Qantas confirms Jetstar talking to AirAsia about possible merger

24 December 2009

Qantas has recently confirmed that wholly owned subsidiary Jetstar has been talking to Malaysia-based low cost carrier AirAsia about a possible joint venture.

This news comes after Qantas eyed Malaysian Airlines earlier in the year as a possible partner earlier in the year in order to set up a strong presence in Southeast Asia.

“Qantas confirms that its wholly-owned subsidiary Jetstar and AirAsia have entered discussions regarding a potential cost-saving joint venture,” said Qantas.

“However, these discussions are at a preliminary stage and no binding agreements have been reached.”

If successful, this cooperation should better position Qantas to battle it out with Singapore Airlines and its low-cost subsidiary Tiger Airways.

The announcement also comes days after an Australian federal government aviation White Paper indicated that foreign ownership laws on Qantas may be slackened.

Travel Blackboard

OSK: AirAsia, Jetstar Cost-Saving Collaboration May Bolster Bottomlines

21 December 2009

KUALA LUMPUR-- The potential cost-cutting collaboration between AirAsia and Jetstar Airways is definitely welcome, said OSK Research.

"Any positive cost reduction may eventually bolster their bottomlines," it said in a research note here Monday.

However, OSK Research also stated, it was not overly excited with the proposed cooperation as it was still preliminary.

"We do not see it materialising so soon," it said.

It was reported that AirAsia and Jetstar, Qantas Airway Ltd's low-fare unit, are discussing cooperation towards cutting costs amid rising competition for the budget-conscious Asian traveller.

AirAsia has not made any formal announcement pertaining to the cooperation. However, a news report said a partnership may cover procurement and ground handling, generating as much as 10 per cent in cost savings.

"Despite the potential collaboration, we remain mindful that high crude oil prices may squeeze AirAsia's margins.This is especially so, given that price undercutting activities, may persist in the short to medium term," OSK Research said.

Due to AirAsia's recent weaker than expected results, OSK Research has kept a "sell" rating for the budget airline.

-- BERNAMA

AirAsia X extends ULD contract with Unitpool for 5 more years

18 December 2009

Kuala Lumpur- Low-cost long-haul airline AirAsia X today signed a five-year extension of agreement with Swiss asset management company Unitpool to support the airline's ambitious cargo growth plans.

With the extension of this agreement, Unitpool will provide for AirAsia X unit load devices (ULDs), which are needed, to support the airline's fast growing cargo operations, until 2014. ULD is a standardized cargo container for air, land and sea transportation. Unitpool guarantees the prompt delivery of ULDs as and when required by the airline in any new destination it flies to. The airline, an affiliate of low-cost short-haul carrier AirAsia, is fast expanding its route network.

The agreement is expected to help AirAsia X meet its projected target of MYR 50 million in cargo revenue in 2010, a more than 60% increase from the MYR 30 million revenue it expects to achieve in 2009.

"Extending our relationship with Unitpool assures us that our needs concerning the procurement, repair and positioning of ULDs are met. It allows us to push forward our growth strategy and to give more attention to the marketing of our passenger seats and cargo space. It also frees AirAsia X from taking the build-up risk of acquiring large numbers of ULDs - based merely on anticipation - before they are actually required," said Sathis Manoharen, Regional Head of Cargo of AirAsia X.

Meanwhile, Unitpool CEO David Harman said, "We are absolutely delighted to grow our relationship with AirAsia X, which is expanding operations and has huge plans for its cargo business. We are excited about our continued participation in its growth and success. The extended agreement allows us to follow through on plans to add Kuala Lumpur International Airport to the growing network of airports with a Unitpool-dedicated presence."

AirAsia X identifies cargo as a major revenue-generating channel. It is optimizing the potential of its otherwise empty belly space to bring in cash by offering cargo services at rates considerably lower than its competitors' and by tapping AirAsia's extensive network and flight frequencies to reach more destinations and achieve faster delivery time.

The airline is increasingly finding new ways of increasing revenue apart from growing passenger volume. AirAsia X is strengthening cargo operations in part to protect its bottom line against the negative impacts of the economic downturn and a possible surge in fuel prices.

AirAsia X began working with Unitpool in April 2007 and has increasingly used the latter's services as the airline grew from one route and one aircraft to its current nine routes and fleet of five Airbus A330s and two A340s.

The Journal of Commerce

Tune Hotels in franchise tie-up with Thai firm

18 December 2009

BANGKOK: AirAsia Bhd affiliate Tune Hotels.com has entered into a strategic partnership with Thailand-listed Evolution Capital pcl to franchise the roll-out of 44 hotels in Thailand, China, Bangladesh, the Philippines and Indonesia.

