Jetstar to launch Hong Kong based carrier

[slim]

Australia's Jetstar plans Hong Kong-based carrier - MarketWatch (http://www.marketwatch.com/story/australias-jetstar-plans-hong-kong-based-carrier-2011-08-03)

[breakfastburrito]

for the record:
Aug. 3, 2011, 9:52 p.m. EDT
Australia's Jetstar plans Hong Kong-based carrier

HONG KONG (MarketWatch) -- Australia's Jetstar Group plans to launch a Hong Kong-based budget airline focused on mainland China routes and has started discussions with the city's government to apply for an air operator's certificate, the Apple Daily reported Thursday, citing unnamed sources.

The report said Jetstar, a unit of Qantas Airways Ltd. (QAN.AU), is seeking Hong Kong permanent residents as potential majority shareholders of the proposed airline, to conform with Hong Kong laws regulating ownership of airlines registered locally.

Jetstar already operates flights within Asia through its Singapore-based unit, Jetstar Asia Airways Pte. Ltd.

original:Australia's Jetstar plans Hong Kong-based carrier - MarketWatch (http://www.marketwatch.com/story/australias-jetstar-plans-hong-kong-based-carrier-2011-08-03)

[Red Jet]

Good luck with that BB & AJ. I'm sure Cathay and Dragon are shivering with fear that you're bringing your extensive Asian experience to their backyard;)

[The Green Goblin]

I'm sure Cathay as a One World partner will also be impressed with Qantas :rolleyes:

[ohallen]

More capital being syphoned off from the group for easy pickings by locals. Thank goodness for the profitable QF DOM.

This is going to end up like a house of cards waiting for a strong wind.

Smartest guys in the room for sure.

[Clb Crz Alt]

So qantas as an Aus based premium carrier paying normal award salaries, thus being downsized by management and j* and are struggling to survive in todays market, taking on low time pilots willing to PAY HUGE money to fly for them, then work for lower pay and conditions for the remainder of their careers, while having to be based OUTSIDE AUSTRALIA, BECAUSE AUSTRALIA is too expensive to base pilots , yet they can open a base in one of the most expensive cities in the world.

Oh, yes, I forgot, the pilots will have to pay for their own accommodation, medical, school fees, etc just like the suckers in j* Sin do.

Strange how Cathay can pay their salaries AND accomodation allowance etc, yet still be one of the most profitable airlines around.

More BS from untrustworthy ceos and management. How many million will that net these B$tards in bonuses.

[nitpicker330]

Good luck trying to get landing slots too. Cathay, Dragon and HK Airlines won't let you have any excess available without a fight.

Want CX wants, CX usually gets in HK.

[porch monkey]

And he calls jetstar Asia a success? I can't wait to hear what this gem gets called then. They will get eaten alive.

[galdian]

....might??

Ever any real doubt :E

[Karunch]

And I'm sure the former KA managers now in Jq management will be more than willing to help with the setup. Perhaps their mates in HK will finally realise how far their former peers have fallen.

Anyone remember Oasis?

[Pukka]

This rings of the same stupidity as announcing a direct service with an aircraft that has insufficient range.

Sell QF buy CX

[VR-HFX]

Joyce and Clifford are not just incompetent they are also delusional.

First they try their very best to destroy the QF brand (with remarkable success) and then think they can use the QF balance sheet and any residual reputational leverage to punt J*.

Clifford won't front the media but Joyce and Buchanan have both proved they can stutter with the best of them when the truth is not quite the way they have presented the facts.

A low cost carrier focussing on China...based in HKG...mind numbingly ignorant at best .... more likely dumb as a box of hammers.

[The Green Goblin]

Don't worry, like Jetstars international arm it will be a sound business and highly lucrative from day one.

Qantas mainline will lose 400 million next financial, and require further restructuring :ugh:

[hongkongfooey]

This is possibly the funniest and stupidest thing I have ever heard, my first reaction was to check it wasn't April 1st :}

Forget about the small players, CX and KA, I'd be a little more worried about Air China, China Southern, China Eastern, and the other 100 carriers in China.
Oh yeh, and the 100s of slots available in HK and China.

Then I guess it will be a case of attracting people to poison themselves and their families In pollution central for what ? I'm guessing 100k HKD a month for a captain and 65 for an effo ? A nice flat in HK will cost around 30-40k and then there's the cheap cost of living.....bring it on :ok:

[1a sound asleep]

AJ kept mentioning China and I doubt they would be allowed to set up a hub inside China. So everything hubs from HKG - All parts of Asia and Europe.

Very dangerous territory if you ask me.

How about Qantas sells off Jetstar to some wise investors and floats it on the stock market. Could probably raise a few billion as it is such a brilliant concept. Then Qanats can get back to being what it is supposed to be doing and RUNNING QANTAS!:D

[Budfox]

Pretty arrogant to think they can just waltz on in there and set up shop in my opinion.
They really are trying to muscle in on the big boys and pee in their backyards at whatever cost.
Maybe they should double check the share price of QAN !!!
Its looking really sick :ouch:

[porch monkey]

The only problem with selling it is they have to find investors who are terminally stupid. Anyone with any brains will want to do due diligence. If they do that, they would be terminally stupid to buy it, given by their own admission they only make money on coffee and muffins!
Mind you, there are some terminally stupid people out there.....

[600ft-lb]

Interesting to see that jetstareurope.com has been registered.

Guess where the 787's are headed boys!

I reckon I can count on no hands how many 787's Qantas will be getting.

767's til 2020 my prediction.

[GUARD]

This is like someone trying to root their mates' wife while he's in the lounge room........


What a joke:D

[1a sound asleep]

Jetstar locks onto Europe, and the offshoring of Qantas jobs, with ‘early’ 787s | Plane Talking (http://blogs.crikey.com.au/planetalking/2010/07/14/jetstar-locks-onto-europe-and-the-offshoring-of-qantas-jobs-with-early-787s/)

Jetstar locks onto Europe, and the offshoring of Qantas jobs, with ‘early’ 787s
July 14, 2010

All fits together

[JMEN]

Alas not the only ones, seem to be a step behind Air Asia.

Air Asia is setting up in Japan, Vietnam, Hong Kong, Manila & most likely everywhere else.

The market is Asia is going ape****, huge, now SIA LO CO too.

Good times for S.E. Asia. :cool:

[Neptunus Rex]

I cannot see it happening. Macau, or perhaps Shenzen, but not Hong Kong.

[boocs]

What's the latest on Jet* Pacific/Vietnam??

b.

[AQIS Boigu]

...try leaving to BJS or SHA on time... huge ATC delays on a daily basis...wonder if AJ has considered this...

why low cost...?? all the Mainlanders love buying branded stuff in Central and they certainly won't fly a LCC home to the Middle Kingdom when flashing their newly bought goods at check in...

[Gnadenburg]

Can't you just see the Jetstar execs standing out front of the HK club in their RM's wondering why the doorman won't let them in.

I wear black or brown RM's to the HKG Club. I have never been kicked out. :ok:

http://i236.photobucket.com/albums/ff187/coronatower/DSC03227.jpg

Cornas night. Auguste Clape.

[DrPepz]

Does Qantas think Hong Kong is like Singapore? The Singapore government welcomed Jetstar Asia with open arms, telling the world that "If SIA has to be sacrificed for the sake of Singapore's hub status, then so be it".

CAAS lobbies and fights for 3K's rights as if it is a Singaporean carrier, even though the 51% Singaporean "owner" was just given however many million it was by QF, to "purchase" 51% of 3K. Everyone in Singapore knows it is a sham set-up, but tolerates it because of the job creation which 3K supposedly brings to Singapore.

Rights which SIA lobbied for decades are now handed to 3K on a platter. QF through 3K will be able to use unlimited 3rd and 4th freedoms to most countries in Europe (I think only CDG and FRA are rights restricted).

3K can also fly SIN-NZ-USA, because there is unlimited 3rd 4th and 5th freedoms between SIN, NZ and the USA. CAAS will only be too happy to facilitate this for the QF Group.

The previous SIA management just stood by and allowed SIA's market share to fall from 50% to 35% in Changi over a decade. The new SIA management has woken up, and, seeing that QF announced their plans for 3K so far ahead in advance, has started to form their own LCC to take up most of the FCO and ATH rights before 3K applies for them.

Will CX and Hong Kong Airlines just sit by blindly and let 3K do in HKG what they did in Singapore?!

[training wheels]

HONG KONG (MarketWatch) -- Australia's Jetstar Group plans to launch a Hong Kong-based budget airline focused on mainland China routes and has started discussions with the city's government to apply for an air operator's certificate, the Apple Daily reported Thursday, citing unnamed sources.

I hope they've done their market research on this. LCC airlines in China don't seem to be popular with the Chinese traveling public. There's only one LCC in China at the moment (Spring Airlines) and the other LCC from Hong Kong (Oasis Airlines) went bankrupt a few years ago.

[Sonny Hammond]

The madness never ends with this lot.

[JMEN]

ROUTES ASIA: AirAsia (http://www.routesonline.com/news/29/breaking-news/105345/routes-asia-airasiaas-filipino-division-announces-base/)

This is the real low co in the region, look at the size, J*, Tiger, SIA Lo Co, none of them are even close to the size and power of Air Asia.

From a little 2 bit outfit 8 years ago, to the size it is today, huge!

I remember reading about a HK base for em but maybe they decided not? That would tell me something.

Also talk that AA setting up a Sing base, already heaps of flights ex Sing.

AA 656 flights a day, these are the guys to watch.

As I have said before and will say again, this region is going ape****! :D

[Sunfish]

Dumb as rocks. This is sheer fcuking madness.

[TSRABECOMING]

ROUTES ASIA: AirAsia (http://www.routesonline.com/news/29/breaking-news/105345/routes-asia-airasiaas-filipino-division-announces-base/)

This is the real low co in the region, look at the size, J*, Tiger, SIA Lo Co, none of them are even close to the size and power of Air Asia.

From a little 2 bit outfit 8 years ago, to the size it is today, huge!

I remember reading about a HK base for em but maybe they decided not? That would tell me something.

Also talk that AA setting up a Sing base, already heaps of flights ex Sing.

AA 656 flights a day, these are the guys to watch.

As I have said before and will say again, this region is going ape****! :D
And AA hire very cheap pilots too esp outside their Malaysian hubs. Both AA and J* are the same. Their pilots get less money just to save the company cost.

[standard]

The ignorance of QF management is astounding!!

If they think that they can just walk into these countries and market a successful LCC without resistance they are on f%cking drugs!!!

They seem to think that with their Weeties Packet Business degrees, anything that they dream up will be successful!

The only reason JQ has been as successful as they claim in Australia is because it's ridden on the back of QF's safety record and cannibalisation of QF routes.

I believe JQ Vietnam is underperforming and JQ Singapore's days of nil-resistance are numbered as SIA shifts into another gear to take JQ down.

JQ's new proposed airline in Japan with JAL is just insane!... JAL were broke 6 months ago!!! But i suppose QF will prop them up!

All i can say is good luck to these short sighted, money hungry f@cks!, Karma is a mutha, and it will come after them well after they have failed at their ridiculous uneducated plans for global domination in a marginal low cost market at the expense of QF!

[DirectAnywhere]

Wish I could claim it as mine, but I can't. Thanks again Ben!

Jetstar would get done faster than a wok full of noodles in Tsim Sha Tsui.;)

[ReverseFlight]

J* in Hong Kong will end up like Tiger in Oz.

A fish out of water.

[JMEN]

Don't be fooled by AA, yes they do pay less if they can depending on where. This is a rumour network after all.

Someone told me that AA in KL Capt on around 35k MYR which is around 11.5k USD. Living in KL that is pretty good coin I would imagine you could live large and still save a bit if you wanted to? Growing network for travel, sounds pretty good actually! That is of course if you want to live there and many do.

AA even opening cabin crew base paying more than J* or Tiger, interesting!

[TSRABECOMING]

yes that's only in Malaysia

[hongkongfooey]

Very unusual thread this one, everybody agrees :ok: That QF/Jetstar is run by :mad:ing idiots ;)

[Forward CofG]

Bonded employment in Hong Kong is against the labour ordinance.

I wonder how long Jetstar could hope to hold on to employees when they realize how expensive it is to survive in one of the most expensive cities in the world, especially on the types of wages they pay.

Could end up as a training ground for Air Asia and other carriers in the region.

[SMOC]

Air Hong Kong (the A300 freight mob) is based in HK but the crews are Singapore based to avoid the higher costs of HK, however I believe crews can request HK as a base but remain on the same COS.

There are ways around it and if the number of cadets applicants to CX from overseas knowing full well that they won't get expat housing is any sign, those with shiny jet syndrome or a quick command will fill the slots. :ugh:

[TBM-Legend]

no growth in the area??

Today's Financial Times:

FT) -- HSBC is planning to hire up to 15,000 people in fast-growing markets in Asia and Latin America over the next three years even after confirmation of the bank's plans to cull jobs elsewhere.
Stuart Gulliver, HSBC chief executive, revealed plans on Monday to cut up to 30,000 jobs by 2013, as HSBC reported stronger-than-expected first-half results.
The cuts, which analysts expect will come mostly in Europe and the US, are part of Gulliver's plan to strip up to $3.5bn from the bank's cost base by 2013.
Of the 5,000 job cuts already identified by the bank, 700 will come from the UK, the same in France and the rest from Middle-East and some parts of its Latin American operations.

[UnderneathTheRadar]

Joyce to announce tie up with China Eastern out of Hong Kong.

Qantas to launch Asian budget carrier (http://www.theage.com.au/business/qantas-to-launch-asian-budget-carrier-20120326-1vt3e.html)

This'll be good - you can't get your executives out of jail in China like Vietnam when things go wrong (just ask Rio).

UTR

[73to91]

Qantas to launch Asian budget carrier


Qantas is set to unveil a joint venture with China Eastern today which will create a new budget airline to be called Jetstar Hong Kong.

In a significant breakthrough into the northern Asian region, Qantas is expected to announce the Hong Kong joint venture with the Shanghai-based airline this morning at a press conference scheduled for 9.30am, AEDT. The new airline will use short-haul Airbus A320 aircraft, serving routes in Asia including China.

It will be modelled on Jetstar's other joint ventures in Asia. Last year Jetstar formed a joint venture with Japan Airlines to create Jetstar Japan, which will begin services later this year on domestic routes in the country.

Qantas's budget offshoot has its main Asian hub in Singapore, while it also has operations in Vietnam and New Zealand.

Jetstar's chief executive, Bruce Buchanan, has been talking up the airline's focus on north Asia over the last 18 months, including China.

China is already one of the largest tourism markets for Australia and has huge potential for growth in air travel as the size of its middle class swells.

