Wandering China

An East/West pulse of China's fourth rise from down under.

Qantas to launch joint venture with China Eastern to form Asian budget carrier [The Age]


More Australia-China synergy – good for business? Jet Star Hong Kong emerges from joint venture with China Eastern (中国东方), a Shanghai-based carrier with a  64.93 million domestic and international passenger load in 2010.

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Qantas to launch Asian budget carrier
by Matt O’Sullivan
Source – The Age, published March 26, 2012

Qantas is set to unveil a joint venture with China Eastern today which will create a new budget airline to be called Jetstar Hong Kong.

In a significant breakthrough into the northern Asian region, Qantas announced the Hong Kong joint venture with the Shanghai-based airline this morning. The new airline will use short-haul Airbus A320 aircraft, serving routes in Asia including China, starting next year.

Qantas said the maximum exposure for both it and China Eastern will be $US99 million ($96 million) over a three-year period. The carriers plan the new venture to expand from an initial three aircraft to 18 by 2015, China Eastern said in a statement to the Hong Kong stock exchange.

It will be modelled on Jetstar’s other joint ventures in Asia. Last year Jetstar formed a joint venture with Japan Airlines to create Jetstar Japan, which will begin services later this year on domestic routes in the country.

Qantas’s budget offshoot has its main Asian hub in Singapore, while it also has operations in Vietnam and New Zealand.

Jetstar’s chief executive, Bruce Buchanan, has been talking up the airline’s focus on north Asia over the last 18 months, including China.

Jetstar Hong Kong will offer fares costing less than 50 per cent of the full-service carriers, Mr Buchanan said. Low-cost carriers now account for less than 5 per cent of the Greater China market – which includes mainland China, Hong Kong and Taiwan.

China push

China is already one of the largest tourism markets for Australia and has huge potential for growth in air travel as the size of its middle class swells.

“We see tremendous potential for the Qantas Group in Asia and we’re looking forward to working more closely with China Eastern Airlines to deliver on it,” said Qantas chief executive officer Allan Joyce, in a statement.

The launch of a new budget airline in Hong Kong in partnership with the mainland Chinese airline will go some way to ease the pressure on Qantas, which ditched plans to launch a premium carrier in south-east Asia earlier this month. The expansion plan had been lauded as one of the main planks of chief executive Alan Joyce’s strategy to turning around Qantas’s premium international business.

The latest push into Asia, however, demonstrates that its expansion plans over coming years will rely heavily on Jetstar.

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Filed under: Australia, Aviation, Beijing Consensus, Chinese Model, Economics, Greater China, Influence, International Relations, Peaceful Development, Social, Soft Power, The Age, The Chinese Identity, The construction of Chinese and Non-Chinese identities, Transport

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