In a statement yesterday, Tune Hotels.com said the first 24 hotels were targeted to be in development by early next year and operational by 2012, with staggered roll-out of the subsequent 20 hotels to be completed by 2013.

“This expansion affirms our confidence in Thailand’s tourism and strong commitment to the Thai market.

“Thailand has become the leading tourism destination for those seeking to stretch their hard-earned income.

Mark Lankester (left) shaking hands with Simon Gerovich after signing the strategic partnership agreement

“It’s a natural fit for Tune Hotels.com to expand its limited service brand of hotels here,” group chief executive officer Mark Lankester said.

He said the partnership with Evolution Capital formed part of Tune Hotels.com’s aggressive regional expansion plan.

“In total, we will have about 100 hotels in key cities across Asia by 2013, including seven existing Tune Hotels.com hotels in Malaysia and Bali, as well as our own significant hotel development plans over that period,” he added.

Evolution Capital president and managing director Simon Gerovich said there remained a huge demand for safe and clean low-cost accommodation in Asia’s most popular destinations.

“The Tune Hotels.com limited service model has proven itself to cater very well to this demand.

“We are very excited to partner with TuneHotels.com in spreading this fresh concept throughout a growing number of destinations in Asia,” he said.

The Star

Jetstar-AirAsia discuss cost-sharing JV, Thai Airways cooperating with Nok Air

18 December 2009

Qantas has advised the stock exchange that its LCC unit Jetstar and AirAsia have entered discussions regarding a potential cost saving joint venture. Qantas noted the discussions are at a preliminary stage and no binding agreements have been reached.

Both airlines operate A320 equipment on short-haul routes, while the long-haul fleets include A330 equipment. Jetstar has 57 A320 orders outstanding, while AirAsia has 105 still to be delivered. Jetstar has seven A330s in service, while AirAsia X has four in service and 21 more on order. Jetstar is also leasing four more A330s (possibly five, with deliveries from Nov-2010), following the decision by Qantas to defer delivery of 15 B787-8s by four years.

Jetstar fleet in service and on order

Aircraft Manufacturer	Aircraft Type	Total In Service	Total On Order	Grand Total
Airbus	A320	32	57	89
Airbus	A321	6	0	6
Airbus	A330	7	0	7
Total		45	57	102

Source: Centre for Asia Pacific Aviation & Ascend

AirAsia fleet in service and on order

Aircraft Manufacturer	Aircraft Type	Total In Service	Total On Order	Grand Total
Airbus	A320	48	105	153
Boeing	737 (CFMI)	1	0	1
Total		49	105	154

Source: Centre for Asia Pacific Aviation & Ascend

AirAsia X fleet in service and on order

Aircraft Manufacturer	Aircraft Type	Total In Service	Total On Order	Grand Total
Airbus	A330	1	0	1
Airbus	A330	4	21	25
Airbus	A340	3	0	3
Airbus	A350	0	10	10
Total		8	31	39

Source: Centre for Asia Pacific Aviation & Ascend

The Australian reports talks centre on aircraft procurement and ground handling, and a tie-up is estimated to cut costs by approximately 5-10%. The agreement would not involve equity.

The airlines did not discuss whether the JV could involve joint maintenance services. Qantas is currently in a dispute with its engineers, which are threatening industrial action during December and January. Qantas stated yesterday the action would not have any impact on airline operations.

Qantas’ shares rose 1.9% yesterday, while AirAsia advanced 0.8%.

Thai Airways and Nok Air Join Force to Boost Domestic and Regional Air Traffic

Thai Airways is meanwhile joining forces with its 39%-owned LCC unit Nok Air in a long-overdue move to cooperate and drive efficiencies for the group. From 01-Mar-2010, Nok Air will operate services to some of Thai’s domestic destinations, including Phitsanulok, Ubol Ratchathani and Mae Hong Son from Bangkok.

Thai Airways President, Piyasvasti Amranand, explained the move is based on the carrier’s “Two-Brand Strategy. The airline is promising a seamless travel experience, noting “passengers on these routes will continue to receive the same standard of services that they currently receive on Thai, such as the same flight frequencies, standards of aircraft maintenance and cockpit crew standards. Traffic between Nok Air’s domestic routes to Thai’s international flights will connect over Bangkok

Mr Piyasvasti added, “the cooperation will add more connecting points in the secondary domestic and regional destinations to Thai and Star Alliance’s global network. Thai will be able to better utilize its aircraft by offering more flight option to high-demand destinations, while still emphasizing its premium service standards to passengers based on its strategic plan”.

He noted the move was a result of a review of the carrier’s domestic performance over the past ten years. He stated domestic secondary routes have “been unprofitable for several years, but operations were sustained for the travelling public”.

Thai Airways’ shares fell 2% yesterday.