The launch of a new budget airline in Hong Kong in partnership with the mainland Chinese airline will go some way to ease the pressure on Qantas, which ditched plans to launch a premium carrier in south-east Asia earlier this month. The expansion plan had been lauded as one of the main planks of chief executive Alan Joyce's strategy to turning around Qantas's premium international business.

The latest push into Asia, however, demonstrates that its expansion plans over coming years will rely heavily on Jetstar.


Read more: Qantas to launch Asian budget carrier (http://www.smh.com.au/business/qantas-to-launch-asian-budget-carrier-20120326-1vt3e.html#ixzz1qAPTwu8X)

[teresa green]

And the pilots and crew? What you want to pay them, will only give them accomodation under the Star Ferry wharves, the cost of living in HK is off the clock. Just when I thought it could not get any worse.

[Managers Perspective]

Finally announced.

Move over boys and girls, this is where the future is for the QF Group.

MP

[DirectAnywhere]

I could suggest just the bloke for the chief pilot's job.

[73to91]

Sorry 'UnderneathTheRadar' I was searching for previous thread whilst you were posting, didn't mean to duplicate your post.

Managers Perspective - it may be based in HKG but some JQ people should read up on Stern Hu

[booglaboy]

MP u r the reason Qf came up with the 'toolsafe' policy. It's to keep tools like u as far away from the operation as possible. Crawl back to the hole u came from and save us all from your stupidity

[coarsepitch]

No chance against AirAsia in the Asian LCC stakes. Good reputation, good marketing, good pricing strategy with a massive route network already.

[Luke SkyToddler]

So what's the story with the "joint venture" with China Eastern?

Maybe it'll be mainland pilots, and China Eastern putting up all the money to use the JQ brand?

[Angle of Attack]

Cathay and its Dragonair subsidary will absolutely maul it, no chance I reckon.

[Toruk Macto]

Not surprising that Qantas found it easy to find a Chinese operater to take their money , the Chinese carriers would have been knocking each other over to rob Qantas.
Big loss of face to travel low cost in China, means your not rich enough to travel full service.

[aveng]

So - how does this fit with QF managements decision to end the LHR-HKG service???? ie. feed in service.

Me thinks they are making it up as they go along.:ugh:

[ohallen]

Suspect you are right.

The terms Low Cost and Premium carrier seem to be changed at will or whatever suits the relevant spin.

[Iver]

So, given that the partner will be China Eastern, who will fly the airplanes - Jetstar or China Eastern pilots (or a combo)? Obviously China Eastern pilots would be a lot cheaper and the A320 is a mainstay of their current fleet... :yuk::yuk::yuk::sad::mad::mad::mad: Will the partnership require a mixing of internal resources including pilots?

[TIMA9X]

Qantas CEO Alan Joyce and Jetstar Group CEO Bruce Buchanan, have called a telephone conference for 9.30 am eastern daylight time.
It is the first full day of the Qantas retreat from London through the cancellation of its services via Hong Kong and Bangkok.The announcement .... How convenient......:rolleyes:

Little Qantas, big announcement? | Plane Talking (http://blogs.crikey.com.au/planetalking/2012/03/26/little-qantas-big-announcement/#comments)

Telephone conference! I guess that way you don’t actually have to face anyone who might want to ask akward questions. Score: Spin 1, Qantas nil.Yep, it appears the mainstream media haven't fallen for the hype this time either.. very subdued reporting in the business press.

The first thing that comes to my mind is convenient available slots at HKG


YMC7IynxIYk

[Sunfish]

Managers Perspective:

Finally announced.

Move over boys and girls, this is where the future is for the QF Group.

MP

You poor, deluded, stupid man.

Qantas has No Chance of making a profit out of the Middle Kingdom.

[Captain Dart]

...and for those of you with SJS, take it from me: the jets don't stay shiny very long in the filthy South China air.

[VR-HFX]

My enemy's enemy...is...

Well this is the perfect time for CX to turn both barrels on QF. There has been serious tension for some years now as QF management has proved to be as duplicitous with allies as they have been with shareholders, customers and staff.

With Air China on the register, CX could be looking seriously at jumping the fence to the Star Alliance. That would put them with Air China/Air NZ/ANA/Asiana/SQ/TG in this part of the world. It could well give some additional push to coordinating Silk/Tiger/Scoot/Dragon/Peach and Thai Lite into a pan-Asian LCC group.

As for One World. It would be an Irish wake with 2 bankrupt carriers JAL and AA as the musical accompaniment.

In the meantime they better practise those circling approaches if they are going to use the allocated slots at Sek Kong:ok:

[abc1]

Why did Anthony Bolton, one of the world's most successful fund managers had his fingers burned in China,with his ''China Fund''(not the real name).
Why did he miss out on the supposed success story that China perpetuates to the world daily?
In contrast, his ''Special situations fund'' which was run in the ''normal world'', grew to be one of the most successful in the world.
Then he tried China and the alleged growth story,mind you only by popular demand and returned from retirement, and to date it has returned nothing. Why?
Because what you make in China stays in China. A little known fact. You wish to take your funds home, 90% tax applies. Despite this the world's brainiacs and fervent supporters of globalisation would defend this puff of smoke economy vehemently and refute such claims.

So not to side track, as AJ and his boardroom laureates, clearly have no idea or vision about investing or organically growing a business, so its only logical to assume that they haven't done their homework either.
In the end it will still be the fault of the australians and not chinese(because they ''employ'' children which accept any terms and help the bottom line).

Care for some more snake juice and a slice of donkey d**k anyone?

Another story from a plethora of such similar cases:

How Not To Run a Business in China - BusinessWeek (http://www.businessweek.com/globalbiz/content/jun2010/gb20100625_997005.htm)

[the rim]

on the radio today AJ said he wanted to grow an Australian brand ......WTF you little irish pr$ck you have a great Australian brand in Qantas....a world wide icon with a great history....USE IT or loose it unfortunally the latter is what he and the rest want....sad really sad....the rim

[gobbledock]

Aagh yes Boston Bruce and Elaine Joyce receive another notch in their belt on the quest for Orange world domination. Dimwits, an epic failure awaits them.
However, they don't care if they lose money on the venture anyway, each new venture for the red or orange brand means the Australian CEO's receive an all new package of director fee's etc to add to their personal financial portfolios!

I can't wait to see the profit and loss statement this time next year. Can't wait to see the shareholders faces also.

[KABOY]

Care for some more snake juice and a slice of donkey d**k anyone?

Another story from a plethora of such similar cases

Australian uranium mining companies ripping off African countries? | Face of Malawi (http://www.faceofmalawi.com/2012/02/australian-uranium-mining-companies-ripping-off-african-countries/)

And one from the Australian file, dig back far enough I am sure we can find more too!!

[Wedcue]

Plenty of "fortune cookies" in the crew room with a welcome message to Jetstar HK..

LCC splashing out..

[boofta]

Must be almost time to talk to the pilots via Fair Work
making a ruling. Quick
Quick AJ make up another bull****e Asian expansion deal.
We must put up a smokescreen quickly to avoid actual
negotiations in good faith.
Quick, make up a story to scare the pilots,anything
will do. Hang on, we already tried this Asian expansion
thing, damn it I can't think of anything else!
It sucks being a stupid irish garden gnome without
a brain. At least he will be home for xmas.

[TIMA9X]

a rather interesting view from Ian Verrender

This time Joyce does it differently (http://www.smh.com.au/business/this-time-joyce-does-it-differently-20120326-1vuqg.html)
It also graphically illustrates the direction Joyce is taking, and the declining significance of the Flying Kangaroo to the Qantas hierarchy, which is rapidly being transformed into a Jetstar afterthought.


The deal announced yesterday contrasts starkly with last year's purported, and now abandoned, launch of a premium Asian carrier: a new airline that was to have been based somewhere in south-east Asia on an aviation plan that had more holes than a sponge in an alliance that was never consummated.
and Lateline Business for those who missed it

MYvymx_WZCo

[gobbledock]

Oh don't worry, this 'international marriage' will be well and truly consumated, however it won't be the Roo doing any of the fu#king.

[Sunfish]

Every new venture is another Thirty minutes of the Boards time at Board meetings and another few hours of reading and absorbing its reports.

How many ventures are there now within the Qantas "Group"?

How much time is being wasted on non essential discussion?

At what point will someone realise that while they have been captivated by the sideshows, Virgin has edged them out of the markets where the real money is to be made?

This is lunacy!

[mmciau]

Sunfish,

And when they are finished with Qantas, these 'icons' will pick up their lunchbox and look for another company to screw over.

Mike

[dragon man]

You would bet the house i reckon that Cathay will leave Oneworld now. With AA in chapter 11 and Delta and is it US Airways sniffing around them i think Oneworld might soon be a half world. Wonder how QF paxs will get to Rome if this happens.:D

[73to91]

Plane Talking (http://blogs.crikey.com.au/planetalking/)

Some interesting points in Ben Sanderlands post here.


interesting bit,

The Jetstar group CEO, Bruce Buchanan, said “We are exporting our expertise in running dual brands as in Qantas and Jetstar, not our jobs, …. nor our Melbourne headquarters.”
makes it sound like Melbourne is the HQ of Qantas and Jetstar !! I guess BB thinks it is.

[ohallen]

This investment of $96m and 3-15 aircraft by 2015 is supposed to be the future of the new Qantas replacing most of the QF Longhaul strategy?

I just don't get it that anyone buys this as visionary when it is only a play thing now and for atleast the next 3 years. It will consume management time and focus while the real game is being played by others????

What happened to the large aircraft order??

[LMFAO]

Good luck . I wish them every success. Hopefully Jetstar can get a fair share of the growth in Asia. You people astound me by wanting an Australian airline to fail.

[denabol]

Is this cart before horse? There is an article here by someone who claims to know the law about being an airline based in Hong Kong who is saying that if Qantas gets away with this you could see Lufthansa Hong Kong, and Virgin Hong Kong and anything Hong Kong.

So maybe this isn't gunna happen.

Jetstar Hong Kong may require rewriting SAR's Basic Law | Plane Talking (http://blogs.crikey.com.au/planetalking/2012/03/27/jetstar-hong-kong-and-some-flag-carrier-issues/)

[bored]

Expats in Hong Kong Pay the Highest Rent in The World : Expat News : Expat Info Desk (http://www.expatinfodesk.com/news/2012/03/08/expats-in-hong-kong-pay-the-highest-rent-in-the-world/)

To all you boys looking for that quick command in a shiny jet earning a lofty Jetstar salary, hope you're prepared to bunk in with your like-minded mates in a Tung Chung shoebox!!

[Gnadenburg]

And don't forget schooling in Hong Kong. I am just about to pay a $60,000AUD debenture for a good international school.

Maybe Jetstar pilots will home school like I heard they are doing in Singapore?

[TheWholeEnchilada]

LMFAO, I'm surprised you can talk with your mouth full. By the by the way, I'd barely call it 6 inches, let alone a foot.

[swh]

Might add that pilots will need to pay full Oz tax, as the Oz ATO works on the residence idea, not where you sleep or work, 23AG is dead. And the HK IRD works on the where the company is controlled idea. An airline cannot fly internationally out of HKG unless it is controlled from HKG, the 51% ownership rule (like Oz and SIN) does not apply in HKG.

CX pilots based in Oz pay full Oz tax, they are employed in Oz and are under Fair Work Oz, and also pay full HKG tax despite not working or living in HKG.

Jetstar will also need to justify the requirement for work visas, more than likely given an immigration stipulation to employ a reasonable percentage of locals in each employment group. HKG does not have GA, so that means an expensive cadetship which people cannot be bonded for under HKG law.

And lastly, HX and UO also have another 100 aircraft on order (so does CX/KA), does AJ think they will sit idle ? They are part of the Hainan Airlines group, the fourth largest airline in China.

[Mstr Caution]

Webb Expects Jetstar Hong Kong to Face `Difficulties', March 27 (Bloomberg) (http://www.ustream.tv/recorded/21394492)

Sounds like another case of AJ divulging his plans prematurely to established players in Asia.

[LMFAO]

I think you clowns have forgotten China Eastern. Bring that into the equation. Jetstar Japan will do very well with the JAL link up.

[aussie027]

SWH, your comments re where the company is controlled are expanded on here in Ben's Blog by Andrew Pyne-

Jetstar Hong Kong may require rewriting SAR's Basic Law | Plane Talking (http://blogs.crikey.com.au/planetalking/2012/03/27/jetstar-hong-kong-and-some-flag-carrier-issues/)

Pyne seems to have some good quals and knows what he is talking about.
If they do not get that regulatory approval it looks like the idea will be well and truly sunk.

[Taildragger67]

Hopefully Jetstar can get a fair share of the growth in Asia.

Indeed. But it may not be so simple.


You people astound me by wanting an Australian airline to fail.

That's just the point. I'd suggest there are very few on these boards who want an Australian airline to fail. Quite the opposite, in fact.

[1a sound asleep]

Why would China Eastern need/want some pathetic little upstart of an airline like Orangestar?

[Capt Kremin]

LMFAO, you lost all your credibility when you confidently predicted QF would buy Strategic to fly the 787.

Troll.

[stillgoing]

Might add that pilots will need to pay full Oz tax, as the Oz ATO works on the residence idea, not where you sleep or work, 23AG is dead. And the HK IRD works on the where the company is controlled idea. An airline cannot fly internationally out of HKG unless it is controlled from HKG, the 51% ownership rule (like Oz and SIN) does not apply in HKG.


What has the Australian tax laws and the Oz ATO got to do with it?

Australian arrogance never surprises me. Just because it is Jetstar, why does it have anything to do with Australian tax laws? Do you automatically assume the pilots employed will be Australian? Not Canadian? NZ? Samoan? Unemployed bum?

Are you trying to say that if a Canadian is employed he will be subject to Aus tax laws as that is where (we presume) the airline is controlled. Get your hand off it!

BTW, since Jetstar Fltops department and 80% of it's Check Pilots are Ex Ansett it will be interesting that eventually these guys will be controlling QF. Based on the predictions that Jetstar will expand at the expense of QF. Not my words just the comments made in this thread and others.

Cheers!

[busdriver007]

Orangestar went broke.....bought out by Newstar...........

[Ollie Onion]

Yea woop woop, lets hope that this brings Jetstar down and that the bang on effect will be for Qantas to go down the drain as well. Then we will all get what we want...... we will all be out of work :ok::ok::ok:

Ollie :{:{

[Mstr Caution]

I seem to recall SQ airlines wanted equity in China Eastern Airlines (CEA)

Then along came CX, with a higher bid for that same equity.

CEA shareholders (if my memory services me correctly) scuttled the deal as not being in the interest of China Eastern.

BB reckons he's going to take airline management expertise up to Hong Kong.

The arrogance of this mob is unbelievable.

[Ollie Onion]

"the arrogance of these people is unbelievable"

Well he is Australian! :}:}

[Mstr Caution]

Why would China Eastern need/want some pathetic little upstart of an airline like Orangestar?

