For all the fuss over Qantas’s so far failed attempts at launching a premium airline in Asia, it is clear that Jetstar is the main game for the Qantas Group in Asia. Today’s announcement of the launch of Jetstar Hong Kong in partnership with China Eastern now means the Jetstar brand has footprints in three of Asia’s most significant commercial centres in Tokyo, Singapore and Hong Kong, and access to some of its most populous markets in Japan, greater China, Vietnam (through Jetstar Pacific) and South-East Asia.
The new Jetstar Hong Kong venture starts small – with just three A320s – but clearly is the result of big thinking. Short of an operation in mainland China itself, Hong Kong is the next best thing in providing access to a booming air traffic market, with Jetstar pointing to a Chinese middle class numbering 300 million. Hong Kong itself, home to seven million people, is one of the world’s largest international airline hubs and has long been a key entry point to mainland China.
But, as the home market for Cathay Pacific and its Dragonair subsidiary, Hong Kong will be a hard nut to crack, even if Jetstar Hong Kong offers fares 50 per cent lower than currently available, as promised. Both Cathay and Dragonair have significant operations into mainland China, and it seems it is this market that Jetstar Hong Kong will focus on, but they are the Hong Kong aviation behemoths, Jetstar will be the minnow.
On the other hand China Eastern, China’s second largest airline, as a Qantas’s joint venture partner in Jetstar Hong Kong will bring political clout and local knowledge of the Chinese airline market.
Critically, Jetstar Hong Kong will allow Jetstar to better ‘connect the dots’ in Asia, to be better able to hub passengers through its Asian hubs and to offer triangulated journeys. For example it could hub passengers out of Japan through Hong Kong to mainland China, or from Singapore via Hong Kong to secondary points in Japan.
As Jetstar Hong Kong and Jetstar Japan get established a grow, Jetstar will begin to look something like the pan-Asian ‘domestic’ airline that today’s bilateral air route negotiation framework currently limits. The potential, if the strategy can be successfully implemented and potential competitors seen off, is huge.
Still, for some time to come, Jetstar’s biggest footprint by far will be in Australia. But it will be fascinating to see where the Jetstar brand in Asia is in five and 10 years.
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