Qantas To Launch Asian Budget Airline

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Singapore/Sydney, April 6: Australia’s biggest airline, Qantas Airways Ltd, plans to launch a Singapore-based budget carrier in a bid to tap the growing market for low-cost travel in Asia.

Qantas said that the new airline, which will be a joint venture with the Singapore government investment agency Temasek Holdings and two Singapore businessmen, will start flying by the end of the year to Asian cities within five hours of the city state.

The owners will invest S$100 Million ($60 million) in the new airline, of which Qantas will take a 49.9 percent stake. Temasek will hold 19 per cent, and Singapore businessmen Tony Chew and FF Wong would own 21.1 per cent and 10 per cent respectively.

"This is a modest investment for Qantas but is an excellent opportunity to participate in the growing intra-Asia travel market," chief executive Geoff Dixon said in a statement. Qantas, which is 19 per cent owned by British Airways Plc, said that it would use existing cash to fund its stake in the new airline.

Budget airlines have recently sprouted in Asia, challenging the dominance of full-service carriers such as Singapore Airlines and Malaysian Airline System Bhd.

The new airline will be the fifth budget air operator to fly to and from Singapore, following Thai Air Asia Co, a joint venture between Malaysian budget carrier Air Asia Sdn Bhd and Thailand’s Shin Corp, and Jakarta-based Lion Air, which are both already operating flights.

Tiger Airways, a budget venture between Singapore Airlines and the founder of Irish discount airline Ryanair, and Valuair Ltd, set up by ex-Singapore Airlines, are also expected to start operations this year.

Temasek holds 11 per cent in Tiger Airways, while Qantas already has a domestic discount airline called Jetstar, which is due to start flying in late May.

Qantas also owns Australian Airlines, launched in October 2002, which flys to Asian cities at cheaper rates than its parent.

Shares in Qantas were down 1.4 per cent, or five Australian cents, at A$3.53 at 0500 GMT on Tuesday.

Analysts said that having Singapore’s Temasek as a partner would help Qantas in getting the airline off the ground.

"It’s a very significant partner because it is the Singapore government’s investment arm, which makes it interesting from a funding point of view. It’s a very solid investor," said Peter Harbison, managing director of the centre for Asia Pacific Aviation.