Leading Asian low-cost carrier groups, AirAsia and Jetstar, hope their recently sealed alliance can help influence the future design of narrowbody aircraft as well as improve their purchasing power of such aircraft in future.
Qantas unit Jetstar and AirAsia in January detailed the new alliance, which does not involve any equity nor codeshare-style co-operation. It instead largely concentrates on procurement synergies by bringing together the region's two largest low-cost airline groups, which generated revenues of more than $2 billion between them in 2008/09. They say the move will give them "a natural advantage in one of the world's most competitive aviation markets".
Jetstar chief executive Bruce Buchanan says the partners have identified "many hundreds of millions of dollars of cost saving opportunities", but admits most of this would come from aircraft design and purchase initiatives.
He adds the alliance's purchasing power could be used beyond narrowbody aircraft. "There are no reasons why this can't be extended to includes widebodies as we both have Airbus A330s."
Other savings will come from co-operating on passenger and ground handling in Australia and within Asia at overlapping airports, and from pooling inventory for aircraft components and spare parts. They will jointly procure engineering supplies and services, Jetstar adding it will maintain its existing use of and commitment to Australian facilities. The alliance is also looking at the joint purchase of fuel. Reciprocal arrangements for handling passengers during service disruptions also features.
The new Jetstar-AirAsia alliance could also examine the formation of a new leasing company based around their older Airbus A320 aircraft. "This is an interesting option for us," says Fernandes, adding such a venture would have to overcome tax issues. Given that the companies operate a large fleet of A320s, it would enable them to provide easy access to spares and overcome other issues, he adds.
Read the Airline Business cover interview with Tony Fernandes from June 2009
It marks the latest sign of co-operation among low-cost carriers. While largely reluctant to get involved in merger and acquisition activity, with notable exceptions in some local markets, there are increasing moves to co-operate. This includes informal attempts to develop self-connections - AirAsia X has highlighted the large number of onward self-connections made on its flights. More formal attempts range from cross-listing selected flights from partner websites, such as between Air Berlin and its Turkish carrier partner, Pegasus, to codeshare-type co-operation. This has seen low-cost carriers forming a variety of different codeshare-style deals with both network and other low-cost carriers.
Source: Airline Business