Malaysia’s AirAsia and Australia-based Jetstar announced an alliance to help the budget carriers reduce costs, including cooperation on passenger handling at airports in Asia and possible joint purchases of aircraft.
Key to the agreement signed in Sydney yesterday is a proposed joint specification for the next generation of narrow body aircraft, the airlines said in a statement.
The airlines, among the biggest low cost carriers in Asia, will consider buying aircraft together so that bigger orders lower the cost per plane.
PHOTO: REUTERS
Jetstar, a unit of Australian flag carrier Qantas Airways Ltd, and AirAsia will also share aircraft parts and cooperate on passenger handling at airports in Australia and Asia.
Airlines are under pressure to find new ways to reduce costs as demand for travel remains weak despite some signs of recovery from the global recession. The International Air Transport Association forecasts the global airline industry’s losses to reach US$5.6 billion this year after an estimated US$11 billion of losses last year.
AirAsia, however, made a profit in the third quarter of last year — its most recently released result — as travelers traded down to budget airlines. Qantas has said it returned to profit in the second half of last year after a loss in the first half.
Qantas Airways chief executive Alan Joyce said Jetstar and AirAsia would gain a natural advantage in one of the world’s most competitive aviation markets through the alliance.
“Jetstar and AirAsia offer unmatched reach in the Asia-Pacific region ... and this new alliance will enable them to maximize that scale,” Joyce said in a statement.
AirAsia chief executive Tony Fernandes described the agreement as a logical development.
“AirAsia strongly believes the strategic tie-up will help the airline maintain its position as the lowest-cost airline in the world despite rising costs associated with the fledgling global economic recovery,” Fernandes said in the statement.
IG Markets research analyst Ben Potter said the alliance was “very positive” given the extremely competitive airline industry and the pressures under which carriers operated.
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