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Air Asia and Jetstar Announce Budget Airline Alliance
Malaysia’s Air Asia and Australia-based Jetstar announced an alliance to help the budget carriers reduce costs including cooperation on passenger handling at airports in Asia and possible joint purchases of aircraft.
Key to the agreement signed Wednesday in Sydney is a proposed joint specification for the next generation of narrow body aircraft, the airlines said in a statement.
The airlines, among the biggest low cost carriers in Asia, will consider buying aircraft together so that bigger orders lower the cost per plane.
Jetstar, a unit of Australian flag carrier Qantas Airways Ltd., and Air Asia will also share aircraft parts and cooperate on passenger handling at airports in Australia and Asia.
Airlines are under pressure to find new ways to reduce costs as demand for travel remains weak despite some signs of recovery from the global recession. The International Air Transport Association forecasts the global airline industry’s losses to reach $5.6 billion this year after an estimated $11 billion of losses in 2009.
Air Asia, however, made a profit in the third quarter of last year — its most recently released result — as travelers traded down to budget airlines. Qantas has said it returned to profit in the second half of 2009 after a loss in the first half.
Qantas Airways chief executive Alan Joyce said Jetstar and Air Asia would gain a natural advantage in one of the world’s most competitive aviation markets through the alliance.
“Jetstar and Air Asia offer unmatched reach in the Asia-Pacific region ... and this new alliance will enable them to maximize that scale,” Joyce said in a statement.
Air Asia chief executive Tony Fernandes described the agreement as a logical development.
“Air Asia strongly believes the strategic tie-up will help the airline maintain its position as the lowest-cost airline in the world despite rising costs associated with the fledgling global economic recovery,” Fernandes said in the statement.
IG Markets research analyst Ben Potter said the alliance was “very positive’’ given the extremely competitive airline industry and the pressures under which carriers operated.
“The Asia-Pacific region is one of the biggest growth markets in aviation so any ways to further reduce costs and offer more competitive fares will benefit both shareholders and customers,” Potter said.
Qantas shares rose 1.7 percent to 3.01 Australian dollars ($2.75) after the announcement.
Both Air Asia and Jetstar fly routes to and from Indonesian airports.
.
Malaysia’s Air Asia and Australia-based Jetstar announced an alliance to help the budget carriers reduce costs including cooperation on passenger handling at airports in Asia and possible joint purchases of aircraft.
Key to the agreement signed Wednesday in Sydney is a proposed joint specification for the next generation of narrow body aircraft, the airlines said in a statement.
The airlines, among the biggest low cost carriers in Asia, will consider buying aircraft together so that bigger orders lower the cost per plane.
Jetstar, a unit of Australian flag carrier Qantas Airways Ltd., and Air Asia will also share aircraft parts and cooperate on passenger handling at airports in Australia and Asia.
Airlines are under pressure to find new ways to reduce costs as demand for travel remains weak despite some signs of recovery from the global recession. The International Air Transport Association forecasts the global airline industry’s losses to reach $5.6 billion this year after an estimated $11 billion of losses in 2009.
Air Asia, however, made a profit in the third quarter of last year — its most recently released result — as travelers traded down to budget airlines. Qantas has said it returned to profit in the second half of 2009 after a loss in the first half.
Qantas Airways chief executive Alan Joyce said Jetstar and Air Asia would gain a natural advantage in one of the world’s most competitive aviation markets through the alliance.
“Jetstar and Air Asia offer unmatched reach in the Asia-Pacific region ... and this new alliance will enable them to maximize that scale,” Joyce said in a statement.
Air Asia chief executive Tony Fernandes described the agreement as a logical development.
“Air Asia strongly believes the strategic tie-up will help the airline maintain its position as the lowest-cost airline in the world despite rising costs associated with the fledgling global economic recovery,” Fernandes said in the statement.
IG Markets research analyst Ben Potter said the alliance was “very positive’’ given the extremely competitive airline industry and the pressures under which carriers operated.
“The Asia-Pacific region is one of the biggest growth markets in aviation so any ways to further reduce costs and offer more competitive fares will benefit both shareholders and customers,” Potter said.
Qantas shares rose 1.7 percent to 3.01 Australian dollars ($2.75) after the announcement.
Both Air Asia and Jetstar fly routes to and from Indonesian airports.
.
