Qantas Airways and China Eastern Airlines will team up to form a budget airline to serve the exploding Asian commercial air travel market.
“The opportunity in China is unlimited,” said Bruce Buchanan, CEO of Qantas Jetstar. “The market potential is huge and those people are looking for affordable air travel.”
‘About 80 cities in Greater China are big enough to support budget flights and that may climb to about 200 by the end of the decade, he said. He didn’t elaborate on where Jetstar Hong Kong will fly. Fares will be half the price of full-service carriers, according to the statement.’
The new airline plans to expand its fleet to 18 aircraft by 2015.
High airport charges have made it difficult for low-cost budget carriers to succeed according to Vivian Tao, a Citigroup Inc. analyst:
“Although the low penetration can be viewed as an opportunity, the high landing, route and staffing costs in Hong Kong make it really challenging for a low-cost carrier to succeed,” she said.
Jetstar Hong Kong expects to turn a profit by their third year of operation.
It’s not yet clear how many jobs will be created through the launching of the new carrier.