Asia Pacific selected airlines daily share price movements (% change): 17-Dec-09

Source: Centre for Asia Pacific Aviation & Reuters

Center for Asia Pacific Aviation

Budget carriers unite to cut costs

18 December 2009

JETSTAR and AirAsia are about to announce an operational joint venture that could save hundreds of millions of dollars by enabling them to jointly buy aircraft, parts and other goods.

The two airlines would still compete for passengers and the deal does not involve equity.

It aims to cut costs through economies of scale.

A Qantas Group spokesman confirmed yesterday that the two airlines were talking but declined to comment further.

It is understood the region's two biggest low-cost carriers have been talking for some time and are working out final details of the deal.

Areas expected to be included in the agreement are procurement and ground handling, with costs savings in the order of 5-10 per cent.

Kuala Lumpur-based AirAsia is the Asia-Pacific region's biggest low-cost carrier.

It is headed by flamboyant entrepreneur and former musician Tony Fernandez.

At the end of last month it had a fleet of 64 180-seat Airbus A320 aircraft and 18 Boeing 737s.

It operates more than 400 flights daily to domestic and international destinations and has offshoots in Thailand and Indonesia as well as a stake in long-haul carrier AirAsiaX, which serves Australia.

Airlines flying under the Jetstar brand operate 46 A320 and and A321 aircraft.

Combining procurement for the two fleets will give the carriers more clout to cut deals with suppliers.

The two airlines also plan to share ground handlers in ports where one partner faces higher costs because it does not have enough flights.

They are considering pooling parts, giving them wider coverage at lower cost.

The deal is understood to minimise the need for regulatory approval but that might be unavoidable in some areas.

Engineering work will still be done separately and the agreement will not include heavily regulated areas such as training and standards.

In the longer term, the airlines hope to join forces on aircraft purchases. They are hoping the size of their combined fleet will give them enough sway to influence the design of the next generation of narrow-body jets when they are offered.

The Australian low-cost carrier has been expanding in Southeast Asia as part of a pan-Asian strategy that includes stakes in Jetstar-branded airlines in Singapore and Vietnam.

Jetstar chief executive Bruce Buchanan reaffirmed the airline's Asia focus last week as Singapore-based Jetstar Asia began services to mainland China.

The move is expected to be a blow to Singapore-based Tiger Aviation.

The Australian.com

Thai Company Signs Franchise Deal To Set Up 44 Tune Hotels In Five Countries

17 December 2009

BANGKOK-- Evolution Capital, listed on the Stock Thai Exchange, is planning to invest over US$200 million in the next few years to build, refurbish and operate 44 Tune Hotels.com in five countries.

The company has signed a franchise agreement with Air Asia to set up the Tune Hotels.

Its President, Simon Gerovich said 24 hotels would be operated in the first phase within the next four years, with the first scheduled to be operational in Thailand's premier resort island of Phuket by 2010.

Besides newly set up hotels, half of them would be existing hotels to be refurbished as Tune hotels.

"We are leasing most of the land or space for 30 years to keep our initial cost low," he said at the announcement of the franchise agreement between Air Asia, the region's leading low cost carrier which had established Tune Hotels.com.

Tune Hotels.com was represented by its Group Chief Executive Officer Mark Lankester at the event on Thursday.

The Thai partner, a real estate investment advisory and management firm focuses on hospitality and branded residential sectors.

Gerovich said besides Thailand where about half of the 44 hotels would be built, Evolution also planned to set up the limited service hotel brand in China, Bangladesh, the Philippines and Indonesia.

Depending on locations, Gerovich said each hotel would have between 79 and 150 rooms, adding that they were hoping for occupancy between 70 to 80 per cent, with average rate of US$20.

Lankester said Thailand was one of the leading tourist destination in the region, and the entry of Tune into the market would bring in significant revenue to the group in the future.

"We are on track to have 65 to 68 hotels operational by 2013 and 100 by 2015. Once this is achieved, we hope to get most of revenue from overseas operations as generally Malaysia's hotel room rates are already very low," he said, citing the RM500 he had to pay for a two-star hotel in India as a comparison.

He said their seven hotels currently operating in Malaysia and Indonesia were getting an average of 95 per cent occupancy, adding that over 500,000 guests have stayed in these hotels so far.

He said the company planned to enter other markets being served by Air Asia, such as India, Australia and United Kingdom.

-- BERNAMA

AirAsia launches Kochi – Kuala Lumpur Flights

17 December 2009

AirAsia has launched flights between Kochi in India and Kuala Lumpur the capital of Malaysia. Kochi is one of the airline’s latest Indian destinations which includes Kolkata and Thiruvananthapuram (Trivandrum). AirAsia is the only airline from Kuala Lumpur which is servicing Kochi with direct daily flights.

