Airlines in Asia's low-budget industry consider consolidation, alliance
Airlines in Asia's low-budget industry consider consolidation, alliance
En-Lay Yeoh, Associated Press, Singapore
Singapore's low-cost carriers Valuair Ltd. and Jetstar Asia were considering an alliance while rival Tiger Airways said it also was mulling possible partnerships Wednesday - in what could herald the first wave of consolidation in Asia's cutthroat budget airline industry.
Jetstar Asia chief executive Ken Ryan on Wednesday confirmed in a one-paragraph statement that his company, a subsidiary of Australia's Qantas, was in talks with Valuair Ltd. He added only that they were "exploring a variety of ways that they can work together or cooperate with each other."
It was not immediately clear why the airlines were considering integration but analysts have said carriers are suffering because of soaring jet fuel prices, now well above US$60 a barrel.
Qantas has said that Jetstar's startup has been slowed by its inability to obtain flying permits in some countries despite having rights allocated by Singapore authorities.
Singapore-based rival Tiger, meanwhile, hinted that it may be seeking a secondary base in Asia when asked about possible routes to China.
"China is too far away and (flying) beyond four hours isn't tenable. It will be more sensible if we have a secondary base and can operate from there," Tiger chief executive Tony Davis said at a press conference.
The airline has been "in talks with a number of airlines for partnerships ... we are looking to be a regional business," Davis added, without elaborating.
Given the current regional regulatory environment which restricts foreign ownership of airlines, Tiger could form joint ventures, similar to those forged by its competitor, Malaysia's AirAsia Bhd.
AirAsia uses Bangkok as a secondary base, from where its Thai joint venture airline flies, to service destinations beyond a four-hour radius from Malaysia and to Singapore, where it hasn't been successful in getting landing rights.
Tiger Airways also announced it was buying eight Airbus Industrie A320 airplanes, which cost more than $500 million in total at list prices. All will be delivered by 2007.