Qantas and China Eastern Create Jetstar Hong Kong

Jetstar Hong Kong to Launch Pending Regulatory Approval | Air Travel News

Jetstar Hong Kong to Fly Next Year

China Eastern Airlines and Qantas Group, which owns the Jetstar Group, engaged in a new partnership to bring Asia’s top low cost carrier model to China with the creation of Jetstar Hong Kong.

Jetstar Hong Kong will follow the successful low cost carrier model and combine it with the partners’ local knowledge and networks to start-up short-haul flights in Asia, including China, Japan, South Korea, and Southeast Asia.  Once launched, Jetstar Hong Kong will become a first – the first low cost carrier in Hong Kong.

The launch of Jetstar Hong Kong is subject to regulatory approval, but the airline intends to start in 2013 with a fleet of three Airbus A320s.  The fleet is expected to grow to 18 A320s by 2015.

Jetstar Hong Kong will be formed with a total maximum capitalization of up to $198 USD million.  China Eastern and Qantas Group will both be equal partners in the Joint Venture.  The maximum exposure for each partner is $99 USD million over a three year period.

Chairman of China Eastern Airlines, Mr Liu Shaoyong, said the airline was pleased to be extending its 20 year relationship with the Qantas Group.  Mr. Liu, said, “We believe there are huge opportunities for the Jetstar low fares model throughout Asia, including Greater China, and are excited to be the first major Chinese carrier to bring this travel option to the region.”

Mr. Liu continued, “Cooperation with Qantas Group is a key step in China Eastern Airlines’ international expansion strategy and an excellent opportunity for China Eastern Airlines to develop low cost carrier operations to complement its existing business model.  Jetstar Hong Kong’s low fare model will enable people to fly more often for less and will help to stimulate the Hong Kong tourism industry and the broader economy.”

Qantas Group Chief Executive Officer, Mr Alan Joyce, said the new agreement would build a strong platform for accessing the world’s largest, fastest growing and most profitable aviation market.  Joyce said, “We see tremendous potential for the Qantas Group in Asia and we’re looking forward to working more closely with China Eastern Airlines to deliver on it.  Establishing Jetstar Hong Kong in the heart of Asia and on the doorstep of mainland China is a historic opportunity to continue the successful expansion of the Jetstar brand in this region.”

“We know from our experience with Jetstar in Australia and in the setup of Jetstar Japan the benefits of both a premium and a low cost airline operating in the same market. This will also apply to Jetstar Hong Kong, which will leverage the local knowledge and scale of China Eastern Airlines with the successful low cost model of Jetstar,” added Mr Joyce.

Vice Chairman and President of China Eastern Airlines, Mr Ma Xulun, said, “Jetstar Hong Kong will maximise synergies by combining Jetstar Group’s resources including brand management, commercial management, safety, aircraft maintenance and IT systems with China Eastern Airlines’ leading position in the Chinese aviation market.”

Chief Executive Officer of the Jetstar Group, Mr Bruce Buchanan, said the new airline would trigger new travel demand as the first low cost carrier based in Hong Kong and only the second currently based in Greater China.

Buchanan, said, “Jetstar Hong Kong’s fares will be 50 per cent less than existing full service carriers, which we’ve seen create new travel demand in our markets across Asia because it enables people to take more trips, more often.  Jetstar’s vision is to make travel more affordable for millions of people across Asia, and the demographics of China with its booming middle class are a key part of that plan.”

“This is a unique opportunity for Jetstar to capitalize on the enormous potential of the Greater Chinese market, where the penetration rate of low cost carriers is less than 5 per cent, using a model that we know delivers for customers and shareholders,” added Mr Buchanan.

Hong Kong is a major travel hub for the Asia Pacific region as 40 million passengers per year use Hong Kong International Airport (HKIA), where they’re looking to build a 3rd runway.  Hong Kong also has a population base of around 7 million, including many that could take advantage of lower fares.

Greater China has a travel market of almost 300 million passengers per annum, forecast to grow to 450 million by 2015.  Greater China, like India, are facing a boom in aviation growth.

The Jetstar Group is Asia Pacific’s fastest growing and largest low cost carrier network by revenue, with airlines in Singapore, Japan, Vietnam, Australia and New Zealand.  The various Jetstar airlines operate nearly 3,000 flights a week to almost 60 destinations, including 30 in Asia and eight in Greater China.


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