Jetstar Asia

Singapore Changi’s decision to close budget terminal could backfire as need for third runway grows

Singapore Changi Airport has taken the unusual decision to demolish its relatively new low-cost carrier terminal and build a larger hybrid terminal in its place. The closure of Changi’s Budget Terminal in Sep-2012 will result in the airport’s total handling capability shrinking by 10% during what could prove to be a challenging four-year period before the new hybrid Terminal 4 opens. Singapore also faces a pressing need to decide on the opening of Changi’s third runway, which is now only available to military aircraft, if it wants to stay ahead of the growth curve. Growing LCC operations have seen aircraft movements grow higher than passenger numbers.

A third runway and even a fifth terminal will eventually be needed for Singapore to maintain its status as a leading hub. Singapore and Changi have always made the investments to ensure there is plenty of space for growth and first class facilities for passengers. But the highly profitable airport has come under scrutiny over the last year: first for its unusual decision to start charging a tax for transit passengers and now for its decision to close its Budget Terminal only six years after it opened.

Jetstar, with Guangzhou, continues China expansion as Australia and SE Asia take back seat

Jetstar Asia is continuing what it sees as the decade of North Asian expansion with a service to Guangzhou, the third largest airport in China with 1.1 million weekly seats available. By comparison, London Heathrow has 1.7 million weekly seats available. Jetstar sees greater growth prospects in North Asia, which has a LCC penetration rate of under 5% compared to approximately 30% in Southeast Asia.

The Guangzhou route is the latest in a big push by Jetstar into China. It launched service to Ningbo last month and is launching service to Beijing next month. With Guangzhou, Jetstar Asia will have seven destinations in mainland China and 10 in greater China. Two more Chinese cities are expected to be added by the end of this year and many more in subsequent years. “There are many, many cities” in China that Jetstar is prepared to serve, CEO Bruce Buchannan previously remarked.

Tiger looks to catch-up after rights issue and departure of founding CEO Tony Davis

Tiger Airways is trying to move forward after surviving the most challenging chapter in its six-year history, capped off recently by a further shake-up in Tiger’s executive team, with founding CEO Tony Davis leaving the group, and a rights issue. Tiger's position going forward is significantly improved, but it still has several challenges to overcome if it has any chances of catching up with rival LCC groups AirAsia and Jetstar, which have successfully established pan-Asian footprints while similar efforts at Tiger have so far failed.

Qantas profit doubling and strategic developments overshadowed by change resistance

Qantas has doubled its annual underlying pre-tax profit to AUD552 million on the back of the strongest performance in three years of its flying divisions. In the face of increased competition, the carriers has maintained a positive outlook – with further details emerging of its future strategy. But publicly the carrier’s position is shaky as it responds to claims of a takeover bid and faces heavy resistance from unions unwilling to accept that Qantas’ storied international operations must change, as outlined last week, if jobs are on the line.

Qantas and Jetstar plans for the long term: partnerships and Asian expansion, if the unions allow it

Increased reliance on the oneworld alliance and tapping into the growth potential of Asia are the cornerstones of a five-year plan to turnaround the Qantas Group’s international operations. The loss-making division Qantas is seeking to restructure through consolidated long-haul flying, a new premium airline will be established in Asia that will see Qantas introduce a third brand, and significant fleet and product changes have been announced. Qantas also confirmed it would establish a new Jetstar subsidiary in Japan with Japan Airlines and Mitsubishi. The carrier is finally owning up to irreversible changes in the competitive landscape. But the key risk lies in the implementation of the plan.