6-Jan-2010 10:13 AM

Jetstar and AirAsia form world first alliance focused on reducing costs

Jetstar and AirAsia confirmed (06-Jan-2010) plans to form a new alliance to reduce costs, pool expertise and ultimately result in cheaper fares for both carriers. The agreement includes the development of cooperation in areas such as:

  • Future fleet specification – both carriers will investigate opportunities for joint procurement of the next generation of narrow body aircraft;
  • Airport passenger and ramp handling services – cooperative arrangements in Australia and within Asia at overlapping airports;
  • Shared aircraft parts and ‘pooling’;
  • Procurement – joint procurement, with a focus on engineering and maintenance supplies and services, with Jetstar maintaining its existing use of and commitment to Australian facilities;
  • Passenger disruption arrangements. [more]

Jetstar CEO, Bruce Buchanan and AirAsia CEO, Tony Fernandes, stated the agreement would lead to further cost efficiencies for the LCCs and allow them to develop with manufacturers the right aircraft for their operations.

Qantas: “Jetstar and AirAsia offer unmatched reach in the Asia Pacific region, with more routes and lower fares than their main competitors, and this new alliance will enable them to maximise that scale...Just as both carriers have pioneered the development of the low cost, long haul airline model, today’s announcement breaks the mould of traditional airline alliances and establishes a new model for achieving reduced costs and increased efficiency. The aviation market in Asia is a growth market, and has proven resilient over the past 12 months, despite the tough operating environment, with significant growth in passenger numbers forecast in the region. This partnership will ensure that both airlines can capitalise on these growth opportunities,” Alan Joyce, CEO. Source: Qantas, 06-Jan-2010.

Jetstar: “Year on year, Jetstar is reducing its controllable costs by up to five per cent annually. This agreement will enable a further step-change in our cost position and ensure sustainable low fares. In coming years Jetstar and AirAsia want to work with manufacturers on the next generation aircraft to ensure it best meets our business requirements,” Bruce Buchanan, CEO. Source: Qantas, 06-Jan-2010.

AirAsia: “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...A strategic arrangement with Jetstar focussed on investigation of operational synergies is a logical development for us. AirAsia and Jetstar share the same philosophy of low cost, low fares and high quality customer service. There is clear sense in finding the right cost solution for a range of airline and associated services which support AirAsia’s expanding route network,”
Tony Fernandes, CEO. Source: Qantas, 06-Jan-2010.

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