Jetstar, AirAsia form low-cost alliance

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In a world first for low-cost airlines, Jetstar and AirAsia announced Wednesday they would form a new alliance that would reduce costs and pool expertise, ultimately resulting in cheaper fares for both.

The carriers said in a statement they would focus on cost reduction and potential savings.

The statement said the key to the agreement was a proposed joint specification for the next generation of narrow-bodied aircraft that would best meet the needs of the low fare customer of the future.

Both airline groups will also investigate opportunities for the joint procurement of aircraft.

Alan Joyce, chief executive officer of Australia’s Qantas Airways, Jetstar’s parent, said the historic non-equity alliance would give the two airlines a natural advantage in one of the world’s most competitive aviation markets.

“Jetstar and AirAsia offer unmatched reach in the Asia Pacific region… and this new alliance will enable them to maximize that scale,” he said.

The Asian aviation market is a growth market which has proven resilient over the past 12 months despite the tough operating environment, with significant growth in passenger numbers forecast in the region, the statement said.

“Year on year, Jetstar is reducing its controllable costs by up to 5 percent annually. This agreement will enable a further change in our cost position and ensure sustainable low fares,” Jetstar CEO Bruce Buchanan said.

He said both carriers want to work with manufacturers on next generation aircraft to ensure it best meets their business requirements.

These arrangements are, where required, subject to regulatory approval.

Reported by Minh Quang

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