Matt O'Sullivan June 11, 2012
Cathay Pacific has made it clear it will not give Jetstar Hong Kong an easy ride when the budget airline is eventually established on its home turf.
It comes as the International Air Transport Association today downgraded its forecasts for growth in the Asia-Pacific region from $US2.3 billion to $US2 billion this year.
The region has been the best performer for a worldwide industry that is expected to make a combined profit of just $US3 billion in 2012.
Qantas last week forecast a full-year loss this financial year, its first since it was floated in 1995. The profit downgrade last Tuesday resulted in more than $1 billion being wiped from Qantas's market value in less than a week.
Qantas's budget offshoot unveiled plans in March to set up a low-cost affiliate in Hong Kong as part of a joint venture with China Eastern. The airlines will invest almost $US100 million over the next three years in Jetstar Hong Kong.
Separately, Emirates is not interested in taking an equity stake in Qantas or other foreign airlines, the Dubai-based carrier's president Tim Clark said on Monday.
It may however discuss a code-sharing agreement with the Australian carrier as it is already doing other airlines, he told reporters at an IATA industry meeting in Beijing.
Cathay Pacific's chief executive, John Slosar, said today that the Hong Kong-based airline would compete aggressively against the new budget airline.
“Aviation is a very competitive business and we compete with lots of carriers in lots of places each day,” he told reporters at IATA's annual meeting in Beijing this morning.
“Every single day we compete against Jetstar in Singapore.”
The joint venture between Jetstar and China Eastern still needs to win regulatory approval from Hong Kong authorities. Some industry observers have speculated that Jetstar and China Eastern will struggle to win approval for their new low-cost offshoot but Mr Slosar declined to comment on the chances of their success.
But he emphasised that some Asian countries were more liberal when it came to allowing foreign airlines to set up operations on their home turf than Western nations such as Australia. “To own more than 49 per cent of an international airline in Australia is not possible,” he said.
Mr Slosar said Jetstar's push into Cathay's home turf “will not particularly strain” its relationship with Qantas. “Alliances always have certain overlaps,” he said.
Qantas and Cathay are both members of the oneworld airline alliance.
Based on the model Jetstar has rolled out elsewhere in Asia, the new low-cost affiliate in Hong Kong is scheduled to begin flying in the middle of next year using three Airbus A320 aircraft, serving short-haul routes in China, Japan and South Korea, before growing to 18 short-haul planes by 2015.
Qantas recently made it clear it will push the “pause button” on the aggressive expansion of Jetstar's operations in Asia to focus on its plans for start ups such as Jetstar Hong Kong. Jetstar also has operations in Vietnam, Singapore and Japan.
Qantas chief executive, Alan Joyce, will be speaking on a panel at IATA's annual meeting in Beijing later today.
The reporter went to Beijing courtesy of China Southern and IATA.