Investment

Jetstar charts expansion plan

By Wang Zhuoqiong (China Daily)
Updated: 2010-09-16 07:59

A baggage handler helps load a container into a Jetstar Airways airplane prior to takeoff at Melbourne Airport in Australia. Carla Gottgens / Bloomberg

Budget airline seeks to cash in on outbound travel boom

BEIJING - Budget airline Jetstar Asia is expected to add its third direct flight to China this November and is looking for further expansion of its operations in the country thanks to the booming number of Chinese outbound travelers, creating a new round of competition among low-cost carriers.

The Singapore-based carrier, owned by Westbrook Investments Private Limited and Qantas, will launch direct flights from Guilin to Singapore twice a week starting on Nov 3, said Chong Phit Lian, chief executive officer of Jetstar Asia, during an interview on Wednesday in Beijing.

The airline recently established flights to Haikou, Hainan province, last December and to Shantou, Guangdong province in February.

The three destinations are second-tier cities where passengers from Singapore have a strong desire for tourism and family visits, she said, adding the number of passengers booking these flights from the Chinese mainland is also on the rise.

"The passenger occupancy rate of these existing flights to the Chinese mainland is above 70 percent," she said.

Collectively, the Jetstar Group operates over 2,000 weekly flights to 50 destinations across the Asia-Pacific region.

The airline has plans to establish a long-distance route from Singapore to Melbourne, Australia, on Dec 16, and one to Auckland, New Zealand, beginning March.

Though only accounting for 3 percent of total flights to the country by January 2011, flights offering low fares to China every week have increased 57 percent annually from 2006 to 2011, according to apgDat, an online schedule of aviation data.

Globally, low-cost airlines take up 24 percent of the overall aviation market.

The challenges to establish destination routes in China lie in the distance of the routes - whether the journey is within five hours - and securing time slots in the airports, said Chong.

But the low-cost airline company sees opportunities in the Chinese mainland market and expects new flights to be launched within the next one or two months.

"It is not easy to make a profit from flights between Southeast Asia to China where major profitable routes are hard to get," said Li Lei, an aviation analyst at China Securities Co Ltd, adding cheap airlines are in still in their infancy.

But Li said the increasing potential of Chinese outbound trips would create a greater market for international routes.

Air Asia, a low-cost airline based in Kuala Lumpur operates flights from seven cities on the Chinese mainland including Tianjin, Hangzhou, Chengdu, Guangzhou and Guilin.

China's first budget airline, Spring Airlines, founded in 2005 by China's domestic travel agency Spring Travel, is to operate a flight from Shanghai to Hong Kong by the end of this month with fares just one-tenth of the regular ticket price.

China Daily