Budget carrier to add to routes in China

08:44, July 14, 2011      

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A Jetstar Airways Airbus SAS A330-200 aircraft taxis at Changi Airport in Singapore. The budget unit of Qantas Airways Ltd aims to open more routes between China and Singapore. Munshi Ahmed / Bloomberg

The Australia-based Jetstar Group, the largest Asia-Pacific budget carrier by revenue, will launch five new routes between China and Singapore in 2011, the group said on Wednesday.

The five new routes include a daily flight between Beijing and Melbourne with a stopover in Singapore starting from Nov 24 and three flights a week between Ningbo, Zhejiang province, and Singapore starting from Sept 9. The other three routes are still in planning.

With its existing seven destinations, the five planned routes will bring Jetstar's total number of destinations in China to 12, most of which will be located in secondary cities, such as Shantou, Fujian province and Hangzhou, Zhejiang province.

The other two budget airlines in Asia - AirAsia Berhad and Tiger Airways Singapore Pte Ltd - are also attracted to the Chinese market. AirAsia has 10 destinations in China. Tiger Airways has four destinations in the country, most of which are in southern China.

"Our rapid development represents our confidence in the Chinese market," said Chong Phit Lian, chief executive officer of Jetstar Asia.

A report by research company CIConsulting said that about 70 percent of all routes inside China are suitable for budget airlines and predicts that 25 percent of domestic routes will be provided by low-priced carriers in 2013.

In 2020, annual passenger capacity in China will reach 700 million people, said Li Jiaxiang, head of the Civil Aviation Administration of China.

Spring Airlines, currently China's only budget carrier, occupies about 3 percent of the domestic civil aviation market, but its net profit was 470 million yuan ($72.68 million) in 2010, a 240 percent increase compared with 2009.

"China is a key market for growth, but currently, we only have a very tiny share of the market," Chong said.

He added that the difficulty in expanding in China is gaining recognition among local consumers. Budget airlines advertise low fares and organize activities and events for students, who are their target consumers.

Many industry experts say Asia still has growth potential in the budget aviation sector.

Low-cost carriers occupy 27 percent of the market share in the United States and 24 percent in Europe, but only 10 percent in Asia.

Bruce Buchanan, CEO of Jetstar, said that at present, about 450 aircraft belong to budget airlines in the Asia-Pacific region and the number will increase to 2,000 in the next five years.

Jetstar operates 2,400 flights a week to 54 destinations in 14 countries across Asia and the Asia-Pacific region with a fleet of 78 aircraft. The company will purchase 50 planes in the next five years to help meet market demand, Buchanan said.

Source:China Daily
 
 
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