Qantas teams up with Chinese airline for budget service

Qantas Airways has teamed up with China Eastern Airlines to begin a budget service in China.

The 50:50 partnership will be known as Jetstar Hong Kong. The service will be based in Hong Kong and fly to mainland China, South Korea, Japan and south-east Asia.

A fleet of three Airbus A320s is expected to expand to 18 by 2015.

Jetstar Hong Kong will be underpinned by a maximum capitalisation of up to $189.35 million.

China Eastern, based in Shanghai, is majority owned by the Chinese government and carries the second-highest number of passengers of any Chinese airline.

“A key part of the Qantas strategy is to have expansion of the Asian markets … the largest aviation market in the world, the most profitable aviation market in the world,” Qantas chief executive Alan Joyce says.

Jetstar chief executive Bruce Buchanan says the new venture offers enormous potential, with only one other budget carrier operating in China.

China has a travel market of almost 300 million passengers per year, It is forecast to grow to 450 million by 2015.

“Jetstar Hong Kong’s fares will be 50% less than existing full-service carriers, which we’ve seen create new travel demand in our markets across Asia because it enables people to take more trips, more often,” Buchanan says in a statement. “Governments around Asia were now encouraging low-cost airlines because they could see the economic benefits that they created, especially for tourism.”

Also today, Qantas announced plans for the first Australian commercial flight using sustainable biofuel.

The Sydney-Adelaide Airbus A330 service, scheduled for April 13, will be powered by 50% used cooking oil and 50% conventional jet fuel. Its carbon footprint will be about 60% smaller than that of a flight using conventional jet fuel.