Low-cost carriers Jetstar and AirAsia have formed a new alliance that will allow them to study the joint purchase of new aircraft, cooperate in ground and passenger handling services, and take on each other's passengers when there is a disruption.

The agreement will reduce costs and pool their expertise, and result in lower fares for customers throughout the Asia Pacific, say the carriers. This is the first time two major low-cost carriers are cooperating on such a large scale, they add.

Jetstar, a subsidiary of Australian flag carrier Qantas, and Malaysia-based AirAsia are the two largest low-cost carriers in the Asia Pacific. The deal will give them "a natural advantage in one of the world's most competitive aviation markets," say the carriers.

Left to right - Tony Fernandes, Alan Joyce and Bru
 © Laura Mueller/Flightglobal
Left to right - Tony Fernandes, Alan Joyce and Bruce Buchanan

For future fleet specifications, the carriers will investigate opportunities for joint procurement of the next generation of narrow body aircraft. "A collective goal is to achieve cost reductions in terms of order volume and influencing design specification to deliver more efficient, low cost operations," they say.

They will also develop agreements to cooperate on the provision of passenger and ground handling in Australia and within Asia at overlapping airports, and will pool inventory for aircraft components and spare parts. They will jointly procure engineering and maintenance supplies and services, with Jetstar saying that it will maintain its existing use of and commitment to Australian facilities.

Finally, there will be reciprocal arrangements for passenger management. This will allow them to support passenger disruptions and recovery onto the other airline's service across both of their networks.

"The aviation market in Asia is a growth market and has proven resilient over the past 12 months despite the tough operating environment, with significant growth in passenger numbers forecast in the region. This partnership will ensure that both airlines can capitalise on these growth opportunities," says Qantas CEO Alan Joyce.

AirAsia's CEO Tony Fernandes says that the agreement is another step in his carrier's strategy to "maintain its position as the lowest-cost airline in the world despite rising costs associated with the fledgling global economic recovery".

AirAsia is Asia's largest low-cost carrier with associates in Thailand and Indonesia. It also has a long-haul associate, AirAsia X, which flies to Perth, Melbourne and the Gold Coast in Australia. Jetstar flies to regional and long haul destinations out of Australia, and has associate carriers in Singapore and Vietnam.

Source: Air Transport Intelligence news