Doubts raised about Lion, Jetstar Asia reports

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Sources have cast doubt on reports that Lion Air is in talks to buy Qantas Airways’ 49% stake in Jetstar Asia, but key players appear reticent to comment.

Two sources who spoke with Flightglobal were dismissive of the reports, saying that they were only speculation.

In an email to Flightglobal, however, Jetstar Asia failed to deny the story outright, and avoided commenting directly on the matter.

“We don’t comment nor speculate on behalf of our investors,” said the Singapore-based low cost carrier. “We remain focused on building the Jetstar Asia strategy out of Singapore and leading the local LCC market.”

Lion Air, for its part, did not return calls related to the reports, nor did Qantas.

Lion Group chief executive Rusdi Kirana had previously expressed interest in setting up an airline in Singapore. In an October 2012 interview with Flightglobal, he said that talks were ongoing with Singapore authorities about setting up a full service carrier in the city-state. At the time, he said no application for an air operator’s certificate had been made.

"We're definitely interested in setting up an airline in Singapore, but we don't want to wait too long. We'll be happy if Singapore gives us an AOC," he said at the time.

The Lion-Jetstar Asia reports come at a time when analysts are predicting consolidation in Southeast Asia’s low cost market, which is increasingly dominated by three players: Lion, AirAsia, and Cebu Pacific.

The economies of scale enjoyed by this trio have placed tremendous pressure on other players, notably Singapore’s Tigerair, which recently shutttered its Indonesian Tigerair Mandala unit.

In February, Qantas said it would suspend growth at its Jetstar Asia unit. The revelation was contained in Qantas’s 1H 2014 earning statement, in which the Australian flag carrier posted a net loss of A$252 million ($226 million).