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Sat, Mar 20, 2004 - Page 12 News List

Qantas mulls new budget airline

AFP , SYDNEY

Australian flag carrier Qantas is considering teaming up with Malaysia's AirAsia to form a Singapore-based, low-cost airline servicing the booming Southeast Asian market, it was reported here yesterday.

News Ltd and Fairfax newspapers reported Qantas Airways Ltd was considering the move as a back-up if regulators blocked a proposed tie-up with Air New Zealand.

The venture would challenge archrival Singapore Airlines on its home turf.

Qantas already had a license to operate a discount airline from Singapore that was granted more than 10 years ago after negotiations on access to Australian airports.

Melbourne's Herald-Sun said Qantas had already completed a feasibility study on running a low-cost airline from the Asian city-state while the Sydney Morning Herald reported Irish aviation consultant Conor McCarthy was brokering a deal between Qantas and AirAsia.

The reports said it was not clear whether Qantas would buy a stake in AirAsia, which is expected to hold a public float later this year, or the airlines would form a joint venture for the Singapore project.

"It would certainly be a positive move for Qantas," Centre for Asia-Pacific Aviation managing director Peter Harbison said. "There's massive potential in that market."

Harbison said AirAsia appeared to favor the joint-venture model when doing business with other airlines.

"It wouldn't surprise me if they went down that track, it would help entrench AirAsia positively in the market," he said.

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