Jetstar adds Beijing flight, eyes China expansion

ALEX KENNEDY Associated Press Published:

SINGAPORE (AP) -- Budget airline Jetstar Airways began flights Thursday between Beijing and Singapore, part of an expansion plan to tap China's growing demand for travel.

Jetstar, a unit of Australia's Qantas Airways Ltd., is the first low-cost carrier to fly to Beijing from Singapore's Changi International Airport. The company plans to add flights to two more Chinese cities for a total of 12 by the end of next year, Jetstar Asia Chief Executive Chong Phit Lian said.

"Things are moving very quickly in China," Chong said. "It's already the world's third-largest outbound tourist market and moving up. The appetite for Chinese to visit Singapore and the region is growing."

Jetstar is battling Malaysian rival AirAsia for the region's long-haul budget market and has 170 aircraft on order to add to its current fleet of 80 planes, Jetstar Australia and New Zealand Chief Executive David Hall said. Singapore Airlines said earlier this month that its new budget long-haul carrier Scoot will begin operations by June.

Jetstar plans to begin domestic flights in Japan with three aircraft by the end of next year and eventually expand the fleet to 24, Hall said.

Low-cost carriers offer ticket prices up to 40 percent cheaper than full-service airlines, but with less frills. Budget airlines often charge extra for meals, luggage and preferred seating. Jetstar offers passengers in economy class the use of iPads for a fee.

Budget carriers account for about 5 percent of air travel capacity in China and Japan compared to 50 percent in Australia and about 20 percent in Asia, Hall said.

Slowing global economic growth and rising fuel costs have squeezed the profit margins of Asian carriers this year. Benchmark U.S. crude soared 37 percent from early October to above $103 per barrel last week before falling to $97 this week.

Jetstar said fuel accounts for about 40 percent of its costs.

Hall said passenger demand for Jetstar flights will likely expand more than 10 percent this year and advanced bookings suggest growth should remain strong into next year.

"There's still solid growth in Asia," Hall said. "The way we structure our pricing, there are all sorts of ways we can stimulate demand."

Asia is the world's fastest growing aviation market and recent aircraft sales reflect that. Last week, Indonesia's Lion Air announced it ordered 230 planes for $21.7 billion from Boeing, the biggest order ever for the U.S. aircraft maker.

Jetstar said it will fly Airbus A330s on its Beijing-Singapore route with a capacity of 303 passengers in business and economy classes.

The carrier has ordered 25 Boeing 787 Dreamliners and expects to use them to replace some of its A330s for long-haul flights, Hall said. The lighter weight 787 will burn 20 percent less fuel and features bigger windows and a wider body, Hall said.

"This will be a game changing aircraft," Hall said.

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