1A - They wanna know what Boston Bruce's plans for a low cost carrier are for HKG, so they can then pull out of the deal with that IP. :}

[KABOY]

The ownership of Dragonair prior to the CX takeover was 38% CNAC and 28% CITIC, both of these companies were mainland owned and Hong Kong based.

China Eastern will be setting up a holding company that is no doubt based in Hong Kong which will meet the basic law requirements. HNA group has done exactly the same with Hong Kong Airlines.

The Basic Law was written to ensure that mainland chinese companies would not be disadvantaged.

A foreign firm without Hong Kong or mainland Chinese investment would have no chance, but Joyce has secured China Eastern. Their biggest shareholder is the Chinese government.

[pigdriver]

Gnadnberg and crew, not sure where you re getting your info re JQ Asia(read Singapore), but the guys are doing very well. Bringing home a very good salary, and so far from what I have heard is EBA guys are queuing up to get onboard!!
20000+k a month is not bad for 15 days work in anyone's language!!!
I also agree that JQ japan will do very well, but HKG???? Who knows......
Good luck to the QF guys still hanging in there, I think you are going to have an interesting few yrs ahead of you....

[Gnadenburg]

Is that 20K AUD?

[DEFCON4]

Jetstar is a franchise with minority holdings in each of it ventures.
The majority of the profit goes to the majority shareholder.
How will the profit aportioned to Jetstar find its way back to the Qantas group.?
Most if not all countries heavily tax repatriated profit. Particularly Asian economic jurisdictions.
Surely the time effort and money poured into these ventures would be better directed to improving and growing the Qantas mainline entity.
The duplication of costs for example seems to be either poorly thought out or ill considered.

[neville_nobody]

the guys are doing very well. Bringing home a very good salary, and so far from what I have heard is EBA guys are queuing up to get onboard!! 20000+k a month is not bad for 15 days work in anyone's language!!

That's a rather misleading statement as living as a non citizen anywhere in the world is expensive.

I would suggest that 240K in Singapore wouldn't leave alot left over if you had 2-3 kids. Remember you are paying full fare for schooling/health. Rent is expensive, cost of living is expensive. Don't get me wrong 240k is reasonable but you won't be living large by any stretch of the imagination.

Why do you think Emirates offer schooling/health/accommodation as part of their package?

Same goes for Jetstar HKG. As a small airline there won't to many problems. However if it is successful and grows I don't know how they will crew it. You can't cut corners on expat salaries and the cost of training local Chinese crews would be prohibitive.

Jetstar Australia get free pilots that ain't going to happen in Asia if you want a big airline.

[Taildragger67]

Is that 20K AUD?

Even if it's SGD, if they're on local (SG) contracts then factor in the lower tax rate and you're not doing too badly; probably more in hand than someone getting the same number in AU. It's all paid gross (tax is paid in the following year, by the taxpayer) with no super / pension deduction (if you're not a citizen or permanent resident).

NN is correct, a foreigner does then have to make their own arrangements for health cover, schools, pension etc. and cars are excruciatingly expensive, but SGD 240k / year can buy you a fairly reasonable lifestyle in SIN city.

Put it this way, a single-earner household in Sydney can find it tough on AUD 240k / year, after the mortgage, car and kids; same in Sing. You probably wouldn't be far ahead, but you probably wouldn't be too far behind, either.

[Sunfish]

Defcon4's comment is on the money. There is nothing for the Qantas shareholder in any of these deals.

There is everything for the Board and Management because:

1. On the surface, these ventures look attractive "Huge Asian Markets" etc.

2. The Board and management are going to "look very busy" implementing this strategy. There will be lots of important trips and meetings...and photo opportunities. I once had a group general manager colleague who excelled at this, his presentations were impeccable, his meetings and organisation charts were superb, but...

3. There is a need to generate a financial return in cash to Qantas shareholders from all this activity. That is the presentation slide I would want to see.....But I guess I'm old fashioned - show me the money.

[The Guru]

Stillgoing is spot on!


Australian arrogance never surprises me. Just because it is Jetstar, why does it have anything to do with Australian tax laws? Do you automatically assume the pilots employed will be Australian? Not Canadian? NZ? Samoan? Unemployed bum?

Are you trying to say that if a Canadian is employed he will be subject to Aus tax laws as that is where (we presume) the airline is controlled. Get your hand off it!

With pilot cadet training courses now flourishing with Chinese based airlines and a lot of that training being done by Australians in Oz at places like Oxford and FTA, it makes sense that the budget workforce will come from China Eastern, with the aircraft and branding from Jetstar.

Growth in Hong Kong will occur at the expense of one (or more) of the other established Jetstar franchises.
It will obviously all be under local terms and conditions, placing pressure on the other businesses to lower their labour costs. Welcome to the D-scale! :ugh: :ugh: :ugh:

The ATO will not see any tax revenue, because as a group company, the books will be manipulated to ensure the loss is transferred to the necessary entity. So Australians are yet again training themselves out of a job, and helping out another country! :uhoh: :uhoh: :uhoh:

[C441]

The ATO will not see any tax revenue, as a group company, the books will be manipulated to ensure the loss is transferred to the necessary entity.

It's not just the ATO that will miss out.

[D.Lamination]

From a friend: some excepts from the HK press:

Jetstar Hong Kong faces bumpy take-off
Various

Extensive media coverage on the MOU signed between Qantas and China Eastern on setting up a HK-based LCC Jetstar HK. China Eastern chairman Liu Shaoyong expects the carrier to take up five million passengers by 2015, equivalent to 6% to 7% market share, and generate a profit from 2016, the concerns of “principal place of business” of the planned carried was raised by SCMP and Ming Pao.

Aviation experts say Jetstar HK may encounter problems in regulatory and licensing issues. One issue is whether it can be designated as a HK carrier by the Government.

They said it was difficult to see how Jetstar HK could qualify as having its principal place of business in the territory if there was no decision-making in Hong Kong.

Countries which had air services agreements with HK could deny the new carrier landing rights if they felt it’s not a truly HKG airline. Jetstar HK is also expected to face opposition from incumbent carriers seeking to block or delay its air transport licensing application.

The HK Government was quoted saying that “new operators need to bring competition into the HK market and offer more choices to the consumers”.



I guess you know who "aviation experts" are - the Airline Planning depts of CX-KA and HX

[piston broke again]

Surely if this expedition Joyce and his motley crue are on falters, he'll have a pretty big target on his back...I'm surprised they have let him get this far after the MAS fiasco.

[TIMA9X]

Surely if this expedition Joyce and his motley crue are on falters, he'll have a pretty big target on his back...I'm surprised they have let him get this far after the MAS fiasco. It appears AJ & BB have the total support of the board as long as the share price heads North, for now anyway...

https://lh5.googleusercontent.com/-oWP_yoOyEqQ/T3KffCmexlI/AAAAAAAABtM/-DSqIIyQu8A/w500-h285-k/28th-March-qantas.JPG

All looks good today, but for me I see a problem with the management side of the different setup structures for J* SIN, Vietnam, Japan and now HKG.. all very different markets with different government regulations & market pressures... All we know so far is J* Singapore finally made a profit of only $18 m after entering the market in 2004.... propped up by who? :}


All I see is, a sea of red ink similar to the setup time frame it took to get the Singapore business to work.... (assuming SIN is indeed making a profit in its own right) confusing to say the least..

I think Matt O'Sullivan makes some good points/observations in this piece he wrote yesterday...


Breathing space for Joyce but locals won't make life easy


Read more: Breathing space for Joyce but locals won't make life easy (http://www.smh.com.au/business/breathing-space-for-joyce-but-locals-wont-make-life-easy-20120326-1vupz.html#ixzz1qNyK69Aw)


THREE weeks after finally ditching plans for a premium airline in Asia, Qantas's boss, Alan Joyce, has won a reprieve from investors on edge about the company's direction.


The inking of a deal to form a budget offshoot in Hong Kong, in partnership with China Eastern, gives Joyce much-needed breathing space. It also helps bolster his long-term aim of tapping China, the jewel in the crown of the world's fastest-growing regional market.


Unveiling the 50:50 joint venture yesterday, Joyce was keen to emphasise the importance of Jetstar having first-mover advantage on the doorstep of mainland China.


Securing China's second-largest airline as an equity partner is no small feat in a country where the only airline to make significant inroads is Cathay Pacific through its links with Air China.

But in the notoriously volatile aviation industry, turning Jetstar Hong Kong into a profitable enterprise and using it as a launch pad for entering the domestic travel market in China will be a tough assignment.
Qantas and Jetstar, the airline Joyce ran until 2008, risk inciting the formidable strength of Cathay Pacific and its offshoot, Dragonair, which can be sure to defend its home turf aggressively.

History shows airlines have found Hong Kong akin to a battleground. Remember Oasis, the budget Hong Kong airline that collapsed four years ago with losses of almost $HK1 billion ($123.1 million)?


Although Cathay has not shown interest in entering the low-cost travel market, it now has every reason to turn Dragonair, which operates the same A320 planes as Jetstar, into a fully-fledged low-cost offshoot.


Then there's Hong Kong Express, the offshoot of Chinese-backed Hong Kong Airlines, which will be reshaped as a low-cost airline later this year.
High airport charges and labour costs have long been a deterrent to airlines considering Hong Kong as a base for a budget carrier.
Of course, the bigger prize is the chance to fly domestic routes in China, something foreign airlines are banking on to become possible through joint ventures with Chinese partners within the next decade.


As growth slows to a canter outside of Asia, they are pinning their hopes on the Chinese government replicating a gradual opening up of aviation markets in countries such as Japan.


The question is whether Qantas and Jetstar run the risk of handing China Eastern the know-how to set up a low-cost airline, only to find their Chinese partners replicating the model on their own on the mainland.
Joyce obviously thinks it is all worth the risk. With a key plank of his strategy to turn around the fortunes of Qantas's premium international airlines consigned to the bottom drawer, the push into Hong Kong demonstrates the Flying Kangaroo's fortunes will rest firmly on Jetstar.


Read more: Breathing space for Joyce but locals won't make life easy (http://www.smh.com.au/business/breathing-space-for-joyce-but-locals-wont-make-life-easy-20120326-1vupz.html#ixzz1qNvwMksx)

[TheWholeEnchilada]

The question is whether Qantas and Jetstar run the risk of handing China Eastern the know-how to set up a low-cost airline, only to find their Chinese partners replicating the model on their own on the mainland.

GM's experience here is instructive: China to GM: Give us Chevy Volt secrets or it'll cost $19,000 more (http://green.autoblog.com/2011/09/20/china-to-gm-give-us-chevy-volt-secrets-or-itll-cost-19-000-mo/)
The Chinese government is refusing to let the Volt qualify for subsidies totaling up to $19,300 a car unless G.M. agrees to transfer the engineering secrets for one of the Volt's three main technologies to a joint venture in China with a Chinese automaker, G.M. officials said. Some international trade experts said China would risk violating World Trade Organization rules if it imposed that requirement.

How about BMW: China Puts The Screws To BMW (http://www.testosteronepit.com/home/2011/9/12/china-puts-the-screws-to-bmw.html)
..It's not a law, but every car manufacturer that wants to build cars in China has been given to understand in closed-door talks that it must share "New Energy Vehicle" technologies with Chinese partners. The deadline is 2015. Car manufacturers have responded by offering to create China-only brands. VW already has decided on the brand Kaili, Daimler is following suit, and now BMW can no longer drag its heels.

Its all about technology transfer, the Chinese aren't stupid.

All warfare is based on deception
-- Suz Tzu

[thrustpig]

9X is making a good point on the LCC know-how. It wasnt long ago when some PRC carriers were trying to get their cadets some "hands on" with offers of FO's for free to asian LCCs'. Even 3K / jetstar asia-singapore knocked back the offer supposedly due to "possible competitive disadvantages when the cadets return home." How does it go now, if you cant beat them, bend over and let them #$%^& you."

[-438]

I can't help thinking the grand plan for Jetstar HK is a staging post for long haul A380 to LHR in orange & silver.

The only possible reason QF could pull off the Hong Kong-Heathrow in the Olympic year & lend the slots to BA is to have them in the bag when Jetstar A380's can take over the route and it doesn't appear as a transfer of business.

Qantas management ordered the wrong aircraft it the A380, when they should have ordered B777s. The Qantas A380 config is too heavy and not suited to routes over 12 hours due to excessive fuel burn.

Current QF management can not handle the loss of face & order the B777.
The only way to save this once great company is to change management.

Lets hope QF/Jetstar management have made this announcement too early once again and they fall on their sword.

[Sunfish]

What will happen to the Qantas Asian ventures is entirely predictable and not good.

[gobbledock]

Living the dream AJ? Shares have inched their way toward $1.80!!
Oh so exciting. However at present things are all exciting indeed, media hype, pomp and ceremony, hell some shareholders would be packing major wood in their shorts by now!

But wait til AJ and BB realize the Chinese kiddies in the playground don't like to be friends. The Chinese kiddies don't want to share, why those kiddies like to take take take.
Hang on, what was that, somebody just mention more American mischief in the Middle East? What do you mean huge oil price rises coming? Why didn't somebody tell me the Euro would collapse by the end of 2012? Hey thats not fair, I didn't know that China's got escalating inflation and there would be a future downturn in Asian tourism and business by 2013?

Oh great, just great, why didn't somebody warn me about the potential for disease outbreak, economic catastrophe's, 'global partners' not sharing the spoils, a sudden massive attack by the competition, an oil price crisis and, and, and oh crap, where's that blarney stone.

[Sunfish]

This is the business culture you are going to have to interact with Qantas. Are you ready? I don't think so. Read, Mark, Learn and inwardly digest.


HONG KONG—Two billionaire brothers who are among the city's most powerful property tycoons and the city's former No. 2 official were arrested Thursday on suspicion of bribery in a case that gets to the heart of city's business culture and its economy.......................


Sun Hung Kai Chairmen Arrested in Hong Kong - WSJ.com (http://online.wsj.com/article/SB10001424052702303816504577311171544624532.html?mod=googlen ews_wsj)

[gobbledock]

Very very good example Sunnie. If these two gentlemen can get pineappled then Herr Alan and his little airline, and of course Herr BB, had better be doing their sums.
To be honest, this Asian venture is going to be lots of fun to watch over the coming few years if it survives that long. Again, it is the Qantas staff beneath the executive level that my heart bleeds for.
Please please relocate AJ, BB and all the execs to China itself :E

Tick tock

[The The]

The only possible reason QF could pull off the Hong Kong-Heathrow in the Olympic year & lend the slots to BA is to have them in the bag when Jetstar A380's can take over the route and it doesn't appear as a transfer of business.


Numerous 744's were coming up for D checks and they weren't prepared to spend the money on them to get them through the Olympic bubble but then face a post Olympic slump when they would withdraw anyway.

