Qantas plans to launch Asian low-cost

Qantas Airways Ltd has unveiled its Asian expansion plans, revealing it will start a low-cost carrier to be based in Singapore.
Speculation had been mounting Qantas might go it alone in Asia, after talks broke down with Malaysian low-cost carrier AirAsia and a deal with Singapore-based Valuair failed to materialise.
Instead, Australia’s flagship carrier announced it will take a 49.9 per cent stake in the $S100 million ($A79.05 million) airline, likely to be known as Jetstar Asia.
State-owned investment agency Temasek Holdings Ltd will hold 19 per cent, with 21.1 per cent owned by Tony Chew and 10 per cent by FF Wong, both prominent Singaporean businessmen.
Qantas chief executive Geoff Dixon said the airline would fly to a range of Asian cities within five hours of Singapore and operate a fleet of either Boeing 737-800s or Airbus A320s.
No further route details would be available until the airline received an Air Operator’s Certificate, he said.
Mr Dixon said new the airline would begin flying before the end of 2004 with four aircraft, and build to a fleet of more than 20 over the following three years.
All aircraft will be financed through operating leases.
“This is a modest investment for Qantas but it is an excellent opportunity to participate in the growing intra-Asia travel market,” Mr Dixon said.
“The region, which has a population of more than 3 billion people, is enjoying strong economic growth and features many potential destinations for point-to-point travel from Singapore.”
Australian Minister for Trade Mark Vaile said Qantas’ decision indicated improved investment conditions in Singapore following the Singapore Australia Free Trade Agreement (SAFTA) in July 2003.
“The decision underlines the importance of Singapore as a regional aviation hub and demonstrates the strong and productive commercial links between Australia and Singapore,” Mr Vaile said.
Mr Dixon said the new low-cost carrier did not aim or expect to be a threat to the major established airlines in the region and was not considering an expansion into Europe.
He said the new venture would be funded from existing cash, adding that Qantas did not currently fly on any of the new airline’s preferred routes.
As such, he said there would be no cannibalisation of existing main routes with the new airline offering a chance to grow.