Partnering up

Up until now, flying solo has been the general rule among LCCs. Apart from a few notable exceptions, such as the Qantas Group’s Jetstar stable, interlining, which allows passengers to transfer airside between flights and have their baggage through-checked, a service which is offered by conventional carriers but, until now, one which few LCCs provide, and codesharing haven’t been on the agenda. Suddenly, it’s the thing to do.

Take tiny Cambodia Angkor Air, Cambodia’s national flag carrier, which operates just three Airbus A321s and three ATR 72-500s, all provided by Vietnam Airlines (a 49 per cent owner of the carrier) along with crew and other personnel. In June it signed a memorandum of understanding (MoU) with LCC Jin Air, a subsidiary of Korean Air (KAL), aimed at paving the way for joint co-operation to expand its network in the Asia Pacific and even to Europe and Hawaii.

“Under the MoU, Jin Air can fly anytime to Cambodia in the coming future and as our partner they can help us sell our (Cambodia Angkor Air) tickets that can connect to other destinations. If our customers want to fly all the way to Europe, they can fly with us and connect with Jin Air in this collaboration,” declared Tek Reth Samrach, the airline’s chairman who is also secretary of state of Cambodia’s Office of Council of Ministers.

Europe does seem a stretch. Neither of the carriers actually flies that far, although Jin did launch services to Hawaii in November. It was established by KAL in 2008 and operates flights to 15 international destinations from its base in Incheon with a fleet of 17 Boeing 737-800s and three 777-200ERs. Presumably, Cambodians will be able to fly with Jin or Cambodia Angkor to Seoul and then on to Europe with KAL. In fact Jin has been particularly active in extending the hand of friendship. It has recently signed deals with Lao Airlines and with Island Air in Hawaii. In April Jin also signed an interline agreement with the Jetstar Group, encompassing Jetstar Asia in Singapore, Jetstar Japan and Jetstar Pacific in Vietnam. The interline service expects to launch in the third quarter of this year and it will give Jin access to more than 150 routes served by Jetstar-branded airlines. “This agreement with Jetstar Group is the first interline agreement for Jin Air. By acknowledging Jin Air’s potential and growth, Jetstar Group will be able to bring in more Korean customers to its airlines, while simultaneously we can also benefit from the expanded network through connecting with Jetstar Group’s extensive routes,” said Jin Air in a statement.

None of this adds up to a formal alliance but it is a virtual one. Jin seems to be “doing an Etihad”, building a group of partner airlines but without the cash investment involved in the Gulf operator’s strategy.

It makes sense. Asian air routes are packed with budget airlines which have hundreds of aircraft on order. They are not only competing among themselves but with powerful full-service carriers which have worked to cut their costs and bring in efficiencies that in many cases allow them to compete effectively with the no-frills operators.

Unique among LCCs until now, Jetstar has used interlining and codesharing as a major strategy to win passenger feed and network reach. It has agreements with more than 20 other airlines, the majority of them legacy operators such as Emirates Airline, Air France, Lufthansa and Qantas. It’s competitors, it seems, have finally caught on. They need to because those that don’t get the message, given the overcapacity, price-cutting and low yields that currently pervade the marketplace, are simply not going to survive.

Jetstar’s competitors, it seems, have finally caught on.