AirAsia and Jetstar form alliance to reduce fares and costs

The airlines said the alliance is expected to help them reduce costs of up to hundreds of millions of dollars, pool expertise and would result in cheaper fares in the fiercely competitive but high-growth Asian market.

Under the alliance, both airlines will now look at opportunities to jointly procure aircrafts, components and spare parts, and cooperate in the handling of passengers in Australia and Asia.

According to a spokeswoman from Jetstar, joint marketing activities and promotions have not yet been discussed.

“The first stage will be focussing on cost savings and there is an intention down the track to look at potential revenue opportunities,” she said.

The joint venture does not involve equity and the two airlines will remain separate businesses.

According to Qantas chief executive Alan Joyce, the alliance would help reinforce the position of the Qantas group in Asia.

AirAsia chief executive Tony Fernandes said that the main thrust of the alliance was to boost efficiency and find ways where the two airlines could cut costs and generate even lower fares.

Last December, AirAsia’s Kathleen Tan, regional head of commercial, mentioned that the budget carrier is set to pitch its regional media business, worth an estimated US$11.5 million, sometime in 2010.