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Jetstar to Focus on Long-Haul Routes

 
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PostPosted: Wed Jan 24, 2007 6:22 am    Post subject: Jetstar to Focus on Long-Haul Routes Reply with quote

By GILLIAN WONG and DERRICK HO
The Associated Press
Tuesday, January 23, 2007; 6:25 AM
source

SINGAPORE -- Jetstar, the low-cost unit of Australia's Qantas Airways, will shift its focus from short-haul flights to long-haul services this year, the carrier's chief executive said Tuesday, becoming the latest airline to turn its attention to the emerging market for cheap, long-distance flights.

Jetstar's long-haul service, which includes flights from Melbourne and Sydney to destinations such as Bangkok and Phuket in Thailand, as well as Honolulu and Bali, Indonesia, broke even in December 2006 after one month of operations, Alan Joyce told reporters on the sidelines of a conference in Singapore on the Asia-Pacific budget airline industry.

"This year we'll pause on the short-haul because we believe our focus should be on the long-haul markets where we see exceptional growth opportunities for the Jetstar brand," Joyce said. "In three years (from now) the long-haul operations will be bigger than short-haul."

A growing number of no-frills carriers in the Asia-Pacific region are betting that flying long distances will give them an edge in an increasingly competitive industry. If this development proves sustainable, it could dramatically change the face of intercontinental travel, a sector currently dominated by full-service airlines.

Among them is Hong Kong-based Oasis Airlines, a four-month-old airline that flies only long-haul routes, including from Hong Kong to London. In June, it plans to start flying from Hong Kong to Oakland, Calif.

Earlier this month, Malaysian aviation tycoon Tony Fernandes launched budget carrier AirAsia X, which will start flying to destinations in China and Britain in July. Fernandes said he expects AirAsia X to carry 500,000 passengers in its first year of operations and eventually expand destinations in India, Europe and Australia.

But other companies at the conference said they would stick to the conventional low-cost formula of flying short distances, preferring to concentrate their efforts in the booming Asian market.

"We're not interested in going into the long-haul market," Tony Davis, CEO of Singapore's Tiger Airways said Tuesday. He said he would be happy "carrying tens of millions of people around Asia."

"There is a limit, in terms of the aircraft, in terms of the operating model that we have where we can still operate that low fare model and get the efficiencies from our model," he said. "If we set up bases in other parts of Asia, we might be able to go to new markets out of those places."

Jetstar, meanwhile, plans to fly routes linking Australia with North America and an Asian hub with Europe from 2010, when a fleet of 12 Boeing 787-9 Dreamliners the airline has on firm order start coming into service, Joyce said.

"Long haul is a critical growth strategy for us going forward... It has been believed that the low-cost model couldn't be applied in these markets. We believe that this is an opportunity that more and more low cost carriers will start entering," Joyce said.

Jetstar's long-haul, budget operations are sustained by keeping costs down _ in the first two months of operation, the carrier's cost base on its long haul flights was 45 percent below Qantas', he said.

"That is sustainable because we offer low airfares and we offer people the added perks," he said. "So you can have a meal, you can have entertainment, you can have a blanket _ if you want to pay for them."
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