losses for Ansett. Against the background of this price war, Qantas took over Impulse, which was later relaunched as Jetstar (JS), and Ansett collapsed in September 2001. This paper examines the product and labor market strategies of VB and JS—the two main low-cost carriers (LCCs) in Australia.