Jetstar, AirAsia in talks for cost saving, consolidation

Jetstar owned by Qantas Airways and Malaysia's AirAsia confirmed talks between the two carriers about a partnership to cut costs and consolidation of their positions as the lowest-cost airlines in the Asia-Pacific region, were in progress.

Qantas, the Australian flag carrier which remains profitable in the downturn that has scarred most of its international rivals, said that its wholly-owned subsidiary and AirAsia had entered preliminary discussions on a potential joint venture.

The move follows Qantas' strategy of forging alliances in Asia and reflects Australia's increasingly strong commercial ties with the region. AirAsia, the largest low-cost carrier in the region, operates several flights into Australia while Jetstar flies some routes into Southeast Asia.

With Qantas moving services from its main brand to Jetstar to counter the effects of the economic downturn, Jetstar has emerged as the vehicle for the group's international expansion.

AirAsia, the biggest low-cost carrier in the region and Jetstar have taken rapid growth strides and are seeking expansion routes across southeast Asia and Australia, beyond Vietnam, Cambodia, Singapore, China and Australia.

Derek Sadubin, chief operation officer for the Centre for Asia-Pacific Aviation, denied any equity arrangement between the two budget carriers as also a strategic alliance on revenue generating activities such as code sharing.