Impulse Airlines

Competition disputes

In December 1999, McGowan complained to the ACCC that Qantas was engaging in predatory conduct on the Newcastle–Melbourne route. He alleged that Qantas was adding capacity to an already marginal market, introducing 792 seats a week against Impulse's 1,062. Qantas deputy chief executive Geoff Dixon denied the allegation and said the expansion was part of an existing plan to develop Newcastle as a regional hub.

In August 2000, the ACCC concluded that there was no basis for action under the Trade Practices Act 1974 over Qantas's Newcastle–Melbourne and Newcastle–Brisbane expansion. It cited Qantas's pre-existing plans, its BHP contract and evidence of commercial viability. Although Impulse had redeployed its Newcastle–Melbourne aircraft, the commission found no indication of material damage to Impulse from the expansion.

Impulse's entry also prompted a dispute over facilities at Canberra Airport. In May 2000, Qantas withdrew from common security-screening and passenger-waiting arrangements ahead of Impulse's arrival. Airport owner Capital Airport Group began legal proceedings alleging breaches of Qantas's lease, and the ACCC examined the competition implications. Qantas said the dispute was with the airport owner and denied trying to restrict another airline's access.

The interstate fare war intensified in early 2001. In March, Qantas offered some Sydney–Melbourne fares as low as $36.50, while Impulse sold seats from $37. McGowan accused Qantas of trying to drive Impulse out by adding excessive capacity. In April he supported Virgin Blue's allegations that Qantas was flooding the market to force one or both new entrants out. Impulse reduced Sydney–Melbourne and Sydney–Brisbane frequencies and redeployed flights to Melbourne–Hobart. The ACCC said it was closely monitoring the airlines, although no formal complaint about that capacity expansion had then been made.

Acquisition by Qantas

By early 2001, the fare war and rising fuel costs had made Impulse unprofitable. It approached Qantas about an agreement, while its investors declined to provide further support. On 1 May 2001, the airlines announced an arrangement under which Impulse would cease selling services under its own name and operate for Qantas. The agreement involved a wet lease of Impulse's aircraft and crews, financial support from Qantas and an option to buy the airline.

Dixon rejected the suggestion that the arrangement was anti-competitive, pointing to continuing competition from Ansett and Virgin Blue. He said that $33 fares were unsustainable and that Impulse's aircraft would replace Qantas aircraft on existing services.

On 18 May, the ACCC announced that it would not oppose the transaction. It concluded that the acquisition would lessen competition, but that receivership would be a worse outcome, given Impulse's financial position and the absence of another buyer. Qantas gave undertakings concerning access to peak-period Sydney Airport slots and terminal facilities, and the maintenance of service frequency and capacity and restrictions on fare increases on routes served only by Qantas and Impulse. Virgin Blue chief executive Brett Godfrey nevertheless argued that the deal threatened low fares by strengthening Qantas's position.

Impulse ended independent interstate services on 22 May 2001. That day it announced cuts to 70 direct jobs and more than 130 contractor positions as Qantas took over airport handling. The cuts prompted staff protests. Qantas said Impulse had made the decision and that the agreement preserved most jobs that would otherwise have been lost.

Qantas exercised its option in November 2001, and Impulse was absorbed into QantasLink. The purchase was completed on 20 November for an undisclosed sum. By then, Impulse's eight Boeing 717s and 13 Beechcraft 1900Ds had been operating under the Qantas banner since May.

In April 2003, Rene Rivkin was found guilty of insider trading over the purchase of 50,000 Qantas shares before the Impulse deal was announced. He bought these shares on behalf of Rivkin Investments on 24 April 2001, just hours after speaking to the executive chairman of Impulse, Gerry McGowan.

Jetstar

Impulse subsequently provided the operating company, aircraft and employment agreements for Qantas's new low-cost airline, Jetstar. In Mayday, journalist Matt O'Sullivan identified Impulse's lower labour costs as a central attraction of the acquisition: its pilots and cabin crew remained employed by the subsidiary on conditions different from those at Qantas. O'Sullivan quoted Dixon as saying, "We went very aggressively to get Impulse when we knew it was in trouble."

Qantas approved the new low-cost airline project in October 2003. The use of Impulse's employment agreements raised concerns among unions that Jetstar could be used to reduce wages and conditions elsewhere in the Qantas group. The Flight Attendants Association of Australia, however, said Qantas appeared willing to negotiate and that the outcome would depend on the routes and aircraft chosen.

Impulse Airlines Pty Limited changed its name to Jetstar Airways Pty Limited on 23 December 2003. Jetstar began passenger services on 25 May 2004, with its inaugural flight from Newcastle to Melbourne. Its initial fleet consisted of 14 Boeing 717s, with Airbus A320s to follow.

The facilities developed by Impulse Airlines for its Newcastle base continued to be used as a heavy maintenance base for Jetstar. In June 2020, Jetstar announced that the base would close and its work would move to Melbourne.