[Captain Gidday]

Oops. Forgot to plan for those D checks or lease some new equipment. Talk about reactive planning.
Apart from the Olympics, it is also a Jubilee year. Historically travel to Britain has been well up in Jubilee years and the following year. And with the Aussie strong and the Pound very weak by almost any historical standard, why wouldn't you go back to the 'Mother Country' for a visit. [OK, my Mother isn't English but that's what everyone called it when I was a boy]. Maybe it's just a Catholic thing.

[ohallen]

Demonstrates yet again the lack of value they place on the QF Brand and the consequences of a cost cutting mentality to drive a company.

Complete lack of vision in actually growing, building or defending accrued/embedded value in a business.

Still cannot fathom the logic of handing over routes to others.

Then again Exec bonuses will be protected in the measure of success.

[Mstr Caution]

Qantas & Jetstar - Growth in Budget Airlines - YouTube

At 3:25 - Hong Kong Constitution regarding domicile.

MC

[Trevor the lover]

Once again AJ shows that when quoting figures he will state what he wants to enhance the argument rather than what is the truth.

In the video above - "Australia's population is just 20 million." What happened to the other 2.9 million?

Yes, maybe a minor point in terms of the argument - but 2.9 million is an error of 14%. Fairly consistent form from AJ.

[indamiddle]

wasn't AJ a former mathematician?
flaming prostate must be acting up again.

[ITman]

AJ has his Singapore population figures wrong as well, it was 3M about 20 years ago now 5M..... even bigger error...!

[73to91]

Jetstar Hong Kong under fire from SAR establishment paper (http://blogs.crikey.com.au/planetalking/2012/04/19/jetstar-hong-kong-under-fire-from-sar-establishment-paper/)


It has taken some time for a considered response from the Hong Kong government to the Jetstar Hong Kong plan to appear in its well connected and long established English language daily the South China Morning Post but this editorial would not be welcome at Qantas.
Jetstar Hong Kong should have no claim on home-ground advantages
Albert Cheng says a HK-tagged carrier should not have access to air rights here
Apr 18, 2012
Australia’s Qantas Airways and China Eastern Airlines have teamed up to launch a new budget airline for the region, Jetstar Hong Kong.
The two are prepared to invest nearly US$100million each to pursue the fast-growing Asian market covering the mainland, Japan and South Korea, among other destinations.
The new carrier plans to take to the skies in the middle of next year with three Airbus A320 aircraft.
By the end of 2015, it plans to have 18 jetliners providing low-cost services for millions of passengers.
Jetstar Group has its business headquarters and maintenance base overseas. So the new budget airline will only be Hong Kong-tagged but not a Hong Kong-based operation. This will infringe Hong Kong’s air traffic rights and directly harm local interests with their principal place of business in Hong Kong.
Such a joint venture would create unhealthy competition in the aviation sector and erode the rights and interests of local airlines. Worse, it would set an undesirable precedent and open the floodgates to foreign airlines knocking on our door wanting to provide low-cost airline services for regional markets.
The short-term benefits offered by Jetstar Hong Kong would eventually bring long-term losses to the city, challenge our status as an international aviation hub and threaten to weaken our competitive edge.
Air traffic rights that allow an airline to pick up passengers from one foreign territory and fly them to another foreign territory are privileges that are heavily guarded by any country or territory. They are not something to be given away unconditionally.
If a country or territory decides to open up its airspace or assign air traffic rights to another country or territory, they will sign air treaties that offer mutual benefits. Only airlines that are owned by or incorporated in that country will be given air traffic rights to operate routes into and out of that country.
Since the handover, Hong Kong’s status as an aviation hub and its civil aviation sector have been under intense focus. The Basic Law gives over significant space to dealing with Hong Kong’s aviation sector.
Article 132 states that all air service agreements providing services between other parts of China and other states and regions with stops in Hong Kong, and air services between Hong Kong and other states and regions with stops at other parts of China, shall be concluded by the central government. And, in concluding such agreements, Beijing shall take into account the “special conditions and economic interests” of Hong Kong and consult its government.
Furthermore, Article 134 specifies that Beijing shall give Hong Kong the authority to negotiate and conclude with other authorities all arrangements concerning the implementation of its air service agreements. It allows the Hong Kong government to issue licences to airlines incorporated in Hong Kong and having their principal place of business in the city.
Without getting prior approval from the government, Qantas Airways and China Eastern Airlines might have jumped the gun. They have gone against the principles and rules laid down by the Basic Law. This is something we cannot tolerate.
For a region to become and then maintain its aviation hub status, there are many preconditions. Besides having all the geographical advantages and proper infrastructure, it needs to have a strong home carrier with an extensive network of routes.
Cathay Pacific is a genuine Hong Kong-based home carrier, offering extensive global connectivity for passengers and serving the city well. There are other examples, such as Dragonair, Hong Kong Airlines and Metrojet.
The government must remain vigilant in safeguarding our air traffic rights. It should also make it a priority to protect the interests of Hong Kong’s own airlines because their well-being is critical to the sustainability of our hub status and the survival of our aviation industry.
Albert Cheng King-hon is a political commentator.
While it would be wrong to jump to conclusions about where the venture is headed on the basis of this article alone, the newspaper has an exceptional track record when it comes to reading the political realities in the SAR.

It is telling observers that Qantas has a fight on its hands, and that like the ballyhoo that was rolled out over the Red Q (http://blogs.crikey.com.au/planetalking/2012/03/09/red-q-is-dead-q-but-weve-know-that-for-a-while/) Asia based minority owned narrow body premium carrier that came to nothing after six months of dictation by Qantas to the aviation powers in Kuala Lumpur and Singapore, communication via press release is an amateur way of conducting business negotiations in the hemisphere


Plane Talking (http://blogs.crikey.com.au/planetalking/)

Latest News Columns & Insight from Hong Kong & China | SCMP.com (http://www.scmp.com/portal/site/SCMP/menuitem.2c913216495213d5df646910cba0a0a0/?vgnextoid=0ad52a62540c6310VgnVCM100000360a0a0aRCRD&vgnextfmt=teaser&ss=Columns+%26+Insight&s=Opinion)

[TheWholeEnchilada]

This is a lengthy read, and at first doesn't seem to fit the Jetstar Hong Kong thread, but reading through it becomes clear it is highly relevant for Qantas when dealing with Chinese partners.

The End of the Communist Dynasty

By Craig Tindale

There is a crisis of confidence unfolding in China that is likely to end in a full scale capital flight and a disorderly collapse in both economic and political cohesiveness. The lowering of the reserve requirements for Chinese banks, while reported in the media as a loosening of credit, is more likely an early sign of capital flight. Similarly reflective of this, are the large increases of gold purchases by Chinese citizens who have few diversification options away from the RMB.


China’s wealth is concentrated abnormally within an elite 1% of high net worth individuals. This 1% command up to $5 USD trillion dollars in wealth. If these elite should rush the doors to move their wealth out of the country using the multitude of avenues that exist to evade Chinese capital controls, then the Chinese banks may face the biggest bank run in history.


The problem is that while the propaganda machine might control the minds of the masses, the wealthy elite are virtually immune to thought control and are likely to be the best informed and have the means to be the first to leave. Reserves are mostly tied up in USD and treasuries cannot be liquidated for fear of raising the value of the RMB. Along with further eroding trade surpluses, this means a capital flight by the elite occurring with massive insolvency in the credit market could vaporize the Chinese liquidity in what will seem like an economic Cat 5 hurricane.


The Chinese economy is in the final stages of largest Ponzi scheme ever devised. Minsky outlined three distinct phases in the credit cycle: In the first phase known as the hedge phase; economic actors borrow money to invest in order to create goods to sell for profit. In the second stage, the speculative phase, more economic actors join the economy, borrowing money to invest in assets in the expectation that these assets will rise in value. In the last stage, known as the Ponzi stage, economic actors borrow in the hope that conditions will improve. This borrowing is designed to avoid insolvency during what is perceived or hoped to be a short to medium term setback in economic conditions.


Some may argue that the Minsky market driven instability hypothesis is not suited to China and that they are chiefly a centrally planned state controlled economy. This reflects a fundamental misunderstanding of Minsky’s work. The Western economies’ attempt to centrally plan economic activities from the consumption end, the state based capitalism that China has become known for attempts to centrally control the economy from the production side.


The Chinese production economy cannot be seen in isolation from the consumption economies of the West; debt based consumption provided the umbrella under which the Chinese miracle grew. When the GFC collapsed Western debt based consumption reacted by providing the last line of Minsky Ponzi financing via government bail-outs. Governments faced with banking collapse chose keep the system going by transferring debt from private hands to those of the taxpayers.


The Chinese, faced with a massive collapse in export income, chose to keep the economy functioning by stimulating the economy with massive capital works and lending. In both cases the government was the provider of the last line Ponzi financing to keep the economy rolling. Now that this Ponzi financing has been near exhausted in both the West and the East, profound collapse is the only logical outcome.


Whereas the Minsky moment in Western economies comes by way of over-enthusiastic private borrowers, the instability in China is potentially more virulent in that its source is an over-enthusiastic government: the former relying on the solvency of borrowers and the later relying on the solvency of the state. Some argue that while the Chinese state remains solvent, no matter how many empty buildings exist they can continue the game. The question then is – Are they solvent and how long can they remain that way? The exponential growth in Chinese debt and mal-investment and the very unlikely return of Western demand means the system will become insolvent in the short to medium term.


The number of investors who have suffered losses due to widespread fraud is growing exponentially and the list of those that have racked up substantial losses includes some of the leading investors in the world. This list of investors includes investment legends like Anthony Bolton one of Europe’s most well-known fund managers, legendary investment icon John Paulson have been the victims of fraud, the scale of which has never been seen in economic history.


Bolton came out of retirement in 2009 specifically to invest in China and his investments have turned into a complete disaster. In fact, Bolton was forced to offer an apology for his companies poor performance after losing 28.9% of its nearly 430M pound capitalization in the last six months of 2011 Anthony Bolton apologises for China fund’s poor performance (http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/8889736/Anthony-Bolton-apologises-for-China-funds-poor-performance.html). Rampant fraud was evident right at the core of his investment difficulties. This appears to have reached epidemic proportions right across the Chinese corporate landscape, so much so that Bolton has been forced to turn to private investigators after investors in Fidelity’s China fund suffer losses of 21% (http://www.guardian.co.uk/business/2011/nov/14/fidelity-china-fund-slumps).


Bolton wasn’t the only one. The legendary investor John Paulson is being sued by his investors after losing $462M of his 23B fund investing in Sino Forest Paulson Fund Sued Over Sino-Forest Losses (http://www.bloomberg.com/news/2012-02-21/paulson-fund-sued-over-sino-forest-losses.html). The Sino Forest debacle was kicked off with a 19 page report issued by Carson Block of Muddy Water Sino Forest Report (http://www.muddywatersresearch.com/wp-content/uploads/2011/06/MW_TRE_060211.pdf). This report didn’t mince words and came out form the start comparing the company to Bernie Madoff’s Ponzi scheme.


“Like Madoff, TRE is one of the rare frauds that is committed by an established institution. In TRE’s case, its early start as an RTO fraud, luck, and deft navigation enabled it to grow into an institution whose “quality management” consistently delivered on earnings growth.”


The problem with Sino Forest was that most of the forests the company claimed as assets simply didn’t exist. Rather than being a few isolated cases, these examples signal an epidemic of systemic fraud and corruption that pervades entire Chinese economy. This systemic fraud directly correlates to Minsky’s final Ponzi phase: cheap credit, floods the economy, eventually exhausting useful ways it can be utilized. This, together with the lack of systemic controls that accompany cheap credit, initially causes mal-investment into projects that will never return enough to service their debt. Then, having exhausted all reasonable avenues of mal-investment, large amounts get siphoned into the hands of criminal opportunistic economic agents who game the system.


In December another Chinese stock research firm Citron came out with this report Qihoo : Fraudulent Financials,Terminal Business, Or Both….You Decide. Citron maintains price target of $5 (http://www.citronresearch.com/index.php/2011/12/05/qihoo-maintains-price-target-of-5/). In late February 2012 they submitted this report to the SEC Citron Reports to Securities and Exchange Commission (http://www.citronresearch.com/wp-content/uploads/2012/02/QIHU-bull-bear-fraud-final-for-pub4.pdf). Australian, John Hempton of Bronte Capital, famous locally for uncovering the Astara Trio Capital Ponzi scheme, has been instrumental in uncovering a long list of Chinese frauds including: Longtop Financial Technologies (http://brontecapital.********.com.au/2011/05/longtop-makes-announcement.html), Universal Travel Group (http://brontecapital.********.com.au/2011/04/universal-travel-group-auditor-resigns.html), China Media Express (http://brontecapital.********.com.au/2011/04/china-media-express-and-comment-on.html), and China Agritech (http://brontecapital.********.com.au/2011/03/china-agritech-how-should-i-reply-to.html)


A few weeks ago, Boshiwa Holdings the licensee and manufacturer of Harry Potter related toys plunged 42% (http://www.bloomberg.com/news/2012-03-15/harry-potter-licensee-boshiwa-plunges-as-auditor-quits-correct-.html) on news that its auditor had quit. In late February Puda Coal raised a $100M from US investors based coal assets that were never there: A Fraud Went Undetected, Although Easy to Spot (http://www.nytimes.com/2012/02/24/business/sec-charges-reveal-fraud-in-chinese-company.html?pagewanted=all).


What is China’s response to this plague of fraud in Chinese US listed stocks? They intend to make it very difficult for the Big 4 to continue to work in China ‘Big Four’ auditors brace for big changes in China (http://in.reuters.com/article/2012/02/28/china-accounting-idINDEE81R04B20120228). In the case of Longtop Financial, Deloites, the firms’ auditors have been unable to provide the SEC with any documentation about the collapse for fear of breaking China’s state secrecy laws.


These frauds are extremely sophisticated and have gone undetected by the large audit firms. They are not just the result of a series of independent events undertaken by similarly dishonest business people acting alone. Rather, a recent report suggests they are part of a systemic network of agents acting inside and outside of China whose main purpose is to perpetuate investment fraud on a scale never seen before in economic history.


