Qantas to launch premium Asian airline, but it's "not Qantas"

By danwarne, August 16 2011

Qantas will launch a new premium airline somewhere in Asia, that will be competitive with Singapore Airlines, Qantas CEO Alan Joyce this morning confirmed.

But he said it will not be majority Qantas owned, nor will it be called "Qantas".

The airline will be a joint-venture with an as-yet unnamed partner, with Qantas holding 49% equity in the new company.

It is targeted specifically at the affluent Chinese market, and will fly in and out of Australia as well as to destinations inside Asia.

Joyce is not willing to be drawn on what it will be called, nor where it will specifically be based.

"The route opportunities are primarily in Asia," he said. "This is a carrier that we're looking at flying incremental services into Australia, complementing Qantas, and flying an extensive intra-Asia network."

"We are looking at this being competitive with Singapore Airlines, and the other premium carriers within Asia."

When pushed on why the new carrier wouldn't bear the Qantas name, Joyce said: "Qantas' cost base is 20% higher than the competitors. If we tried to do this with the Qantas cost base it wouldn't exist. This is all about protecting as many of the 35,000 jobs as we can in Australia.

"It's all about making sure that we get the efficiencies that we can't get in the Australian market, and tapping into a huge Asian market.

"We can't do this with Qantas' Australian traffic rights in Asia, either. There is no alternative way of doing this that can work. We have to use Asian traffic rights."

In terms of where the new airline would be based, Joyce named Kuala Lumpur and Singapore as possibilities, but committed to neither, and didn't exclude other Asian locations either.

"We have a number of interesting opportunities -- a good existing hub in Singapore with Jetstar operating out of there. And Kuala Lumpur with what [Air Asia boss] Tony Fernandes has done with [buying a big stake in] Malaysian Airlines; we want to talk to MAS and Air Asia about what that opportunity could look like."

The new premium airline will use 11 Airbus A320 aircraft -- eight new ones and three moved over from the existing Qantas fleet.

Joyce said he'd asked the Lowy Institute to look at the future shape of Asia, with it finding that inside 20 years, 16% of the world's middle class would be in Asia.

"China already has the world's fourth largest population of millionaires," he said.

"Leisure tourism is ranked highly as a consumer experience by Asia's emerging middle classes."

"There are millions of travellers in waiting, and Chinese travellers rank prestige brands and safety highly in their priorities."

He said the new airline would have a new brand, look and feel, separate from Qantas.

"It will leverage Qantas know-how, making the most of our excellence in brand, safety, aviation, marketing, finance and corporate customer relationships.

"For the first time in our history, Qantas intends to fully participate in the benefits of an Asian hub."

"We will offer same-day services to and within Asia -- and overall frequencies from Australia to Asia will grow."

He said the new airline would not result in Qantas scaling back its own flight operations to Asia, saying it was a growth strategy and flights by the new airline would operate in complement to Qantas' existing routes.

danwarne
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