Put a mature nation like Australia, with slow population and economic growth, next to a dynamo like Asia, and it is small wonder that Australia's airlines are seeking ways to tap into their neighbour's growth.
Nationality rules prevent them from doing it on their own, but through alliances and imaginative joint ventures, Qantas and Virgin Australia Airlines are finding ways to enter Asia, a region that Boeing predicts will account over the next 20 years for half the world's air traffic growth.
Virgin Australia, formerly Virgin Blue, is the new kid on the Asian block, but it has made a grand entry via a joint venture with Singapore Airlines (SIA). Both carriers have applied for antitrust clearance to form a full metal-neutral alliance with coordinated schedules, fares and revenue sharing. Australia's transportation department has endorsed the plan. Pending approval, both carriers have started interlining, which opens SIA's extensive Asian network to Virgin Australia.
Qantas has been flying to Asia for years. Five years ago, it started turning some routes over to its low-cost subsidiary, Jetstar. Low-yield leisure routes went first because Jetstar had the cost base that could make them profitable where Qantas could not. The two airlines now divide Asia, with Qantas serving such major routes as Singapore, Mumbai, Bangkok, Hong Kong, Shanghai and Tokyo, while Jetstar flies to resort destinations at Denpasar (Bali) and Phuket, and smaller cities such as Osaka and Ho Chi Minh City. Qantas and Jetstar share some destinations, such as Tokyo, but Qantas flies the trunk route from Sydney, while Jetstar serves the thinner route from Cairns. They follow the same pattern at Singapore, which Qantas serves from Australia's largest cities and Jetstar from Darwin and Perth.
Shortly after Jetstar made its international debut, Qantas and Jetstar started cultivating joint ventures with other airlines in Southeast Asia. This produced Jetstar Asia, based in Singapore, and Jetstar Pacific in Ho Chi Minh City. By local law, Qantas owns only a minority stake in each, but it provides significant management and operating support. Jetstar Pacific mostly serves Vietnam, but Jetstar Asia has spread its network from Singapore to 20 Asian destinations, including Hong Kong, Macau and two coastal Chinese cities. According to Jetstar Asia's chief executive Chong Phit Lian, growth plans in Asia are on full throttle.
Recent plans to restructure Qantas also show a strong tilt toward Asia. Jetstar Japan, a new joint venture between Qantas, Oneworld partner Japan Airlines, and Mitsubishi, was unveiled in August. Bruce Buchanan, Jetstar's chief executive, predicts it will grow "very fast", with a fleet of 24 Airbus A320s within the first few years. As soon as it secures an operating licence, Jetstar Japan plans to launch domestic flights between Tokyo and Osaka. It also plans to expand quickly to other Japanese cities and launch short-haul international flights to South Korea and China. Buchanan sees Japan as "a massive travel market" that until now has lacked low-cost carriers to stimulate it.
The other leg of the Qantas's new Asian strategy is to form a "premium" carrier based in Asia that will not use the Qantas or Jetstar brand, but in which Qantas will own a minority stake and play a major role. Alan Joyce, Qantas chief executive, sees this new full-service airline as catering to Asia's growing business travel sector. It is due to launch next year.
Singapore and Kuala Lumpur are most frequently mentioned as its base. According to Joyce, "Singapore has a better yielding and bigger traffic base, but a lot depends on the rights we get out of Singapore." Kuala Lumpur has less business travel, but the prospect of a link with Malaysia Airlines, which is joining Qantas in the Oneworld alliance, may offer more traffic rights. This makes Kuala Lumpur, says Joyce, "equally as good as Singapore". He predicts Qantas will choose a base by November or December.
By the time Jetstar Japan and this new carrier take off, Joyce predicts Vietnam's Jetstar Pacific will join Singapore's Jetstar Asia in flying to China, thus bringing to five the number of carriers serving China in which Qantas holds a stake. Add the Asia-wide Virgin Australia-SIA alliance, and the combination shows how closely Australia, a so-called Western nation, is really linked to the East.
Source: Flight Daily News