One of the central players in uncovering Chinese investment fraud research is the firm Muddy Waters (http://www.muddywatersresearch.com/) who recently published a white paper entitled Frauducation Part I (http://www.muddywatersresearch.com/wp-content/uploads/2012/04/MW_FrauducationWhitePaper.pdf): in this paper the author outlines how Chinese businessmen are taught and sponsored by experts, who sponsor and coach fraudsters in subjects like falsifying records, accounting, assets and the various methods needed to pull off grand frauds. When a character like John Paulson gets taken for nearly half a billion there is a lot of motivation on the criminal side to get things right


The fraud school’s assistance went well beyond providing document and accounting templates. The fraud school provided a network of “friendly” auditors that would help the companies get through the initial due diligence processes. The fraud school also helped companies game the due diligence process by providing the companies with contact information of suppliers and customers to give to potential investors. The
suppliers and customers were frauds – the school hired them merely to play a role and answer questions according to the script. (Source: Muddy Waters)


Fraud is central to the Chinese system, it has emerged via virulent mutation of the ancient tribute system. In the past, these tribute systems reflected an ancient form of private regulatory order. In the past there was often a limited basis for the rule of law to govern transactions. Throughout Chinese history, trade relied on systems of tribute to ensure secure business and political outcomes.


These old systems were still essential throughout Asia up until only a few decades ago because, transacting parties could not rely on the rule of law to ensure the security of terms governing a transaction. In China this has evolved into government sponsored systemic corruption with Western motivations of greed and criminality. It infects every level of the private and public sector.
A small piece of it was exposed recently in the “Bo” scandal, where there are reports of it infecting the families: Not only the Bo Lai family but even to the highest level of government- up to and including the family of Propaganda Minister, Liu Yunshan .Who 16 elder retired elder statesmen petitioned to have sacked (http://english.ntdtv.com/ntdtv_en/news_china/2012-05-22/16-Retired-Chinese-Officials-2nd-Petition-to-Dismiss-Zhou-Yongkang-and-Liu-Yunshan.html)


Rather than being seen as isolated incidents, these examples reflect a cultural meme, a way of doing business that represents the standard operating procedure for a large segment (if not all) of the Chinese economy.


The epidemic of fraud sits like a structural element across both the private and government sector further magnifying the mal-investment caused by the massive credit expansion. For example: The high speed rail project audits reveal millions have been siphoned (http://www.bbc.co.uk/news/world-asia-china-17429123) toward corrupt contractors and government officials. This amount merely represents the siphoning on the core budget and doesn’t reflect the extra costs loaded by each of the contractors.


Take for example Hollysys (http://brontecapital.********.com.au/2011/07/hollysys-blog-post-inspired-by-railway.html), the provider of signalling and control systems for many the Chinese high speed train projects. This company managed to earn `154M (2009)-175M(2010) with a trifling $3.1 M in capital equipment. Their explanation for this is they outsource all manufacturing, which is a little odd since they have such massive buildings, covering hundreds of acres and $24M in inventories.


On its website, the company boasts of over 40 major projects covering everything from Nuclear Power station instrumentation to cutting edge high-speed rail. All of these projects combined require no more than $3.1 million in capital equipment? In a country where corruption is evident at every level, the corruption apparent in the high-speed rail project was even too much for the Chinese system to carry. China’s Communist Party has expelled a once-powerful former railways minister accused of serious corruption, state-run media report (http://www.bbc.co.uk/news/world-asia-china-18237731).


China is a country that is essentially a directly funded fiat system, whereas in a traditional fiat funded system the state prints money to directly purchase goods and services. Here, the Chinese system achieves the same outcome by lending with little prospect of repayment. A system that perpetually rolls over debts does not constitute a credit based money system. Whether they are corporations or individuals, many of state affiliated economic agents simply cannot default because the lender is unwilling to foreclose on an influential political player. If you cannot pay you can simply ring the party to arrange a rollover the balance.


The funds are effectively fiscal stimulus carried out government-controlled intermediaries, state and local governments, who then spend these funds on projects dreamt up by corrupt local politicians. These projects are built with borrowed money by various state aligned economic agents. These agents have little hope of repaying the debts incurred. This in turn means that the debts are roll over when they fall due. In reality the State is simply printing money, spending it and then at some point writing it off. This is being done at a speed and scale never before seen in human history.


Jim Chanos the famous hedge fund investor who foresaw the subprime crisis described the entire Chinese economy as “1000 times worse than Dubai”. In 2008, when the world experienced the GFC, China doubled down and simply spent their way through via massive credit stimulus. When China’s massive export markets shrank due to the Western debt crisis the Chinese elected to convert their economy from an export based one to a construction based economy. Meanwhile, the Western media perpetuates the myths of China’s supposed ascent to displace the US as being the world largest economy.
The problem is that the Western economies never recovered and the Chinese have had to continue their massive growth purely based on constructing roads, bridges, airports, dams and various other construction based infrastructure


If one starts with the official economic statistics and works down through the accounting, taxation, banking systems and then across Chinese industry, there is rampant fraud, poor reporting and outright propaganda at every level. The Chinese economy is largely a central government budgetary system of fiscal spending; each local government submits spending plans to central party authorities, who in turn recommend expenditure up the line.


In 2008 in order to counter the shock of the GFC the Chinese Communist Party (CCP) engaged in massive stimulus programs just as the West did. The difference though was in the way the stimulus was delivered. In Australia, stimulus was delivered as government spending. This is traditionally known as fiscal stimulus where the government borrows money to spend on projects like the new fibre optic NBN Network. In China, though the stimulus was delivered much less traditionally; the increase in expenditure was delivered through banks who were encouraged to offer massive amounts of debt to provincial governments, state owned and sponsored owned enterprise.


The impetus for the stimulus might have been centrally planned, but the spending was decentralised. Provincial governments in China are not able to issue bonds, so state owned investment vehicles borrow the money, often using state gifted real estate collateral as security. The reality is that the majority of these investments, do not or will not pay a return anywhere near that required to make debt repayments. These projects born of corruption, nursed by self-serving bureaucracy fail to thrive due to the defective financial DNA.


Provincial credit expanded at a rate of +35% of GDP per annum and many of the loans needing to be rolled over, with no prospect of serviceability. For this lunacy to continue, what is primarily a construction economy must build more infrastructure this year than last and more again next year and the year after into perpetuity. If these projects had no chance of becoming solvent going concerns in the past, then new projects are even less likely to repay their lenders in the future. In this environment of manic overproduction, elite capital at some point will panic and run for the exits.


To a large extent the Chinese propaganda machine has captured an unquestioning Western media;, the meme that China is the next rising super power and will shortly overtake the US is a part of this propaganda story. Westerners imbue their view of China’s future with cultural qualities that have simply never been reflected in historical fact. In fact, programs like the one child policy reflect the opposite


If the projects in 2009 and 2010 cannot pay adequate returns to service debt then what hope do the new projects have? Furthermore, due to the epidemic of corruption throughout China’s public and private sector, the projects rarely reflect good value for money. This places the entire Chinese economy in Minsky’s last phase of expansion: The Ponzi phase, where lending is perpetrated in the hope that conditions will improve and with little hope of repayment.


In the West debt is to be freely given but even at its worst it is done on some basis of return. When an economic system loses its way, to the extent China has done, the tension it creates on a society becomes unbearable. When the eventual day of reckoning comes and the ability to expand debt is exhausted, then the physics of complete collapse come into play.


A bleak harsh reality will descend on a political system that’s run out of options. One unique feature will come the fore: That China uniquely spends more on internal security than external defence. China will at once face a great leap backward forcing a military coup and the effective end of CCP rule. Whether the military can hold the country together through a Soviet style collapse is anyone’s guess. One outcome could see the wealthier provinces seeking independence, however it ends it will be the end of a dynasty that started with Mao.


China will not be be the world’s biggest economy this century. It will falter, due to its demographic arthritis and debt explosion. The denouement of its corruption will pull it down like no other collapse in history. China will shortly have “interesting times.”


Craig Tindale is the Vice President of the Centre for Economic Stability, Professor Steve Keen’s non-profit research initiative.

Steve Keen's Blog (http://www.debtdeflation.com/blogs/2012/06/03/the-end-of-the-communist-dynasty/)

[Sunfish]

......and Australia has hitched its star to the Chinese economy.

The resulting misallocation of investment capital in mining should now be obvious:

http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2012/06/20120604_AussieExuberance.png



IrrAUSional Exuberance | ZeroHedge (http://www.zerohedge.com/news/irrausional-exuberance)

And as I said months ago, Qantas investors will cry themselves to sleep over the treasure invested in these stupid operations.

[Night Watch]

Jetstar will have a fight in Hong Kong... Cathay says (http://www.theage.com.au/business/jetstar-will-have-a-fight-in-hong-kong-cathay-says-20120611-205g4.html)

[wheels_down]

Didn't Tiger attempt the same venture to only have it blocked?

[PoppaJo]

I believe that was Korea.

[jarden]

Maybe they should set up Jetstar North Korea operation... and see how far they get with that too, well while they are in the neighbourhood.

[Toruk Macto]

Dont be suprised if this venture is fully supported by the Chinese while the money is being transferred to China. :ugh:

[DrPepz]

Why doesn't he make sure the mother of all Jetstar franchises, Jetstar Asia, makes money first?

Cookies must be enabled. | The Australian (http://www.theaustralian.com.au/business/aviation/qantas-chief-alan-joyce-sets-asian-expansion-hopes-on-jetstar-hk-joint-venture/story-e6frg95x-1226391646627)

After launching a firesale of SGD270 ALL UP one way BUSINESS CLASS on SINPEK, JQ has since reduced SINPEK to 5 weekly (SQ is 28 weekly) and cut AKL to 3 weekly for some weeks in June (back to 4 weekly after that while SQ is daily to CHC and double daily to AKL)

In Singapore, Joyce had himself a very supportive government and airport authority, plus a home airline that was for too long only too happy to cede marketshare to Jetstar and other airlines. And he still can't make money.

In the meantime, the home airline has decided to add 471 seats a day to London through capacity and frequency increases(equivalent to adding an additional A380 per day) in response to QF cutting 2 flights a day to London. The home airline unleashed Scoot, flooding SYD, BKK, Tianjin, Taipei and Tokyo with thousands of seats a day in the next few months. If Jetstar Asia could not make money in SIA's years of retreat from 2004 to 2010, how are they going to make money now that SIA has woken up?

I guess from Singapore's perspective, Qantas Group brings in millions of tourists per year to boost tourism spending. QF should become one of the constituent charities under Singapore's Community Chest, for their charitable works to the Singapore economy for nearly one decade.

But no - Jetstar Asia may not make money but fear not, revenue from Jetstar Japan is now rolling in faster than expected.

I'm not even Australian and this makes me angry. I can only imagine how you Aussies actually feel!

Qantas chief Alan Joyce sets Asian expansion hopes on Jetstar HK joint venture
BY: MICHAEL SAINSBURY AND STEVE CREEDY From: The Australian June 12, 2012 12:00AM
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QANTAS chief Alan Joyce says the China market is a huge opportunity for the company as it builds up its Jetstar Hong Kong joint venture with China Eastern as part of a plan to become the dominant low-cost carrier in Asia.

Mr Joyce said Jetstar had more planes after seven years than European low-cost pioneer Ryanair did at the same stage in its development, and aimed to be as big as his old employer in coming years.

He admitted the Singapore-based Jetstar Asia venture would lose money this year on long-haul routes but said revenue was coming more quickly than expected into its low-cost Japanese start-up.

Jetstar has committed $64 million to the Japanese operation it owns with Oneworld partner Japan Airlines and Mitsubishi.

"We have a smaller shareholding (33 per cent) because of the law," Mr Joyce said. "Revenue is coming in sooner than expected."

But the huge opportunities in Asia lay in China, already the world's second-biggest airline market and set to rival the US in the next decade.


"We believe there are three big markets in China: premium, low-cost, cargo," Mr Joyce said. "For premium we need to turn around Qantas International before we can grow it again. We made a commitment to shareholders we won't put more capital or aircraft into it until it gets to break even and is returning costs over the next three years."

Meanwhile, Qantas's operations to mainland China are limited to just one flight daily from Sydney to Shanghai and the more profitable three cargo flights from Australia to China and then the US and back to Australia.

"We're looking at enhancing (code-sharing) further and working a lot closer with China Eastern," Mr Joyce said.

In the interim, Jetstar is committing $99m in capital to its 50-50 Jetstar Hong Kong venture with China Eastern.

Qantas is optimistic that a new Hong Kong government, a reconfiguration of government departments and review of aviation regulation will work in its favour.

It hopes that will clear the way for approvals for the airline to progress more quickly and says it has been getting strong local support.

Mr Joyce said the biggest resistance was coming from the pilot union, which was paying a consultant to lobby against the move. He said the airline had gone through regulatory approval processes several times and had a team that was dedicated to the process.

It had teamed up with local partners because they knew the local market and Jetstar had taken a comprehensive view of getting as many stakeholders behind it as it could.

"We're optimistic, so we're still on plan for the middle of next year," he said.

Both China Eastern and Jetstar have started allocating people to the project and the airline is already looking at issues such as aircraft allocation, AOC requirements and recruitment.

There was also a commercial team looking at routes and Mr Joyce said the airline could also allocate its Jetstar Japan start-up team to the project after the airline launched next month.

[Ken Borough]

Mr Joyce said Jetstar had more planes after seven years than European low-cost pioneer Ryanair did at the same stage in its development, and aimed to be as big as his old employer in coming years.

How can these so-called journalists have any credilbility when they can't even get the basics right? I stand to be corrected but to the best of my knowledge, Alan Joyce has NEVER worked for Ryanair. :E:E

[Goat Whisperer]

"and aimed to be as big as his old employer (Qantas) in coming years"

I don't see the inaccuracy.

[The The]

He admitted the Singapore-based Jetstar Asia venture would lose money this year on long-haul routes but said revenue was coming more quickly than expected into its low-cost Japanese start-up.

"For premium we need to turn around Qantas International before we can grow it again. We made a commitment to shareholders we won't put more capital or aircraft into it until it gets to break even and is returning costs over the next three years."

Aren't the 787's planned to be based in Singapore? Shareholders must be happy to take losses on Jetstar ventures but not Qantas.

[Sunfish]

As I have repeatedly said, Qantas/Jetstar doesn't have a snowballs chance in hell of making money out of the Middle Kingdom. Nobody who is not Chinese is allowed to profit from the Chinese people.

Jetstars regulatory woes will continue until:

(a) Its Chinese competitors have made suitable commercial arrangements to compete with it.

(b) The Chinese Government decides it has extracted maximum benefit (Money, Fees, bribes(?), concessions) from the delay.

At that point Jetstar will be asked to invest more money to "secure" its commercial future in China. Qantas will do so.

Some time, perhaps a few years after, Jetstars Chinese partner will take ove rthe wreckage for a few cents in the dollar.

I say again: NO ONE is allowed to make money out of the Chinese people except other Chinese.

and Yes, I know about the Swire Group, but they have been there for 200+ years.


JETSTAR'S attempt to gain regulatory approval for its new airline in Hong Kong is likely to drag on for months, giving its competitors time to up the ante ahead of the planned launch in the middle of next year.

