Qantas, Jetstar to launch counterattack in Asia

QANTAS and its low-cost subsidiary Jetstar are fighting back against an invasion of Australia by Asian carriers.Qantas is determined that it will not allow Singapore’s Tiger Airways and Malaysia’s AirAsiaX to take the ground from beneath its feet. AirAsiaX expects to launch flights to Australia from Kuala Lumpur in October, while Tiger Airways, which already operates internationally to Australia from Singapore, is seeking approval to launch domestic services to eight destinations in Australia, starting in November.“The extremely positive reaction to Tiger Airways’ entry into the market has shown that they (consumers) think they haven’t been getting a fair go from the incumbents (Qantas and Virgin Blue),” said Tiger chief executive, Tony Davis.Both Tiger and AirAsiaX want to tap into the Australian market and link it to their growing regional and global destinations. AirAsiaX, boosted by recent investment in the airline by Richard Branson’s Virgin Group, has acquired rights to fly to London’s Stansted Airport, and is well down the track with plans to fly to China.Jetstar will lead the counter-attack with plans to open a hub in Asia from where it will fly to Europe. Qantas is spending US$50 million investing in Vietnam’s second-biggest carrier, taking an 18 percent stake in Pacific Airlines. It intends to lift that stake to 30 percent in the next two years.Qantas plans to eventually include Pacific as a franchise operating under its Jetstar brand, as a part of a strategy to further expand its presence in Asia.Qantas will work with Pacific Airlines to implement a new business plan for the carrier, which currently operates a fleet of single-class Boeing 737-400 aircraft on domestic routes in Vietnam.“The initial strategy is to reposition Pacific Airlines as Vietnam’s only low-cost carrier, to enable its future expansion both within Vietnam and, in the future, internationally, through short-haul, intra-Asia services,” said Qantas chief executive, Geoff Dixon. The new airline will see Jetstar’s expanding Asia reach bolstered by Pacific’s routes between Ho Chi Minh City and Da Nang and Hanoi, as well as international routes to Taipei.Qantas is also looking at opportunities beyond Vietnam and says the most likely markets are Indonesia, Thailand or the Philippines.“This is a historic opportunity for Qantas,” Dixon said. “We have a small time slot, perhaps three years, to make ourselves an indispensable part of this growth story.“We are looking at taking advantage of other attractive openings for growth in Asia, organically, via acquisitions or partnerships, to ensure we merit a chapter in what will be the biggest aviation story of the next 20 years.”Dixon said the performance of both the Jetstar and Qantas international operations since Jetstar commenced widebody overseas flying in November 2006 indicated the successful strategy would be replicated in the international market. “Jetstar has grown domestic leisure travel and quickly established itself in overseas leisure markets, enabling Qantas to concentrate more on business markets with a significant yield premium,” he said.