Qantas rethinks plan for Asian subsidiary

FACED with multiple challenges, including strained relations with unions and opposition in Singapore for the establishment of a premium subsidiary airline, Qantas is reportedly rethinking its plan, according to Australian media reports.

The Australian Financial Review quoted a Qantas executive as saying that the airline has terminated discussion with the Singapore government and a would-be investor poised to take a 51 per cent stake in the premium airline. This confirms speculation in the industry that Singapore was to be the base for this premium subsidiary airline – a logical choice, given Qantas’ and Jetstar Asia Airways’ extensive operations out of Changi Airport.

Qantas is reported to be favouring a broader and lower risk code-share and alliance with Malaysia Airlines. This arrangement – pending agreement and subsequent approval by the Australian Competiton and Consumer Commission (ACCC) and the newly-established Malaysian Competition Commission – will result in joint marketing, scheduling and pricing between both carriers. Qantas currently does not operate directly to Kuala Lumpur International Airport.

The establishment of Scoot, a low-cost carrier by Singapore Airlines, is also believed to have contributed to this latest development.

Jetstar Asia, however, is still strongly determined to grow its footprint in Singapore, with plans for 12 Chinese destinations by 2012 and further expansion to Europe when it takes delivery of its first Boeing 787 Dreamliner in 2014.

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