Qantas to launch low-cost airline based in Singapore

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6/04/2004

Qantas to launch low-cost airline based in Singapore

Qantas will launch a Singapore-based low-cost carrier by the end of the year.

The airline, which is likely to be called Jetstar Asia, will fly to destinations within five hours of Singapore, initially with a fleet of four leased B737-800s or A320s.

Qantas will inject SGD50 million from cash reserves into the carrier for a 49.9 per cent stake.

It intends to increase the airline's fleet to 20 aircraft over the next three years.

Qantas said it could not name any of the new airline's intended routes because it had not received approval to operate from the Singaporean ministry of transport.

But Qantas ceo Geoff Dixon said Qantas did not fly on any of the new airline's preferred routes.

Under Singaporean foreign investment rules, a Singapore-based airline must be majority owned by local investors.

Qantas has secured support from high-profile Singaporean businessmen Tony Chew, who will hold 21.1 per cent of the company, and FF Wong, who will hold 10 per cent.

A further 19 per cent stake will be bought by private investment company Temasek Holdings which also has a stake in Qantas rival, Singapore Airlines.

The three investors will together match Qantas' SGD50 million.

Dixon said a team of about 60 Qantas staff, headed by senior executive Con Korfiatis, had been working on this deal for the past nine months.

He described the new airline as a "modest investment" for Qantas.

"The major airlines that fly throughout Asia will not be threatened by this new development," he said.

While Dixon confirmed that Qantas had had discussions with other Asian low-cost carriers - ValuAir and AirAsia - the announcement ends speculation that the Australian flag carrier will take equity in either company.

He said he was aware of a lot of competition in Singapore with three low-cost carriers already slated to operate from the city state but was confident Qantas would be successful.

"In my own view, it would be derelict not to take this opportunity," he said. "This is an opportunity for Qantas to grow and we believe to grow profitably."

Dixon said the announcement would not end Qantas' attempts to form an alliance with Air New Zealand.

He said Qantas would not stop operating to any destinations which the new carrier might service.

Dixon said Qantas frequent flyers would not be able to earn points on the new airline.

He said he expected to release route details within the next two months.

Qantas will hold three of the new carrier’s board positions and the remaining investors will hold one each, with the initial chairman to be appointed from Qantas ranks.

6 April 2004

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