Jetstar Hong Kong made its official pitch to regulators in July - four months after Jetstar's parent, Qantas, and joint venture partner China Eastern unveiled plans for the new airline - in the form of an application for an air operator's certificate, or licence to operate commercial flights.

The airline's backers will not say when they expect a response from Hong Kong's Civil Aviation Department, but sources in China say the final decision will ultimately rest in Beijing and will take some time.

Although Jetstar Hong Kong has the advantage of China Eastern lobbying on its behalf, the mainland airline has a vociferous opponent in Air China, which is a cornerstone shareholder in Cathay Pacific.
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An analyst at CIMB Securities in Hong Kong, Andrew Orchard, said he expected it to be a few more months before the regulators made a decision. ''It seems that, internally [at Jetstar] at least, they are fairly confident that it will go through.''

Jetstar Hong Kong faces competition from Cathay Pacific and other airlines in the region, as well as the challenge of operating at an airport that has not been set up for budget airlines.

China's Spring Airlines has also raised the possibility of setting up an offshoot in Hong Kong.

Cathay Pacific has highlighted in regulatory filings that it is ''possible that conditions may be imposed on any approval given in Hong Kong'' for the new competitor. Its short-haul offshoot, Dragonair, will spearhead the group's counter-offensive.

Dragonair has added six Airbus planes to its fleet this year to meet the needs of its expanding network.

''We have added a total of eight destinations to our network this year, and more are coming up in early 2013, including Zhengzhou, China and Yangon, Myanmar,'' a Dragonair spokesman said.

The Jetstar Group has a project team in place in Hong Kong, which is being led by Nick Rohrlach, an executive manager of strategy at the budget airline. It is well on the way to hiring the first batch of 50 pilots needed for the launch of Jetstar Hong Kong, and it recently began recruiting flight attendants.

China Eastern's vice-president, Tang Bing, has been named chairman of Jetstar Hong Kong's six-member board, which includes two Jetstar representatives in Jayne Hrdlicka and David Koczkar.

Jetstar Hong Kong will begin operations with three A320 aircraft, before expanding to a fleet of 18 within three years. It will initially fly to greater China, Japan, South Korea and south-east Asia.

Read more: Slow take-off for Jetstar HK (http://www.theage.com.au/business/slow-takeoff-for-jetstar-hk-20121209-2b3hb.html#ixzz2EaJ0gEKn)

[Dynasty Trash Hauler]

"Nobody who is not Chinese is allowed to profit from the Chinese people."

What about Volkswagen. And Buick. Or McDonalds. Starbucks. They are not growing in China for nothing I would have thought.

[DrPepz]

Qantas can barely even make money in Jetstar Asia where:

1. SIA deliberately went into retreat from 2003 to 2010 and did not fight
2. The Singapore government was a cornerstone investor
3. The Singapore government overlooked the fact that Jetstar Asia was de facto 100% controlled by a foreign airline, and gave it a Singapore AOC and lobbied for Jetstar Asia to foreign governments as if it was a Singaporean carrier
4. Load factors are well over 80%

Good luck to making Jetstar HK work.

[DirectAnywhere]

QANTAS barely seems to be able to make any airline work anywhere which is why they have outsourced all the flying to EK. QANTAS - the world's first virtual airline.

[Night Watch]

Hong Kong Halts Processing Applications for New Airline Licenses
(http://www.bloomberg.com/news/2013-06-04/hong-kong-halts-processing-applications-for-new-airline-licenses.html)


As expected.... if Jet Star wish to play in the back yard of another country, they really should do a bit more research on the Governments regulatory requirements.

Let face it.... CX management sit at the same table as the law makers. They were never going to let this happen.

[004wercras]

Of course AJ assumed he could waltz into Kitty City and just start an LCC and attempt to take away some CX's cream? Fool. AJ will need to be anointed as a Swire Prince before he pulls this one off.
Now, where will he try next? Russia, Maldives, Alaska........

[Ollie Onion]

Yay!!! Lets all rejoice in the news that an Australian company has failed so spectacularly and hope that no future Australian company tries to expand overseas. Much better to sit around here and watch the aviation industry be handed to the likes of Emirates, Ethiad, China Southern etc.

Even better, lets hope Qantas goes down the drain so we can truly celebrate ........

[Capt Kremin]

No-one is celebrating here Ollie, particularly as the calibre of our "leadership" is yet again so graphically illustrated. :ugh:

[004wercras]

Correct, as i said in another thread, AJ would need to be a Swire prince before successfully pulling off such an audacious plan. CX, Swires and the Hong Kong Regulator decide who they will allow to operate. Didn't anybody tell AJ about the 'cultural business differences'? Thought he may have learned his lesson from the Vietnam fiasco? Perhaps he should send the two Kiddies from Nam over to Kitty City to sort it out? Then again, I believe they are still held in protection under lock and key down in Mascot.

[From a distance]

There wouldn't be too many on this forum that wouldn't like to see the qantas group expand and increase pilot opportunities. Although in the case of jetstar ventures the opportunities are going offshore. Many on these forums drew attention to the exact issues qantas would face in obtaining an AOC for jetstar in HKG.
The latest media release by the HKG government highlights the total ineptitude of the qantas management who it would seem didn't do due diligence. AJ promises much, ie. qantas red, jetstar HKG but before making the big announcements surely a little more planning should be undertaken.

[kookaburra]

As sad as it was, hard not to laugh when you see the 'Jetstar is coming' bill board in the middle of Hennessy rd Causeway bay.
AJ & co ..... incompetent....wasting money before a deal even remotely had a chance.

"There wouldn't be too many on this forum that wouldn't like to see the qantas group expand and increase pilot opportunities. Although in the case of jetstar ventures the opportunities are going offshore"

.....on decent pay and conditions though....

[LapSap]

Transport and Housing Bureau (http://www.thb.gov.hk/eng/psp/pressreleases/transport/air/2013/20130604.htm)

Playing with the big boys now AJ.


(Just noted the link was imbedded in the Bloomberg report. Will leave here anyway.)

[ALAEA Fed Sec]

Book it all to Qantas International. Use it as an excuse to ditch more routes.

[Toruk Macto]

Hong Kong do as their told from Beijing . Airlines of china slowly taking over Cathay and china eastern not wanted on their future patch . Connect the dots from there and the picture becomes clear .

[404 Titan]

TM

Hong Kong do as their told from Beijing . Airlines of china slowly taking over Cathay and china eastern not wanted on their future patch . Connect the dots from there and the picture becomes clear .
Do you know this from first hand experience? I've lived here for quite some time and for the most part, apart from constitutional matters, Beijing leaves us alone so that we can run ourselves.

Regarding CX's ownership, while CA owns 30% of CX, CX also owns 20% of CA. It is unlikely that this will change any time soon, i.e. the next 10 years at the earliest.







Posted from Pprune.org App for Android

[Mstr Caution]

Fantastic to see Red Q & JQ HK are finally "Exploiting Asian Markets".

[The Green Goblin]

Announced today another partner onboard.

So this means Qantas has a third of the business.

Interesting.

Jetstar Hong Kong welcomes Shun Tak Holdings Ltd as a New Investor (http://www.jetstar.com/mediacentre/latest-announcements/detail?Id=b2a32857-e4cc-4a61-8b0b-c661f99f9a08&language=en)

[DirectAnywhere]

On a slightly different but related topic, the WA mining boom is now officially over because Alan has said it's not.

QANTAS chief executive Alan Joyce said the national carrier saw no signs of an end to the mining boom in Western Australia.

Link here (http://www.theaustralian.com.au/business/aviation/qantas-to-built-new-club-at-perth-airport-as-joyce-sees-no-end-to-boom/story-e6frg95x-1226652153215)

[bubble.head]

Just saw the annoucement has been posted. DELETED.

[breakfastburrito]

from GG's link:
Jetstar Hong Kong welcomes Shun Tak Holdings Ltd as a New Investor

AustraliaHong Kong 06 June 2013


more



Shun Tak Holdings Limited introduced as the third equal-share investor in Jetstar Hong Kong
New partner will enrich the airline’s competitiveness with its solid transportation and hospitality experience
Opportunity to grow the Hong Kong economy through the establishment of a local LCC moves closer

Jetstar Hong Kong* today welcomed a new shareholder, Shun Tak Holdings Limited (HKSE: 242) through its wholly owned subsidiary, in Hong Kong’s first truly local low cost airline.

Shun Tak has taken an equal third share in Jetstar Hong Kong along with existing partners Qantas Group and China Eastern Airlines.

As the new partnership was cemented, Jetstar Hong Kong Chief Executive Officer Edward Lau said “We are pleased to welcome Shun Tak to the new venture.”
“Shun Tak’s long history in tourism and transportation businesses will further deepen the experience behind Jetstar Hong Kong,” Mr Lau said.

“As Hong Kong’s only local low fares airline, having a strong local partner in Hong Kong like Shun Tak, who understands the revolution we want to bring to Hong Kong air travel, is of great benefit.
“We see enormous potential for a local LCC in Hong Kong and our low fares model will stimulate a new market, bringing significant opportunities to Hong Kong’s local tourism sector and our broader economy.”

Jetstar Hong Kong will complement Shun Tak’s extensive transportation and tourism portfolio.

“It has long been our vision to create an air-sea-land network that seamlessly connects the Pearl River Delta and facilitate its integration, under the spirit of Guangdong, Hong Kong and Macau development blue print as part of the Central Government policy. We believe a low-cost airline will be most efficient in driving growth across the leisure sector, and bring benefits to the complete visitor economy for Hong Kong, as well as contribute to the sustainable development of Hong Kong as the top aviation hub,” commented Ms Pansy Ho, Managing Director of Shun Tak Holdings Limited.
The new shareholding structure will not affect Jetstar Hong Kong’s planned capitalisation of a maximum of HKD1,544.4 million (USD198 million).

Jetstar Hong Kong is progressing with regulatory approvals and is confident of approval before end of 2013. The airline is led by a local management team with its head office overlooking Hong Kong International Airport. By the time it operates a full fleet of 18 A320 aircraft in 2015, Jetstar Hong Kong will employ a local team of 600 people, plus its local suppliers will create hundreds more jobs.
Jetstar Hong Kong intends to fly to destinations within five hours of Hong Kong and is considering destinations in Southeast Asia, Japan, South Korea and Mainland China.

For more information please contact Jetstar Corporate Communications








Shun Tak Holdings Limited (信德集團有限公司) (SEHK (http://en.wikipedia.org/wiki/Hong_Kong_Stock_Exchange): 0242 (http://www.hkex.com.hk/eng/invest/company/quote_page_e.asp?WidCoID=0242&WidCoAbbName=&Month=&langcode=e)) is a public company incorporated in 1972. It has been one of the constituents of the Hang Seng Hong Kong MidCap Index since 11 September 2006.
The company's founder and executive chairman (http://en.wikipedia.org/wiki/Executive_chairman) is Stanley Ho (http://en.wikipedia.org/wiki/Stanley_Ho). His daughter Pansy Ho (http://en.wikipedia.org/wiki/Pansy_Ho) serves as managing director (http://en.wikipedia.org/wiki/Managing_director)[1] (http://en.wikipedia.org/wiki/Shun_Tak_Holdings#cite_note-CIB20080312-1) with two of his other daughters, Daisy Ho Chiu-fung and Maisy Ho Chiu-ha, as executive directors as well as David Shum.[2] (http://en.wikipedia.org/wiki/Shun_Tak_Holdings#cite_note-2)
The company is active in shipping, property, hospitality and investments businesses. Its shipping division, operating under the name of TurboJET (http://en.wikipedia.org/wiki/TurboJET), operates ferry services between Hong Kong and Macau.
Until late 2010, Stanley Ho controlled the company. An 11.55 per cent stake in Shun Tak was transferred by Ho to Hanika Realty, a company controlled by second wife Lucina Laam and his five children with her. The transfer made Hanika Shun Tak's biggest single shareholder.[3] (http://en.wikipedia.org/wiki/Shun_Tak_Holdings#cite_note-3)
Shun Tak Holdings (http://en.wikipedia.org/wiki/Shun_Tak_Holdings)

This looks like a "tribute" payment to a local Chieftain ensuring "smooth passage" of the application.

[Keg]

Yet no news in the Oz about J* HKG struggling. I wonder why that is? Surely Steve isn't waiting so its buried in the aviation section tomorrow? :=

[breakfastburrito]

Stanley Ho’s Shun Tak Acquires Stake in Jetstar Hong Kong


By Jasmine Wang - Jun 6, 2013 10:21 AM ET



Qantas Airways Ltd. (QAN) (http://www.bloomberg.com/quote/QAN:AU) and China Eastern Airlines Corp. (670) (http://www.bloomberg.com/quote/670:HK)’s Hong Kong (http://topics.bloomberg.com/hong-kong/) budget airline venture sold a stake in their airline to a company founded by billionaire Stanley Ho (http://topics.bloomberg.com/stanley-ho/), which will help pave the way for an operating license.
The low-cost carrier, called Jetstar Hong Kong, sold a 33.3 percent stake to Shun Tak Holdings (242) (http://www.bloomberg.com/quote/242:HK), Sydney-based Qantas said in a statement today. Qantas and China Eastern (http://topics.bloomberg.com/china-eastern/) will hold 33.3 percent each, according to the statement.
The total capitalization of Jetstar Hong Kong remains unchanged at $198 million. With the addition of the partner, Qantas group cut its initial planned equity investment to $66 million from up to $99 million. China Eastern and Shun Tak will also contribute up to $66 million each, the statement said.
A local investor may help Jetstar Hong Kong win operating license from the local government. Failure to get the permit has delayed the venture’s operations, damping Qantas Chief Executive Officer Alan Joyce’s move to tap travel demand (http://topics.bloomberg.com/travel-demand/) in China with a discount carrier.
According to the city’s basic law, the local government has the authority to issue licenses to airlines incorporated in Hong Kong and having principal place of business (http://www.hkhrm.org.hk/english/law/basic6.html) in the city.
Shun Tak’s biggest shareholders include firms owned by Ho’s daughters and himself. Its business range from property development, ferry services between Hong Kong and Macau, hotels and investment.
Chinese Cities

Jetstar Hong Kong will focus on flying to secondary Chinese cities, Qantas Chief Executive Officer Alan Joyce said in April. The airline will have about 18 aircraft, he said.
The first Hong Kong-based budget airline will offer 50 percent lower airfares on average than those by full-service carriers, Jetstar Hong Kong Chief Executive Officer Edward Lau said in February.
The new venture targets its first flights by the end of this year with two Airbus SAS (EAD) (http://www.bloomberg.com/quote/EAD:FP) A320s, China Eastern vice chairman Ma Xulun said in March. Previously, the budget carrier aimed to start services as early as this month with three A320s.
No budget carrier has a hub at Hong Kong Airport. Hong Kong Express, an affiliate of Hong Kong Airlines, has said it will convert to a low-cost model. Oasis Hong Kong Airlines Ltd., which operated budget long-haul flights, collapsed in 2008 after racking up losses of about HK$1 billion ($129 million) in less than two years.
To contact the reporter on this story: Jasmine Wang in Hong Kong at [email protected]
To contact the editor responsible for this story: Anand Krishnamoorthy at [email protected].


story: Bloomberg (http://www.bloomberg.com/news/2013-06-06/stanley-ho-s-shun-tak-acquires-stake-in-jetstar-hong-kong.html)

[004wercras]

And QF will pay through the nose for this. They needed somebody to help them save face because Orangestar was never going to cut it alone, and wee man needs to save face. I am sure that there will be many robust money transactions involved in this one, no doubt the QF shareholders will be at the bottom of the beneficiaries list, as usual.

