Qantas and China Eastern launch budget airline

Australian companies Qantas and China Eastern Airlines said Monday to launch a low-cost regional airline based in Hong Kong.

Subject to regulatory approvals, an offshoot of Qantas subsidiary Jetstar, Jetstar Hong Kong will operate medium-haul flights between China, Japan, South Korea and Southeast Asia from mid-2013.

“This is a unique opportunity to capitalize the huge potential Chinese market, where penetration of low-cost transportation is less than 5%,” said the CEO of Jetstar, Bruce Buchanan. “Prices of Jetstar will be 50% cheaper than traditional carriers, which generates demand in our markets across Asia, allowing to make more trips, more often,” he added.

The newcomer on the market wishes to receive between 6 and 10% of cheap flights between China, Japan or South Korea. Qantas and China Eastern will be equal shareholders in the new company, which will have a minimum capital of 198 million dollars, according to a statement sent to stock exchange authorities in Hong Kong. Jetstar will operate initially with three Airbus A320, 18 by 2015 and would order more than twenty by 2017.