Kathleen Tan, Regional Head of Commercial AirAsia said, “With Kochi now added to our extensive network, AirAsia is unlocking the potential of international air travel from Kuala Lumpur to Southern India and its surrounding areas. We are thrilled to be serving Kochi direct, a huge market that no other airline is serving directly. With the commencement of this direct service to Kuala Lumpur, the people of Kerala and India can now use Kochi as a gateway to our extensive route network to ASEAN and beyond ...... Moving forward, we are looking into expanding our route network in India and opening-up the market. Amongst the destinations which are on our network radar include Chennai, Hyderabad, Banglore and Mumbai.”

AirAsia is currently the largest low-cost carrier in Asia and services one of the most extensive route network in South East Asia with over 70 destinations across 20 countries and 9 major hubs in Malaysia (Kuala Lumpur, Penang, Kota Kinabalu), Thailand (Bangkok, Phuket) and Indonesia (Jakarta, Bali, Surabaya, Bandung). It has grown from a modest two aircraft to its current fleet of 85, servicing over 130 routes in just 7 years.

AsiaTravelTips.com

AirAsia set to review regional media account

17 December 2009

KUALA LUMPUR - Malaysia-based budget carrier AirAsia is set to pitch its regional media business.

The airline’s media account is worth an estimated US$11.5 million.

In an exclusive interview with Media, Kathleen Tan, regional head of commercial at AirAsia, confirmed plans for the review, saying that the airline is looking to “put its media account up for pitch sometime next year”.

She added: “It’s a health check that we do every two to three years because sometimes if agencies win a business without a pitch I feel complacency comes in and they just cruise along. Sometimes change is good.”

In May last year, AirAsia split its regional media account between Carat and incumbent agency Omnicom Media Group.
Carat was given the media duties for the airline’s long-haul arm, AirAsia X, while OMD continued to work with AirAsia on existing projects. Since then, it is believed that OMD's remaining duties have been moved elsewhere.

In response to the news of the pitch, both Carat and OMD declined to comment.
In the interview, Tan also offered agencies some “frank feedback”. “I would advise media and creative agencies to change the team that services the client every two years. Having a new team will bring new ideas; then there is no reason for the client to change its agency,” she said.

On AirAsia’s advertising Tan said that the airline still had some way to go. “I don’t think it’s as innovative as I would like it to be. We want agencies to push the limit. I want to tell the agencies that sometimes, for tactical campaigns, we cannot take risks because we have to look at the bottom line and bring in the dollars.”

Tan singled out Carat Taiwan as the type of agency AirAsia would be looking for. “They engage you at all levels and bring extra value. Sometimes they advise us not to spend our budget and recommend editorial coverage instead.”

Tan also revealed plans to reward AirAsia’s best agencies through a scheme called Agency Extraordinaire.

AirAsia was crowned Brand of the Year at Media’s Agency of the Year Awards in Singapore. In the same week it became the airline with the largest number of followers on social network Facebook.

Media

F1 side bet: Fernandez vs Branson

17 December 2009

KUALA LUMPUR-- The next season of Formula 1 racing has just been made more interesting -- and will certainly come with hilarious results -- because of a side between two buddies in the airline industry.

AirAsia boss Datuk Tony Fernandes has taken up Sir Richard Branson's challenge -- that the loser in the Formula 1 stakes will dress up as an airline stewardess on the winner's airline.

Fernandez is the Lotus F1 Racing team principal while Branson’s Virgin Group owns Virgin Racing. Both are among the four new teams competing in the 2010 F1 circuit.

An AirAsia statement said Fernandes has even taken the liberty to pick out a lovely crew uniform for Branson. (See attached image)

"It's quite fitting, don't you think? Our guests will be delighted to be served by a Knight of the Realm. But knowing Richard, the real challenge will be to prevent him from asking our guests "coffee, tea or me?," said Fernandes.

He said Branson would be assigned to duty on board a flight operated by AirAsia X, the long-haul, low-cost affiliate of AirAsia. "We’d like to keep him with us for a longer flight rather than the short-haul flights operated by AirAsia. We’ll be applying soon to the Department of Civil Aviation to gain clearance for him."

Fernandes, who once worked for Branson as a financial controller at Virgin Records, had recently joked his only target in the new F1 season is to beat Branson otherwise he would retire and kill himself.

The statement said Branson however suggested something less macabre. "I like Tony a lot and I really hope he doesn't have to kill himself, but at the same time I'd obviously like to beat him. So maybe we should think of another challenge.

"He has an airline, we have an airline, and if we beat him he can come and work on one of our airlines as a Virgin stewardess. It will save him having to kill himself, but we'll make sure the stewardess outfit is perfect," joked Branson.

"I suspect if he beats us he might ask me to reciprocate. Maybe I'll have to check out how fetching his stewardess outfits are," he added.

Sun2Surf