Bangkok--14 Nov--Centre for Asia Pacific Aviation Today's announcement of nearly 200 new domestic aircraft orders for delivery over the next decade and beyond adds meat to CEO Geoff Dixon's statement that Qantas plans to maintain its line in the sand at 65% market share. It brings Qantas' total order book (with previously announced B787s and A380s) to almost AUD35 billion ("at current list prices" - but Qantas will have driven some hard deals in these large purchases). The announcement provides for firm orders for 68 A320 and A321 aircraft (for Jetstar) and 31 B737-800s (for Qantas), with another 40 and 49 options and purchase rights respectively for the two airlines. Jetstar to grow - fast; all regional markets targetedTwo things are immediately clear from this: (1) Jetstar is the vehicle of choice for long term competition in the domestic market and will grow much faster than Qantas; and (2) projecting the use of so many single-aisle aircraft over this period means that Qantas plans to maintain its share of service at all smaller regional ports, basically creating a blanket across the market. The key routes on the "golden triangle" of Sydney, Melbourne and Brisbane, which currently account for over a third of all domestic passengers, will almost inevitably require larger gauge aircraft, as Sydney airport slots dry up. (Currently, A330s and B767s fill that larger aircraft role, so there will almost certainly be more orders to follow in the next couple of years, as the older B767s are phased out.) Qantas' short haul fleet to consolidate around the new -800NGsQantas operated 30 B737-300 and -400 types as of 01-Jul-07, and 33 B737-800NGs. Qantas' short haul fleet will therefore consolidate around the new -800NGs, with Dixon noting that the airline will "replace older aircraft" in this category, thus further accelerating Jetstar's market share growth, as the -300s and -400s are withdrawn. By contrast, there is little to indicate that Jetstar's 24 still nearly-new A320-200s will be withdrawn in the medium term.A big signal to both Virgin Blue and Tiger Like the biggest tomcat on the block, Qantas is clearly today sending a big signal to both Virgin Blue and Tiger (and any other prospective entrants) that it will take no prisoners. This order will necessarily be factored into future planning by those airlines and, in due course, by any prospective purchaser of Virgin Blue. In this way, Qantas is effectively exercising the market power that comes with dominance - at the same time as protecting that dominance. The leasing option - reduces risk exposureQantas has another option here too, as it accumulates an order book of near-Middle East proportions. As the Group is progressively split into its parts, one of those will be the leasing arm, which will own aircraft and on-lease them to its Group partners. It also offers the option of leasing them out, tax-effectively, to other airlines. Having this alternative outlet for its orders reduces Qantas' risk profile in the market as it evolves into a neo-leasing company as well. Even assuming a major downturn, the A320s and B737NGs should continue to command good values, given the demand for short haul aircraft, as new entrant LCCs continue to emerge in Asia and the Middle East.