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Cheap Flights to Asia Middle

Qantas Airways is teaming up with China Eastern Airlines to bring cheap flights to Asia by forming a budget airline in Hong Kong.  Hong Kong is Qantas’ fourth Asian hub and their goal is to tap into the growing overseas market.  Both carriers have agreed to invest up to $198 million to form what will be called Jetstar Hong Kong, which will launch next year with three Airbus SAS A320s.  By 2015, the budget airline will operate 18 aircraft.  Qantas Chief Executive Officer Alan Joyce is challenging Cathay Pacific Airways in Hong Kong with his intention to target the Asian market and make international operations profitable.

 

According to Bruce Buchanan, CEO of Qantas’ Jetstar Group, Hong Kong and Greater China have the potential to reach as much as 800 million annual passengers by the year 2020, doubling the current number.  He said that the market in China is virtually unlimited because there are so many people looking for affordable airfares.  Right now there are at least 80 cities that are big enough to support a budget airline in the region and by 2020 this number could rise to at least 200.

There are currently no budget carriers using Hong Kong as a hub, despite the fact that it was used by 54 million passengers last year, because it is difficult to provide cheap flights with high airport fees and wages for airport staff.  Citigroup Inc. analyst Vivian Tao said that these factors have kept budget carriers from penetrating more than about 5.5% of the market.  Liu Shaoyong, China Eastern (670)’s chairman, said that Jetstar will probably make a profit in its third year of operation.  Future plans include a Jetstar Japan and possibly a Jetstar in South Korea, which will create an international triangle that will allow Jetstar to make the most of the Asian market.

The above article is a summary.  Please see the source article at Google News.

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