By Christian Mahne in Sydney

The future's bright orange for Qantas.

The flying Kangaroo has opted for a change of strategy. There's a new brand, a new livery, and even a new name.

It's stimulated by the low cost concept, as every airline is having to be these days

Peter Harbison, Centre for Asia Pacific Aviation

Segmentation is the future, and Australian Airlines is the tactic.

It's a new orange-coloured all economy airline designed to eke out profits on routes where the expensive full service carriers have tried and failed.

Australian Airlines, which makes its maiden flight on Monday, hopes to make money by taking over Qantas' unprofitable routes and then lowering the cost base.

Trimming costs

But it's not your normal low cost model, as Chief Executive Denis Adams explains.

"A lot of people say "low cost" so you're going to cut the fares aren't you? We just say there's no way we are going to cut the fares.

"Because if we cut the fares we just replicate the financial conditions which forced Qantas' withdrawal - Why would we go and make savings of 25 to 30% in already low yield markets and then go and cut prices and ruin ourselves in the first couple of years?"

So, prices won't fall, but instead of losing money no matter how full the plane, Australian Airlines will be in the black once three quarters of the seats are filled, since their whole operation is cheaper to run.

But don't expect Australian Airlines to have the final word on low cost travel in the Asian region.

Singapore's Silk Air is mulling the change to an all economy configuration to chase the new leisure markets opening up in the region.

Competition

For would-be carriers considering starting up from scratch, breaking into the market is likely to be very tough indeed.

Becoming successful in Asia involves selling, not just flying, and that's where the incumbents with their established market presence have an advantage.

The other problem is distance. With the most lucrative routes taking 6 hours flying time or more, the characteristic European "no frills" model of no food or entertainment just won't work in Asia.

There'll be four Boeing 767's in the Australian Airlines fleet. If all goes according to plan, Australia's newest airline expects to carry some 350,000 passengers in its first year.

Initially they'll fly between Japan and Cairns, in Northern Queensland.

Brand protection

This is a deliberate choice of hubs that keeps Australian Airlines from competing directly against Qantas, according to the Centre for Asia Pacific Aviation's founder, Peter Harbison.

"It's stimulated by the low cost concept, as every airline is having to be these days. But in this case it is a separate segment of Qantas which is designed to provide a low cost product into the market place without polluting the Qantas brand itself."

Protecting the Qantas brand is a significant issue. Australian Airlines will offer standard economy class, just like its parent.

Services to Singapore, Taipei and Hong Kong will follow at the end of November.