MELBOURNE: AirAsia says its alliance with Qantas Airways' subsidiary, Jetstar, could potentially generate costsavings worth hundreds of millions of dollars and result in lower fares.Under the alliance formed in Sydney Wednesday, Jetstar and AirAsia would explore opportunities to jointly procure next generation narrowbody aircraft, cooperate in passenger handling in Australia and Asia, pool aircraft components and spare parts and jointly acquire engineering and maintenance supplies and services.
The airlines said the alliance would reduce costs, pool expertise and result in cheaper fares.
AirAsia Group Chief Executive Datuk Seri Tony Fernandes said the alliance showed lowcost carriers could work together to stimulate the market and to operate on lower fares.
"The key thrust is to increase our efficiency and find ways of getting even lower fares. From this I believe we will then move into revenue ideas and we've already got a few that we've been discussing," Fernandes was quoted as saying in Sydney by the Australian Associated Press.
Fernandes said a common aircraft type specifications of the next generation narrowbody airplanes would be proactively pursued by both airlines due to the many efficiencies it would bring.
Jetstar Chief Executive Bruce Buchanan said: "We have identified many hundreds of millions of dollars of costsaving opportunities and we think is an exciting opportunity for us as we launch this partnership going forward.
"Costsavings are critical to Jetstar's business model and enables lower fares and more people can travel," he said.
Buchanan said there were "natural synergies" between Jetstar and AirAsia: They operated the same aircraft type to similar ports and had very similar business models.
The big potential savings would not be in labour costs but in obtaining aircraft best suited for the AsiaPacific region and in sharing spare parts, he said.
"There'll be no job cuts from the Jetstar side and I can't imagine there'll be any job cuts from the AirAsia side," said Buchanan.
Describing the alliance as "historic", Qantas Chief Executive Alan Joyce said: "This is the first alliance between two lowcost carriers of this size anywhere in the world.
"It's a nonequity alliance but it's the foundation for bigger things for the group into the future.
"This will lead to further joint ventures, it will lead to significant cost savings within the group," Joyce was quoted by AAP as saying.
The alliance would reinforce Qantas Group's position in Asia, said Joyce, adding that: "It makes Asia the big focus of the group going forward and it's something that we think is strategically significant for the group today."
Asia is expected to overtake the US and Europe as the world's largest travel market by 2015.
Joyce said he did not expect any significant regulatory issues arising from the alliance given that the focus at the moment was on cost savings and future aircraft design.
Joint purchasing power would enable the airlines to work with airline manufacturers on the right aircraft configuration and design, he added.
IG Markets research analyst Ben Potter said the alliance was "very positive" given the extremely competitive airline industry and the pressures under which carriers operated.
"The AsiaPacific region is one of the biggest growth markets in aviation. Any ways to further reduce costs and offer more competitive fares will benefit both shareholders and customers," Potter told AAP. - Bernama
Via The Star
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