Jetstar and AirAsia in partnership talks

[bigdelta 46]

Jetstar, owned by Qantas Airways, and Malaysia’s AirAsia confirmed on Friday they are in talks about a partnership to cut costs and consolidate their positions as the lowest-cost airlines in the Asia-Pacific region.

 

Qantas, the still-profitable Australian flag carrier – which remains well positioned compared with its international rivals – said its wholly owned subsidiary and AirAsia had entered into preliminary discussions regarding a potential joint venture.

 

AirAsia, the region’s biggest low-cost carrier, and Jetstar have grown rapidly and are looking to expand routes across south-east Asia and Australia, beyond Vietnam, Cambodia, Singapore, China and Australia.

 

Derek Sadubin, chief operation officer for the Centre for Asia-Pacific Aviation, said there was no talk of an equity arrangement between the two budget carriers or a strategic alliance on revenue-generating activities such as code sharing.

 

However, such deeper ties could eventually happen if the two carriers established a working partnership when doing procurement deals. “As the worlds lowest-cost airline, AirAsia is attractive to rivals who want to emulate their cost leadership,” said Mr Sadubin.

 

“It’s a feather in their cap if they can partner with a major foreign carrier like Jetstar on cost reduction. It will help them lower their costs even further and allow them to continue to offer extremely low fares in an intensely competitive market,” he said.

 

Analysts said this potential deal probably did foreshadow a more formal tie-up, but that the regulatory approvals for business combination or revenue scheduling were so drawn-out that the carriers looked at what they could achieve quickly to benefit both parties.

 

One analyst suggested that if Air Asia and Jetstar placed a big enough order for parts or for an engine, their combined power might encourage manufacturers not only to offer a good price but potentially develop more advanced and lower-cost aircraft.

 

However, competition in the region is intensifying.

 

Tiger Airways, which is modelled on Jetstar, recently began offering services between Sydney and Melbourne.

 

Virgin Blue has forged an alliance with Delta to put pressure on Qantas’s transPacific yields.

[aussiechic 209]

I would support this co venture, at the moment it cost us more to get to a capital city to take advantage of good sales flying to Thailand. As Air Asia leaves out of the Gold Coast it awkward to get to and adds costs. So if we could book one flight with Jetstar Brisbane to Singapore and then Singapore to Bangkok with Airasia would be good. Or even Jetstar Townsville to the Gold Coast with connecting flight on Airasia to Bangkok would good to.