Business

Saturday July 16, 2011

JetStar to invest US$500m0il in Singapore hub and to expand fleet 


SINGAPORE: Budget airline JetStar, a unit of Australia's Qantas, plans to invest US$500mil in its Singapore hub, mostly by adding seven Airbus aircraft, according to chief executive Bruce Buchanan.

JetStar would add five new Airbus A320 single-aisle aircraft and an additional two wide-body Airbus A330 planes at the Singapore operation to support its expansion, the carrier said in a statement.

Competition among Asian budget carriers is heating up with Singapore Airlines, the world's second largest airline by market value, planning to set up a long-haul budget carrier by mid next year.

JetStar competes with Singapore's Tiger Airways, which is grounded by authorities in Australia due to safety issues, as well as Malaysia's AirAsia and some smaller South-East Asian budget carriers.

Buchanan said the grounding of Tiger only made a “small positive impact” on JetStar's operations due to the small size of Tiger's Australian domestic service.

He said the company was aiming to maintain a 20% share of the Asia-Pacific low-cost carrier market and might need to have as much as 400 aircraft by 2020.

“The total (fleet size of) the low-cost carrier market (in Asia-Pacific) is about 450 aircraft today and we envisage it to grow to in excess of 2,000 aircraft by the end of the decade,” he said on the sideline of a media briefing in Singapore.

“To maintain 20% market share by 2020, we need about 400 aircraft,” Buchanan added without elaborating when the carrier will start making orders of those aircraft.

JetStar, which operates nearly 80 aircraft in the region, mostly single-aisle A320s, has about an additional 50 A320s and around the same number of Boeing 787 Dreamliners in order.

Buchanan said the delivery of its 787 Dreamliners was still on schedule with the first aircraft coming into service by the end of 2012.

JetStar was in talks with Airbus over the A320neo programme, he said, but declined to say when the company would order the aircraft.

Last month, Qantas CEO Alan Joyce said the Australian flag carrier was looking at the Airbus A320neo for a potential purchase for JetStar.

Strong economic growth, a rising middle class and the lack of reliable land and sea transport infrastructure have been fuelling the growth of budget airlines in Asia, which recently overtook North America as the world's biggest passenger air travel market.

Asian budget carriers including AirAsia and India's IndiGo have been buying aircraft aggressively.

AirAsia has drawn up plans to buy an extra 100 Airbus A320neo jets, potentially taking its record-breaking order to 300, a source with direct knowledge of ongoing discussions said last week. Reuters

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