Qantas has announced a strategic alliance with China Eastern to create a budget airline servicing Asia out of Hong Kong. Drawing on Qantas’s existing low fares airline model and China Eastern’s local knowledge of the region and extensive China and Asian networks, Jetstar Hong Kong will service short haul routes in Asia, including Greater China, Japan, South Korea and South East Asia.
China Eastern Airlines Chairman, Mr Liu Shaoyong said he believed there were huge opportunities for the Jetstar low fares model throughout Asia, including Greater China.
“Cooperation with Qantas Group is a key step in China Eastern Airlines’ international expansion strategy and an excellent opportunity for China Eastern Airlines to develop low cost carrier operations to complement its existing business model,” said Mr Liu.
“Jetstar Hong Kong’s low fare model will enable people to fly more often for less and will help to stimulate the Hong Kong tourism industry and the broader economy,” he said.
Qantas Group Chief Executive Officer, Mr Alan Joyce, said the new agreement would build a strong platform for accessing the world’s largest, fastest growing and most profitable aviation market.
“Establishing Jetstar Hong Kong in the heart of Asia and on the doorstep of Mainland China is a historic opportunity to continue the successful expansion of the Jetstar brand in this region,” he said.
The two airlines have each invested US$99 million over three years to form Jetstar Hong Kong.
The joint venture will draw on Jetstar Group’s resources including brand management, commercial management, safety, aircraft maintenance and IT systems.
Chief Executive Officer of the Jetstar Group, Mr Bruce Buchanan, said Jetstar Hong Kong’s fares will be 50 percent less than existing full service carriers.
“This is a unique opportunity for Jetstar to capitalise on the enormous potential of the Greater Chinese market, where the penetration rate of low cost carriers is less than 5 per cent, using a model that we know delivers for customers and shareholders,” said Mr Buchanan.
Hong Kong is one of the Asia Pacific’s major travel hubs, with around 40 million passengers a year and a population base of around 7 million. Greater China has a travel market of almost 300 million passengers per annum, forecast to grow to 450 million by 2015.
The Jetstar Group is Asia Pacific’s fastest growing and largest low fares network by revenue, with airlines in Singapore, Japan, Vietnam, Australia and New Zealand. It operates up to 3,000 flights a week to almost 60 destinations, including 30 in Asia and eight in Greater China. The Jetstar Group anticipates it will carry more than 20 million people in the 2012 financial year.
Headquartered out of Shanghai, China Eastern Airlines is China’s second largest carrier by passenger numbers. It has a route network covering over 900 destinations in 169 countries, and passenger traffic of 68.8 million in 2011. China Eastern Airlines has become a Top 10 global airline company in terms of passenger traffic. ■
