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Qantas, Japan Airlines in Budget Venture

Qantas Airways & Japan Airlines LogosQantas Airways has turned its focus onto Asia, with chief executive Alan Joyce announcing that it will start a budget carrier in the region in a joint venture with Japan Airlines. The airline boss is putting a lot of faith in the growing prosperity in the area, which will hopefully end losses from its international operations. He noted that Australia used to fly over or via Asia en route to Europe, but now they fly to the region for relaxation and business.

The new low-cost airline, Jetstar Japan, will be set up through Qantas’s Jetstar unit in a partnership with Japan Airlines and Mitsubishi. The carrier is slated to begin domestic services from the Narita and Kansai airports in Japan to Okinawa, Sapporo and Fukuoka by the end of next year. It’s expected to operate 24 Airbus A320s within the first few years. Total capitalisation commitment for the joint venture is ¥12 billion.

Jetstar Japan will be third Asian base for the budget Jetstar unit, which also has ventures in Vietnam with Jetstar Pacific and Singapore with Jetstar Asia. The unit flies from Gold Coast and Cairns in Australia to Osaka and Tokyo as well. Chief executive Bruce Buchanan says the new domestic operations in Japan have the potential to be a big boost for tourism in Australia, as it will make the country more accessible to new markets throughout Japan with its existing flights.

Japan Airlines president Masaru Onishi says Jetstar Japan will encourage more movement of people within Japan and from Asia to the country. They expect this to stimulate consumer spending, as well as play a part in restoring the nation’s economy.

The International Air Transport Association (IATA) predicted in June that the Asia-Pacific region is going to be the most profitable market for aviation this year. It’s being helped by economic growth in nations like India and China. This has prompted budget airlines to rush in setting up affiliates in different centres throughout the region so that flyers are provided with a network that offers more choice and destinations.

This means that Jetstar Japan will have plenty of competition in the market. Rival Air Asia has recently started a low-cost airline in Japan with All Nippon Airways. Air Asia also operates services out of Thailand, Malaysia and Indonesia. Furthermore, Tiger Airways currently has a hub in Singapore and is looking forward to expanding to Thailand and the Philippines.

Meanwhile, Qantas is also planning to form an Asia-based full-service carrier. Joyce says that they haven’t decided where the new airline will be based; however, Kuala Lumpur and Singapore are potential hubs. He added that Qantas will likely have a big minority stake in the venture. Additionally, the Australian flagship carrier is giving some of its European services to British Airways and will order up to 110 Airbus SAS A320s, as well as 78 of the new neo version. It is cutting 1,000 jobs and postponing the delivery of six Airbus A380s as well.

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