Nice article. And some of the names mentioned, Wangs and Pansy Ho, perhaps relatives of some senior QF people??:E

[breakfastburrito]

And QF will pay through the nose for this.Indeed. I wonder where Stanley got the $66 million, nah QF wouldn't have lent him his "investment" on non-recourse terms would they....

[Shark Patrol]

I wonder which countries are moving to the front of the queue for the Leprechaun's next grand adventure? Jetstar India? Jetstar China? Jetstar Indonesia perhaps?

C'mon guys. The Leprechaun with the Messiah complex is looking to play, so if you want to get your hands on some of "struggling" mainline's hard-earned, just stroke the ego of the QF management genius and the cash will soon start rolling in.

[ohallen]

BB reckon you are spot on because it wont be disclosed until it has to be written off and this buys them even more time.

How long can this go on for??

[SeeBee]

When o when are THEY going to get rid of these F*** W**s

[ohallen]

History will show that is never going to happen until
1. Chairmans lounge closes.
2. Board is held accountable.
3. Major fund managers stop taking the spin.
4. All 3 of the above happens.

It beggars belief that the constant changes in plans is never questioned by anyone, why....refer above.

[Mstr Caution]

Stanley Ho - Wikipedia, the free encyclopedia (http://en.m.wikipedia.org/wiki/Stanley_Ho)

In Australian terms, Mr Stanley Ho would be described as a "colourful racing identity"

Making his fortunes is gambling, seems his JQ HGK folly is an extension of his past activities.

MC

[crwkunt roll]

There wouldn't be too many on this forum that wouldn't like to see the qantas group expand and increase pilot opportunities.
Agreed, in Australia, paying top dollar for top pilots, not paying Cr*p for buy-your-own- endorsement or P2F or anybody who has a pulse.

[Toruk Macto]

Does Stanely still have interests in Hong Kong express ? What's the relationship between him and the Hainan group who own HKA ?

[DrPepz]

There was an article in today's Apple Daily (unfortunately in Chinese) in Hong Kong, with Hong Kong Chief Executive CY Leung being quoted as saying that he doesn't think LCCs add much to the economy, and he's against giving Jetstar Hong Kong an AOC.

[breakfastburrito]

DrPepz, translate.google.com (http://translate.google.com) made short work of the apple news article: http://hk.apple.nextmedia.com/news/first/20130607/18287961
How did it do?


Pansy gamble engage low cost airlines

WASHINGTON bet after Pansy Ho Shun Tak Holdings held spent over $ 500 million stake in Jetstar Hong Kong, trying to challenge Cathay Pacific Hong Kong dominated, but the master of the aviation industry insider sources, CY Leung oppose licensing that low cost airlines for contribute little to the economy, the future is uncertain Pansy involved in aviation business, this shop always betting on the wrong note.


Reporter: Lu Zhuo Wu Yongqiang were Qantas subsidiary Jetstar cheap Air Group, following in Tokyo, Singapore and Vietnam have established a headquarters last year after July joint venture with China Eastern Airlines HK $ 1.544 billion Hong Kong set up Jetstar, based in Hong Kong to enter the mainland market, but the absence of shareholders in Hong Kong , was questioned non-principal place of business, the Government does not match the licensing requirements, it has been a minor thing. Jetstar Hong Kong, one of the shareholders of China Eastern Airlines, a number of high-level meetings last year, and Leung Chun-ying, was encouraged to invest in Hong Kong.


Spend over $ 500 million stake in Jetstar Hong Kong held a press conference yesterday to announce Shun Tak Holdings shares for $ 66 million (approximately HK $ 515 million), with each one-third of existing shareholders equity. Pansy Ho, Managing Director of Shun Tak said, investing mainly optimistic about its prospects of low cost airlines, low cost airlines refers to the global aviation industry trends, but also for the public to provide more travel choices and bring economic benefits.

Jetstar Hong Kong has not licensed, the city passed by the holders of Cathay Pacific obstruction Pansy yesterday stressed the intention to challenge Cathay Pacific, "Nuisance eligibility challenges, but also she has no need to challenge Drainage (CPA)." But she must've said: "I Do not believe it generous full-Asia's most important airports, Well you can accommodate more than one airline." Ho early in the aerospace industry has invested Air Macau and Hong Kong Express, but the results are not ideal.


Jetstar Hong Kong chief executive, said Edward Lau as eligible before the end of the license, the fastest into service early next year, will cover operational early routes from Hong Kong 5 hours voyage locations such as Southeast Asian countries, Japan, South Korea and mainland China, promised fare "minimum ratio opponents flat five percent. " He said the first phase of a three Airbus A320 flights will later purchase and lease 18 new Airbus A320 aircraft operations, others employ approximately 1,000 employees, has received more than 2,500 pilots and 600 flight attendants applications.


According to the aviation industry estimates, an airline early opening, assuming operating three aircraft, fuel costs, airport charges, staff costs, etc., burn about $ 20 million per month.
Delay unlicensed Jetstar sail is unknown when Hong Kong, Liu said yesterday in accordance with government requirements continue to submit additional information, are confident that the end of the year was a license. He was referring to existing shareholders in Hong Kong Hong Kong Jetstar, seven members of the Board that there were four people of Hong Kong identity management are all Hong Kong people have to meet the "Basic Law" provisions and licensing requirements.


Jetstar plan may come to nothing, however, told us that the aviation industry, Cathay Pacific to pressure the government, non-Jetstar Hong Kong is not a license key factor because the Transport and Housing Bureau preliminary assessment that the new low cost airlines company can stimulate competition and improve the overall services, it will not increase the load of airport facilities, the support licensing.

Chief Executive: little contribution to Hong Kong
But against all the odds, but CY Leung, it is understood within the government meeting he said that freedom rights is an important economic asset, our airport facilities are limited, and the low cost airlines passengers non-high consumer group, contribute little to the economy of Hong Kong, indicating disapproval licensing.
Secretary for Transport and Housing Anthony yesterday unanimously agreed, saying the new government is a comprehensive review policy before the completion of the review, will not deal with the application for the designated airlines of Hong Kong, meaning not bother Jetstar to Hong Kong.


Leung Chun-ying of aviation industry on the licensing of low cost airlines do not feel angry, "Mr Leung in Hong Kong since the system must be reduced competitiveness." According to the information, low cost airlines account for only 5% of the local market share, Chinese University of Aviation Policy and Research Center, deputy director kwok said that the new low cost airlines and passengers benefit to the economy, the introduction of Jetstar Hong Kong shareholders, operational interests of Hong Kong as the first, it would have met " principal place of business in Hong Kong ", should be licensed, or at any time subject to judicial review challenge.


Cathay Pacific said no objection low cost airlines operating in Hong Kong, referring to a number of low cost airlines Cathay Pacific and compete with confidence the Government review the application, will be "Basic" in mind, safeguard interests of Hong Kong. Hong Kong Airlines president Yang Jianhong said: "do yourself, regardless of others."

[DrPepz]

Ha ha well it did get the gist of the article. Anyway, to get Stanley Ho as your partner smacks of desperation.

[V-Jet]

Nuisance eligibility challenges, but also she has no need to challenge Drainage (CPA)." But she must've said: "I Do not believe it generous full-Asia's most important "

OK, I've put the screws in the second battery cover, how do I fit the batteries in? Must be missing something:):)


So.. Another disaster in HKG. When will muffin man throw in the towel? The man is a danger to himself and a burden to others. Worse, he is making Australian business a laughing stock. When you add his efforts to the ALP, what damage is this doing to us as a country???

[Freehills]

"Qantas subsidiary Jetstar cheap Air Group"

Should be the official name

[DrPepz]

Looking at the SIN departure boards today, between 3pm and 8pm there are 2 cancelled 3K services to KUL, 1 cancelled JQ service to DRW and 1 cancelled JQ service to PEK. The PEK service is already 3 weekly and this week they cancelled one service. With SQ being 28 weekly why does JQ even try and compete?

[jarden]

^^Maybe JQ can't think of any other options for using their fleet.

[Ken Borough]

Dr Pepz

Last time I checked, SQ considered itself a 'full service' carrier while Jetstar is a low cost carrier. This vital difference hardly makes them competitors!

[porch monkey]

Yeah, guess that makes it ok to cancel services. It's not like you're screwing over anyone who matters......:rolleyes:

[DrPepz]

Today's cancelled flights ex SIN:

JQ60 to Darwin again
3K551 to Ho Chi Minh City
JQ8 to Melbourne (the PEK flight is operating though)
3K689 to Kuala Lumpur again
3K697 to Hong Kong
3K665 to Kuala Lumpur again

Also - QF SIN MEL is on many days 40% cheaper than JQ

I was going to book to Taipei this Sunday, and SQ was trying to charge S$1278 (AUD1100) for the 4h45min flight. 3K is charging SGD560 return. However SQ is now completely full. 3K has seats wide open

So the DRW flight was cancelled today and yesterday. How long more can QF keep up with SINDRW when they can't provide the onward feed to Europe?

[Ken Borough]

PM

I neither know nor care why Jetstar cancelled the flights to which the Doc referred in his post. He questioned why Jetstar compete with SQ: I simply suggested that they don't. And who said it was OK to cancel flights? :mad::ugh:

Dr Pepz

Are 3K/JQ taking the concept of 'demand scheduling' too far? (There's nothing wrong with the concept provided it's done in good time and the punters appropriately protected IMHO.)

[plasticmerc]

I can't for an IATA standard for delayed or cancelled flight compensation for punters.
1star has cancelled a few flights on me over the last year alone.
once sold me a ticket in Singapore for Dwn then 1hr later cancelled so had 12hr lay up.
Oh if you haven't guessed I hate Jetstar.
poor service, bad attitudes to passengers.
Can't wait for VA to serve Singapore someday!

[Ken Borough]

Jetstar and Virgin Australia are not IATA carriers. They would treat their disrupted punters either in accord with applicable Consumer Law or their own policies. Don't expect too much from either.

[TIMA9X]

Interesting post Dr P and thanks for it (trust they don't close the thread because of what appears to be a bit of a clash over different points of view.) by and large a good thread :ok:


Today's cancelled flights ex SIN:

JQ60 to Darwin again
3K551 to Ho Chi Minh City
JQ8 to Melbourne (the PEK flight is operating though)
3K689 to Kuala Lumpur again
3K697 to Hong Kong
3K665 to Kuala Lumpur again

Also - QF SIN MEL is on many days 40% cheaper than JQ
A fair hit for one day...

possibly a low demand seasonal thing this time of year? (don't have access to any figures right now...)

Also - QF SIN MEL is on many days 40% cheaper than JQ Is it also possible J class is already well booked or even full and the discounts mainly apply to the aft sections of this class?
I was going to book to Taipei this Sunday, and SQ was trying to charge S$1278 (AUD1100) for the 4h45min flight. 3K is charging SGD560 return. However SQ is now completely full. 3K has seats wide open
One thing I find interesting (product wise) SQ are doing so well to Taipei, I guess they are well established on that route compared to JQ who are only the new kids on the block.. quite a difference in the fares, for me, sounds like a quiet time for the JQ business.

It reminds of the story last week about the progress of J* Japan.


Macquarie Equities estimates Jetstar Japan is losing about $50 million a year as it competes against Peach and AirAsia Japan. Jetstar Japan has grown quicker, and is now about twice the size of AirAsia Japan.

After initially relying on selling tickets via the internet, the airlines are looking to boost ways of encouraging consumers to fly with them in a market where people tend to book through travel agents.

Mr Onishi said Jetstar Japan had been able to win passengers in the high season but in the low season it was ''difficult to get passengers by the web or direct sales''.

Qantas chief executive Alan Joyce said the budget airline was still on track to become profitable within three years of its launch.

Qantas is also waiting longer than expected for regulatory approval to launch Jetstar Hong Kong, a joint venture with China Eastern.
''We believe we have a solid case that is no different from what our competitors are operating up there,'' Mr Joyce said at the airline conference in Cape Town. ''People really want this because the fares in Hong Kong are too high.''

A new government in Hong Kong has made slight changes in the past month to what it deems a local airline. It has meant Jetstar Hong Kong has had to make changes to its application for regulatory approval.


Read more: Jetstar Japan widens horizons (http://www.smh.com.au/business/jetstar-japan-widens-horizons-20130604-2no92.html#ixzz2W6fzaKEO)

Indeed, it appears parts of the J* Asia operations are taking longer than first expected, which burns money. I know firsthand how Asia varies from country to country (so special, never boring) and I have learned that all of these countries have very unique business cultures. I am not always sure or convinced Australian business leaders fully understand the complete picture up there, contrary to what they say in the business press.

In many Asian countries, people still prefer to use a Travel agent to book their travel, (group travel is huge) unlike Oz or Europe who seem to be more comfortable with the internet. I guess this may mess with the JQ model in parts of Asia somewhat, which relies heavily on the web back in Aus.

Premium Asian branded carriers are still strong in Asia, many carry the nations hearts, they are patriotic to their counties carrier simply because their local language is spoken, it is a natural draw for them. Other words, although English is widely spoken in Asia, there are a lot of non English speaking Asians, now more than ever, flying and believe it or not, are also comfortable and proud of their languages.

Sometimes I think, the western version LCC model approach applied in some Asian countries may be too brutal for the local business culture...

(disclaimer I know the LCC's are growing in Asia, but for the size of the Asian market I think still very small compared to the LCC grow rate in Europe or OZ) Asia is a lot more complicated.

Here we are again coming up to the end of June 2013 and our business leaders are still talking about "Off-Shoring" this time NZ.

This piece from the ABC tonight was interesting but worrying.. becoming a well worn business trend these days....:hmm:

It's all over the place....

/KIryKqrO6Yo
..

[porch monkey]

Shoot your researcher Ken. Virgin has been an IATA member for a while now. Wonder how accurate your other info might be. :ugh::hmm:

[Ken Borough]

PM

Counselling and retribution complete. He says 'mea culpa! :ok:

[porch monkey]

Hahaha. Fair enuf!

[Mstr Caution]

Could the thread be more appropriately titled.

