China Eastern, Qantas invest in low-cost airline
By Yang Jian |
March 27, 2012, Tuesday
|
Print Edition
Print Edition
CHINA Eastern Airlines and Australia's Qantas have banded together to set up a regional low-cost carrier called Jetstar Hong Kong.
China's second-largest airline by passenger numbers and Australia's top carrier will invest up to US$198 million over three years for the equally-owned Hong Kong-based joint venture, China Eastern said yesterday.
Jetstar Hong Kong will start operation in mid-2013 with three Airbus 320 aircraft before expanding to 18 planes by 2015, when the venture is expected to be profitable then, according to China Eastern.
"I believe this low-cost model, whether in a high or low oil price environment, will be competitive," Liu Shaoyong, China Eastern's chairman, said in Hong Kong.
The new venture comes at a time when the budget carrier sector is growing in the region and Shanghai-based China Eastern is the first major Chinese carrier to try and tap the low-cost airline market.
"This is a good move for China Eastern," said Patrick Xu, analyst at Barclays Capital. "They can rationalize their fleet and capacity allocation to this JV, meaning they probably won't over-invest in regional (fleets)."
The venture may meet the rising demand not only from Hong Kong, whose airport handles around 40 million passengers a year, but also from the Chinese mainland which Qantas said is set to see 450 million passengers by 2015.
In June, Asian budget airlines from Malaysia to India placed a record US$42 billion in plane orders as they were confident of the sector's growth.
China's second-largest airline by passenger numbers and Australia's top carrier will invest up to US$198 million over three years for the equally-owned Hong Kong-based joint venture, China Eastern said yesterday.
Jetstar Hong Kong will start operation in mid-2013 with three Airbus 320 aircraft before expanding to 18 planes by 2015, when the venture is expected to be profitable then, according to China Eastern.
"I believe this low-cost model, whether in a high or low oil price environment, will be competitive," Liu Shaoyong, China Eastern's chairman, said in Hong Kong.
The new venture comes at a time when the budget carrier sector is growing in the region and Shanghai-based China Eastern is the first major Chinese carrier to try and tap the low-cost airline market.
"This is a good move for China Eastern," said Patrick Xu, analyst at Barclays Capital. "They can rationalize their fleet and capacity allocation to this JV, meaning they probably won't over-invest in regional (fleets)."
The venture may meet the rising demand not only from Hong Kong, whose airport handles around 40 million passengers a year, but also from the Chinese mainland which Qantas said is set to see 450 million passengers by 2015.
In June, Asian budget airlines from Malaysia to India placed a record US$42 billion in plane orders as they were confident of the sector's growth.
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