26-Mar-2012 9:27 AM

China Eastern and Qantas to launch Jetstar Hong Kong in 2013

China Eastern Airlines and the Qantas Group (which owns the Jetstar Group) have entered (25-Mar-2012) into a new strategic alliance to create Jetstar Hong Kong. Jetstar Hong Kong will "combine the partners’ local knowledge, networks and successful low cost carrier model to service short haul routes in Asia, including Greater China, Japan, South Korea and South East Asia". It will be the first low fares airline based in Hong Kong. Subject to regulatory approval Jetstar Hong Kong services will commence operations in 2013 with a fleet of three A320s, growing to 18 A320s by 2015. Jetstar Hong Kong is underpinned by a total maximum capitalisation of up to USD198 million. The shareholding percentage in Jetstar Hong Kong will be equally held by China Eastern Airlines and Qantas Group, which will be equal partners in the JV. The maximum exposure for each partner is USD99 million over a three-year period. The company will maximise synergies by combining Jetstar Group's resources including brand management, commercial management, safety, aircraft maintenance and IT systems with China Eastern Airlines' position in the Chinese aviation market, according to China Eastern Airlines vice chairman and president Ma Xulun. Jetstar Group CEO Bruce Buchanan said the new airline will offer fares that are "50 per cent less than existing full service carriers", with this expected to "trigger new travel demand as the first low cost carrier based in Hong Kong and only the second currently based in Greater China". [more - original PR - Qantas] [more - original PR - China Eastern Airlines] [more - CAPA Blog]

China Eastern Airlines: “We believe there are huge opportunities for the Jetstar low fares model throughout Asia, including Greater China, and are excited to be the first major Chinese carrier to bring this travel option to the region. Cooperation with Qantas Group is a key step in China Eastern Airlines' international expansion strategy and an excellent opportunity for China Eastern Airlines to develop low cost carrier operations to complement its existing business model," Liu Shaoyong, chairman. Source: Company statement, 25-Mar-2012.

Qantas Group: “We see tremendous potential for the Qantas Group in Asia and we’re looking forward to working more closely with China Eastern Airlines to deliver on it. Establishing Jetstar Hong Kong in the heart of Asia and on the doorstep of mainland China is a historic opportunity to continue the successful expansion of the Jetstar brand in this region. We know from our experience with Jetstar in Australia and in the setup of Jetstar Japan the benefits of both a premium and a low cost airline operating in the same market. This will also apply to Jetstar Hong Kong, which will leverage the local knowledge and scale of China Eastern Airlines with the successful low cost model of Jetstar,” Alan Joyce, CEO. Source: Company statement, 25-Mar-2012.

Jetstar Group: “This is a unique opportunity for Jetstar to capitalise on the enormous potential of the Greater Chinese market, where the penetration rate of low cost carriers is less than 5 per cent, using a model that we know delivers for customers and shareholders,” Bruce Buchanan, CEO. Source: Company statement, 25-Mar-2012.

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