Joint Ventures Spur Expansion For Asia-Pacific LCCs

By Adrian Schofield
Source: Aviation Week & Space Technology

Hrdlicka says Jetstar remains confident that the Hong Kong joint venture will begin flying by year-end. China Eastern Airlines also has an ownership stake, and local company Shun Tak Holdings joined as a shareholder in June, which is expected to help the carrier gain regulatory approval.

Elsewhere, Jetstar Japan has expanded its fleet to 13 Airbus A320s, and will boost this to 21 by the end of June 2014, Hrdlicka says. The carrier is seeing “significant underlying demand” in Japan, and this is expected to strengthen, as the Japanese market still has comparatively little penetration by low-cost carriers.

Another of the Asian LCC giants is the Malaysia-based AirAsia group, which has established joint-venture franchises in Thailand, Indonesia and the Philippines, and is launching another in India. Now, the group's long-haul airline, AirAsia X, is following up with its own offshore expansion.

AirAsia X CEO Azran Osman-Rani says the carrier is in the process of setting up new hubs for long-haul operations in Thailand and Indonesia. In both locations, AirAsia X will be able to draw on feeder traffic from AirAsia short-haul carriers already located there, Osman-Rani says. An announcement regarding the formation of the Thai carrier is expected “very soon,” he says.

The AirAsia X strategy is to follow AirAsia as it establishes new short-haul joint-venture carriers in other countries, says Osman-Rani. But beyond Thailand and Indonesia, it could be years before any other AirAsia affiliates grow enough to help support an AirAsia X hub, he says.

Indonesia's Lion Air has more aircraft orders than any carrier in Asia, but has previously trailed the other big LCCs in setting up joint ventures. However, this year it launched Malindo Air in Malaysia and is attempting to set up an LCC in Thailand.

The proposed joint venture in Thailand is making progress toward gaining government approval. Lion is working with an unnamed Thai partner, and a launch date will not be announced until the air operator's certificate (AOC) has been approved, a Lion Air spokesman says.

The joint venture is going through a two-stage approval process; it must first secure a business license before it can gain the AOC from Thailand's department of civil aviation. The business license application is going smoothly, the spokesman says. In addition, meetings have been held with the civil aviation department regarding the AOC.

The new airline will use Boeing 737 aircraft from Lion Air. The carrier has not revealed how many aircraft it will initially use nor from which of the two Bangkok airports it will operate. The joint-venture partners are negotiating for the best possible airport deal.

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