China Eastern will be our biggest partnership: Joyce

China Eastern will be our biggest partnership: Joyce

Alan Joyce has pinned its partnership with China Eastern as having the biggest global potential.

According to reports from eTN, the head of Qantas has said that once the China-Australia Free Trade Agreement (FTA) is in place, the partnership with China Eastern has the potential to be airline’s largest, ahead of the Qantas-Emirates partnership that services Europe and the Qantas-American Airlines relationship that services the Americas.

“With China growing the way it’s growing, the opportunities of the FTA…we’re pretty excited about it,” Joyce said.

“As the free trade agreement encourages more trade, we will grow and grow more rapidly into the Chinese market.”

Speaking on Xinhua’s Talk to China Program, Joyce said that the surge of China’s middle class would see the relationship between Australia and China become even stronger, as if it wasn’t burgeoning enough already.

“We can benefit out of tourism, out of economic activity,” Joyce said.

Joyce said both airlines will work together to develop and increase capacity in the Australia-Shanghai market, starting with Brisbane, with goals of growing by 21% as a result of the China-Australia FTA.

“Both brands will use their domestic networks to enhance the operation to Shanghai,” Joyce added, per eTN.

“Qantas and China Eastern will use their brands and their distribution to enhance the services from Shanghai, but, Qantas will be selling the rest of China and the rest of Australia on that network to allow people more easy access.”

And easy access into Australia is exactly what’s needed to ensure Chinese tourists, second in numbers behind NZ but highest in expenditure, continue to pump more dollars into the Aussie market, Joyce suggests.

“In China, they say France is the number one destination the Chinese want to travel to and Australia is number two. That’s huge potential in terms of tourism.”

“We have over 750,000 Chinese tourists coming here,” Joyce said, adding that this number is growing at 11% year-on-year.

Joyce also predicted that while the Chinese expenditure is currently sitting at $5 billion, it will double to $9-10 billion by 2020.

“That’s why we’re very keen on the Free Trade Agreement,” he said.

“The FTA helps with everything – tourism, with manufacturing, with trade in agriculture. It can improve the economic activity between the two countries – which is already very big – and has the potential to grow even further.”

Joyce said even before the China-Australia FTA, the economic relationship was still significant with two-way trade amounting to $160 billion annually and nearly $40 billion of Chinese investment into Australia.

Joyce, however, is not worried about China’s investment into Australia following a slowing economic growth and the Aussie dollar’s significant drop on Wednesday that saw the unit below 70 U.S. cents.

Despite the slowdown of the mining boom, Australia’s diverse economy is experiencing good growth in other sectors, Joyce said according to eTN, adding that Qantas’ domestic business is an example of Australia’s economy.

“We made nearly $600 million in the domestic operation between our two brands,” Joyce said. “So that gives you an indication of how healthy the underlying economy still is.”

Qantas experienced a decent lag in recent years, with a $2.8 billion loss in the 2013/14 financial year, however most recently recorded a massive comeback that no one saw coming, clocking in at $975 million of underlying profit for a turnaround of $1.6 billion.

In the process, Joyce has had to shed some 5000 jobs, 4000 of which have been lost so far.

Joyce commended the 30,000 Qantas staff and their increased engagement through the process over the past few years.

“A profitable business that is expanding, and a business that the customers love to travel with, it’s thanks to our people that the transformation is working well so far,” Joyce said.

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