Jetstar-AirAsia tie-up 'will save millions'

Photo / Simon Baker

MELBOURNE - Qantas subsidiary Jetstar says its alliance with Malaysia-based low-cost carrier AirAsia could potentially generate cost savings worth hundreds of millions of dollars and result in lower fares.

Under the alliance, which was announced in Sydney yesterday, Jetstar and AirAsia will investigate opportunities to jointly procure the next generation of narrow-body aircraft, co-operate in the handling of passengers in Australia and Asia, pool aircraft components and spare parts, and jointly procure engineering and maintenance supplies and services.

"We have identified ... many hundreds of millions of dollars of cost-saving opportunities, and we think that is an exciting opportunity for us as we launch this partnership going forward," Jetstar chief executive Bruce Buchanan said.

The big potential savings would not be in labour costs but in obtaining aircraft best suited for the Asia-Pacific region and in sharing spare parts.

"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," Buchanan said.

Qantas chief executive Alan Joyce described the alliance as "historic".

"This is the first alliance between two low-cost carriers of this size anywhere in the world," Joyce said.

"It's a non-equity alliance, but it's the foundation for bigger things for the group into the future."

AirAsia Group chief executive Tony Fernandes said the alliance showed that low-cost carriers could work together and was aimed at producing lower fares and stimulating the market.

Qantas shares rose 1.7 per cent to A$3.01 after the announcement, easing to A$2.95 by the close.

- AAP