In a world first for low cost airlines, Jetstar and AirAsia announced today they would form a new alliance that would reduce costs, pool expertise and ultimately result in cheaper fares for both carriers. The alliance brings together the Asia Pacific’s two leading low cost, low fare carriers and will focus on a range of major cost reduction opportunities and potential savings – to the benefit of customers throughout the region. Key to the agreement is a proposed joint specification for the next generation of narrow body aircraft, that will best meet the needs of the low fare customer of the future. Both airline groups will also investigate opportunities for the joint procurement of aircraft.
Qantas Airways Chief Executive Officer Alan Joyce, Jetstar Chief Executive Officer Bruce Buchanan and AirAsia Group Chief Executive Officer Datuk Seri Tony Fernandes finalised the agreement in Sydney today. Qantas Airways Chief Executive Officer, Mr Alan Joyce, said the historic non-equity alliance would give Jetstar and AirAsia a natural advantage in one of the world’s most competitive aviation markets. “Jetstar and AirAsia offer unmatched reach in the Asia Pacific region, with more routes and lower fares than their main competitors, and this new alliance will enable them to maximise that scale,” Mr Joyce said. “Just as both carriers have pioneered the development of the low cost, long haul airline model, today’s announcement breaks the mould of traditional airline alliances and establishes a new model for achieving reduced costs and increased efficiency. “The aviation market in Asia is a growth market, and has proven resilient over the past 12 months, despite the tough operating environment, with significant growth in passenger numbers forecast in the region. “This partnership will ensure that both airlines can capitalise on these growth opportunities.”
Both carriers will investigate opportunities for joint procurement of the next generation of narrow body aircraft. A collective goal is to achieve cost reductions in terms of order volume and influencing design specification to deliver more efficient, low cost operations. It is agreed to develop cooperative arrangements for the provision of passenger and ground handling in Australia and within Asia at overlapping airports by leveraging scale. Both air carriers would pool inventory arrangements for aircraft components and spare parts. It has been agreed to jointly procure engineering and maintenance supplies and services, with Jetstar maintaining its existing use of and commitment to Australian facilities. It has also been decided to follow reciprocal arrangements for passenger management (i.e. support for passenger disruptions and recovery onto the other airline’s service) across both the AirAsia and Jetstar flying networks.
Jetstar is the Qantas Group’s (QAN) low cost airline brand. Jetstar is a wholly owned subsidiary of the Qantas Group yet has separate management to Qantas. Based in Melbourne, Jetstar commenced operations on 25 May 2004 and is both the world’s largest low-cost, long haul carrier and the largest value based carrier in Asia in revenue terms. The airline has carried over 50 million passengers since its inception.