Asia gets new budget airline eyeing Chinese flyers

AUSTRALIA: Australian flag carrier Qantas and China Eastern Airlines said Monday they will launch a new Hong Kong-based budget airline next year aimed at cashing in on China’s booming aviation market. The new low-cost Asian carrier, Jetstar Hong Kong, will fly short-haul routes, including in China, Japan, South Korea and Southeast Asia, the partners announced.

The move marks a major expansion of Jetstar, Qantas’s budget brand, which flies domestic Australian and Asian routes, and comes as the embattled carrier struggles to refocus on Asia, the world’s fast-growing aviation market.

“This is a unique opportunity to capitalise on the enormous potential of the Greater China market, where the penetration of low-cost carriers is less than five percent,” Jetstar’s Chief Executive Bruce Buchanan said.

“Jetstar’s fares will be 50 percent less than existing full-service carriers, which we’ve seen create new travel demand in our markets across Asia because it enables people to make more trips, more often.” Qantas and China Eastern -- which will each have an equal stake in Jetstar Hong Kong -- told the Australian Stock Exchange that the new airline would have a maximum capitalisation of US$198 million.

Jetstar Hong Kong, which will be a pioneer in the China budget market, will launch with a fleet of three Airbus A320s, but will increase that number to 18 by 2015.

“We believe there are huge opportunities in the Jetstar low fares model throughout Asia, including Greater China,” said Shanghai-based China Eastern’s chairman, Liu Shaoyong.

Greater China boasts a travel market of almost 300 million passengers a year, which is forecast to grow to 450 million by 2015 as middle class spending and travel surge in the vast nation, according to Qantas. The announcement comes little more than a fortnight after Qantas’s Asian plans were dealt a blow when talks with Malaysian Airlines over a premium joint-venture Asian airline collapsed.

AFP