Grapevine: Stoddart Races into Australian Skies

Australia's crowded skies are set to become even busier after Formula One racing millionaire Paul Stoddart said on Sunday he hopes to have a new budget airline flying by October.

Stoddart said his OzJet would take on Qantas Airways Ltd's discount carrier Jetstar and its arch-rival Virgin Blue on highly competitive routes between Australia's three main east-coast cities of Sydney, Melbourne and Brisbane.

"We'll start off with about half a dozen aircraft, probably launching in about October," Stoddart, the boss of the Minardi Formula One team, told Channel Ten television.

"We're hoping to get in just before Christmas," he said.

Stoddart, who has long said there was room in Australia for a budget carrier similar to Irish no-frills carrier Ryanair, had shelved plans late last year to take on Qantas and Virgin Blue.

Qantas launched its cut-price Jetstar last month to meet the competitive threat from British billionaire Richard Branson's Virgin Blue. The national carrier celebrated the launch by offering 100,000 seats at A$29 ($22) each. Virgin Blue responded the same day by releasing 200,000 seats at the same price.

Stoddart has already held preliminary talks with Victoria state officials and said that OzJet would most likely operate out of existing smaller suburban airports in the three cities.

"We are trying to serve a different niche market and I think it will work really well," said Stoddart, who was in Melbourne for the Australian Formula One Grand Prix.

Qantas currently has about 66 percent of Australia's domestic market. It estimates that the number of people flying has grown around 15 percent each month for the past six months, and has tipped growth rates would continue at 10 to 15 percent for the next couple of years.

Virgin Blue listed on the Australian Stock Exchange last December.

Not long after Virgin Blue's float and with Jetstar looming on the horizon, Stoddart said in December he had shelved his plans for a carrier then dubbed as "OzAir" because he did not want to get caught up in a price war