"Qantas to invest in one third share owned airline franchised under Jetstar branding".

Isn't that what is really is. A one third stake in an entity where 100% of the franchise agreement is paid back to the Qantas Group. Make money thru the franchise deal.

MC

[V-Jet]

I have a small problem with your use of the word 'invest' MC, otherwise it seems accurate...

[TIMA9X]

"Qantas to invest in one third share owned airline franchised under Jetstar branding".

Isn't that what is really is. A one third stake in an entity where 100% of the franchise agreement is paid back to the Qantas Group. Make money thru the franchise deal.

MC Well, as time rolls along it's hard to say where things will end up, seems to be a lot more players involved since the day when the idea was first announced with a lot of fanfare back in March last year.

Interesting piece in today's SMH,

It's destination Hong Kong - and at any price


Read more: It's destination Hong Kong - and at any price (http://www.smh.com.au/business/its-destination-hong-kong--and-at-any-price-20131004-2uztk.html#ixzz2gmB1aNIG)


It is 2007 in the world's new casino capital of Macau, and Qantas executives are knocking on as many doors as they can in the former sleepy Portuguese enclave.
With the botched $11 billion private-equity raid on Qantas fresh in their minds, the airline's executives are so desperate to find a partner in north Asia that they are talking to both of Macau's airlines.
The two-timing with Air Macau and Viva Macau is part of a strategy to gain a north Asian foothold for Qantas' low-cost franchise, Jetstar. With the hurdles too high elsewhere, they are searching for a way into markets on the doorstep of the most-prized market of them all - China.



Several Qantas heavyweights - including then chief executive Geoff Dixon and finance chief Peter Gregg - are flown in for talks with their counterparts at the two Macau airlines. But the talks amount to nothing, with Qantas deciding its potential partners were too much of a gamble.

It was probably just as well. Viva Macau collapsed three years later, and Air Macau remains a small player even as hundreds of thousands of Chinese flock to the city's gaming dens every year. But six years on, the links built in Macau could well prove to be Qantas's trump card as it attempts to gain access to nearby Hong Kong - a Holy Grail for airlines.

The battle for the Hong Kong skies pits oneworld alliance partners Qantas and Cathay Pacific against each other, as well as some of Hong Kong's powerful business people. It also drags in well-connected interests from mainland China.

It is testing the resolve of Qantas chief executive Alan Joyce and his trusted Jetstar boss, Jayne Hrdlicka, and on the other side that of Cathay boss John Slosar and his heir, Ivan Chu.

The former British trading colony's location at the crossroads of Asia has been treasured for centuries. Even today, Hong Kong is ideally placed for the 21st century's preferred mode of transport. Last year, more than 56 million people passed through Chek Lap Kok's vast terminals - about 19 million more than those that went through Sydney Airport.

Importantly for airlines, Hong Kong is within five hours' flying time of all the other major Asian financial centres, making it one of the world's most prized aviation hubs.

http://images.smh.com.au/2013/10/04/4805734/1_ipad0510hongkong-300x0.jpg The battle for Hong Kong skies.

Qantas, with Joyce at the helm, is determined to launch its low-cost offshoot into this potentially lucrative market before its Asian budget rivals. But Cathay, the airline that has held the keys to Hong Kong for decades, is putting up the fight of its life - even if that means going to war against its founding oneworld alliance partner.

After deflecting questions for months about the new entrant, Cathay ripped off the gloves a month ago when it filed its formal opposition to Jetstar Hong Kong with regulators.

''The setting up of Jetstar Hong Kong is an attempt by a foreign carrier to gain access to Hong Kong's pool of traffic rights without a fair exchange of value to Hong Kong,'' it thundered.

The ferocity of its attack surprised many who thought it would be better served lobbying aggressively behind the scenes.

But Cathay has everything to lose. Its fear is not that it has to contend with a budget airline that plans to begin flying with just six planes.
Instead, the worry is that the arrival of Jetstar will open the floodgates to many airlines, including the large Chinese carriers wanting to set up shop on their home turf.

''Cathay's view is that we have to fight this one to the death otherwise there are going to be many more airlines coming after Jetstar,'' says Andrew Pyne, the former Viva Macau chief executive, who also advised the territory's last governor, Chris Patten, on aviation matters.

''If an Australian carrier, as they see it, is allowed to use Hong Kong as an access point to China, then there is going to be a reaction from the Chinese carriers, and they would want to get into Hong Kong,'' Pyne says.
As a place to base a low-cost airline, Hong Kong has its pitfalls.
An Australian who knows Hong Kong and aviation better than most is Rod Eddington.

The former chief executive of British Airways and Cathay says the city is both a competitive aviation market and an expensive place to run a business.
''The two most competitive markets in Asia are Hong Kong and Singapore because everybody flies there and everyone wants traffic rights to these places,'' he says.
''It's one thing to set up in Malaysia and Indonesia. But in Hong Kong and Singapore you are taking on two extremely successful, very combative, major Asian players.''

To much fanfare, Joyce unveiled the blueprint for the Jetstar offshoot in Hong Kong in March last year. Trumpeting its ''first-mover advantage'', the Qantas CEO talked of the ''huge potential'' to tap mainland China where the number of passengers is forecast to grow from 300 million a year to 450 million by 2015. The plan was for Jetstar Hong Kong to begin flying by the middle of this year using three Airbus A320s, before growing to 18 by 2015.

With Qantas and alliance partner China Eastern each taking a 50 per cent stake, Joyce pointed out that he did not see the need for any other partners for Jetstar Hong Kong. But as a year passed, doubts grew about whether the new airline would get off the ground. The regulatory hurdles were stacked against it amid Cathay's lobbying power.

Enter socialite and businesswoman Pansy Ho, the daughter of Macau gaming billionaire Stanley Ho.

Dispelling fears the game was over, the Hos' listed conglomerate Shun Tak bought a third of Jetstar Hong Kong in June for $US66 million. For Qantas, the dilution of its stake was a small price to pay - the new offshoot stood little chance without the influential support of Shun Tak
.
The Ho family is Macau's de facto royal family, controlling everything from casinos to retail, transport, tourism and property assets. Its tentacles stretch into Hong Kong where Pansy Ho holds court at Shun Tak as its managing director.

Her father Stanley, now 91, would be driven around Hong Kong in a burgundy Rolls-Royce with a number plate ''HK1''. According to those who witnessed his grand entrances, Ho's driver bore a striking resemblance to Oddjob, the henchman to Goldfinger in the James Bond film.
Of Ho's 17 children to four wives, Pansy has emerged as an heir apparent to the Ho empire.

''She is a very shrewd businesswoman and a very tough lady. I would go as far as to call her ruthless in the way she operates but I have a grudging respect for her,'' Pyne says.
''Within the whole empire there is quite a lot of internecine squabbling, to put it kindly, and she has come out at the top of it. She is quite an impressive lady.''
Australians will be more familiar with one of her brothers, Lawrence, who is James Packer's business partner in casino joint venture Melco Crown. But in Hong Kong it is Pansy Ho, the territory's richest woman, who hugs the headlines. In years past, the tabloids christened her ''Party Girl Pansy'' for her exploits on the social circuit.

She might be the antithesis of budget travel, but with her now ensconced as chairwoman of Jetstar Hong Kong, the airline has given itself a flying chance of setting up operations at Chek Lap Kok Airport.
''I couldn't think of a better local partner - financial business smarts and political connections there [in Hong Kong] and on the mainland,'' a China-based Australian executive says. ''It is a first-class choice [for Qantas and Jetstar] - they have done very well there.''

Her arrival reads straight from the Hos' playbook. Shun Tak began in the 1970s as a ferry operator, while its interests in aviation have also included a helicopter shuttle service between Macau and Hong Kong.
It is not the first time Shun Tak has been courted by an Australian airline. Back in 2004, the conglomerate was one of the parties Virgin Blue's then chief executive, Brett Godfrey, talked to about setting up a budget airline in Macau to operate flights to mainland China.
''

They have got form in getting involved in tourism and aviation interests. Obviously with the casinos, the whole business is about bringing people to spend their money in Macau,'' an executive with knowledge of those talks recalls.
''They are a good fit [for Qantas] and natural partner with aligned interests in terms of a low-cost carrier model of getting passengers, particularly inbound passengers, to that region.''

But even with Macau's most famous family on board, Qantas faces a battle in getting Jetstar Hong Kong flying. In the other corner with Cathay is its short-haul offshoot, Dragonair - the group's main weapon on routes to the mainland - and Chinese-backed Hong Kong Airlines and its sister carrier Hong Kong Express. Later this month Hong Kong Express will be relaunched as a low-cost carrier, pre-empting the arrival of Jetstar-badged planes from Hong Kong.

Qantas has surprised many people in Hong Kong by fighting what some grudgingly term ''a half-decent rearguard action''.
''But Cathay are not going to go down without a fight. Even if they did get into the market and it was a three-way battle, it would get brutal very fast. Cathay don't want to lose money but if they have to rationalise the market I suppose they would,'' one former Asian aviation executive says. ''What Hong Kong Airlines would stomach, who knows.''

While the Hos are well connected, it is important not to underestimate the power of Cathay and its biggest shareholder, Swire Group, which is synonymous with the ''Pearl of the Orient''. Cathay's second-largest shareholder is Beijing-based Air China, one of the mainland's big-three airlines.

And Cathay has been one of the best protectors of its turf of any airline in the region. ''Cathay are trying to protect their market. Companies all have great free-trade rhetoric except when they are on the receiving end,'' Commonwealth Bank analyst Matt Crowe says. ''They are just trying to tilt the playing field in their favour.''

Jetstar's bid to launch flights will rest on the Hong Kong aviation regulator's interpretation of ''principle place of business'', as defined under the territory's constitution known as the ''Basic Law''. The law was designed around the Cathay ownership structure. The concept, developed in the 1980s, was designed to ensure Cathay's existence after Britain's handover of Hong Kong in 1997 to China.

With the change in sovereignty, neither the locals nor the mainland authorities wanted the Chinese airlines to descend en masse on Hong Kong. The territory was to be Cathay's sphere of influence with the mainland carved up by the big three - Air China in Beijing, China Eastern in Shanghai and China Southern in Guangzhou.

In a nutshell, the law means that it does not matter who owns a Hong Kong airline - whether onshore or offshore - provided its genuine place of business is the territory. It cannot be an affiliate of another airline or controlled from somewhere else. If it meets this criteria, it is designated as a Hong Kong airline and in turn gains the benefits that flow from that.
One of the tests is where the ultimate decision making of a Hong Kong airline rests. In this regard, Cathay has always been careful that its board meetings are held in Hong Kong.

Both the Cathay CEO and Jetstar's top brass in Australia and Hong Kong declined requests for interviews. Jetstar has maintained it is confident its Hong Kong airline will be flying soon, and is attempting to win in the court of public opinion by promising to serve the territory's flyers with low fares. It has repeatedly pointed to research which claims there is overwhelming support in Hong Kong for a local budget airline.

For Qantas shareholders, the question is whether it is worth the fight. Jetstar has a chequered report card in Asia. Almost nine years after its largest offshoot was launched in Singapore, Jetstar Asia is still struggling to post strong results.
In Vietnam, Jetstar Pacific has had its fair share of troubles. They include secret police barring two Australian executives from leaving the country for six months in 2010.

In Japan, the Jetstar joint venture is still in its infancy, having been launched last year.
Now, much faith is being placed on making Jetstar Hong Kong fly. To date, Hong Kong and Macau haven't been easy hunting grounds for budget airlines - the failed airlines Oasis Hong Kong and Viva Macau are cases in point. But Qantas and Jetstar executives are expending considerable efforts on this bid.

Working in the shadows for Qantas as a consultant in China is Geoff Raby, the former ambassador to China regarded as the man for hire for Australian companies wanting advice about the diplomatic dance required in the world's second-largest economy. It also has the lobbying power of China Eastern to call upon in the mainland.

Debate has long raged internally at Qantas about where to position the airline group's centre of gravity in Asia. Many have favoured Singapore because Jetstar's main Asian operations are already operating from the city's Changi Airport.

But others support Hong Kong because it is in the middle of Asia - and, importantly, much of its wealth. The territory is one step into China but yet governed by a clear rule of law as opposed to that on the mainland.
Hong Kong has been on the Qantas radar for a long time.

In 2008, a paper to Qantas management recommended Hong Kong as a base for the so-called north Asia ''mega region'', encompassing China, Japan and Korea. It was seen as a logical spot because most of the biggest cities in Asia are within five hours flying time - about the maximum distances for Jetstar's workhorse A320s.

But even if Jetstar Hong Kong gains a licence to operate commercial flights, it faces a higher set of obstacles in gaining the right to fly to destinations in mainland China.

Drawing upon his knowledge as Cathay CEO from 1992 to early 1997, Eddington says one of the big hurdles for Jetstar will be gaining access to routes from Hong Kong to mainland China and other Asian destinations.
That's because it will require the airline to negotiate for access to bilateral air-rights agreements between countries.

While countries such as Singapore have relatively liberal views on access to foreign airlines, others including China take a more measured approach to negotiations.
''It requires Jetstar to negotiate traffic rights to fly to these other places from Hong Kong. The Chinese authorities in Beijing aren't necessarily going to be handing out these rights immediately,'' he says.

''They will want to ensure they gain benefits and access from the countries at the other ends of the routes. And current Hong Kong-based carriers will have their own ambitions for additional Hong Kong traffic rights as they become available.''

Then there's the cost of doing business in Hong Kong, and gaining landing slots at the city's already congested airport. While Jetstar might be able to bring in cabin crew from the mainland, it will have to hire pilots and engineers based in Hong Kong, where the cost of living is among the highest in Asia.
Of course, the same assumption could have been made of Sydney or Melbourne more than a decade ago. But Virgin Blue and Jetstar were able to establish themselves in the market. The battle now raging in Hong Kong offers riches to the winners but costs aplenty to those who fall short.

This weekend, Joyce will be in Seattle, the US city that is the home of Nirvana, Starbucks and Boeing. There, he will finally take the keys to Jetstar's first state-of-the-art 787 Dreamliner - albeit almost four years late. He has described the plane as a game changer.

Across the Pacific Ocean in Hong Kong, the other game changer now rests in the hands of the city's regulators. If history is any guide, it promises to be a long and bumpy ride.

Read more: It's destination Hong Kong - and at any price (http://www.smh.com.au/business/its-destination-hong-kong--and-at-any-price-20131004-2uztk.html#ixzz2gmBJx12H)

MYvymx_WZCo

Video Published on 26 Mar 2012

[V-Jet]

From some aviation movie I remember from the '80's:
'That's a helluva gamble with a $30m plane Lieutenant'

To add to all the other gambles/failures.

Who cares? Get paid anyway. If idiots want to slog their guts out to fund our lifestyles, why shouldn't we take it out for a spin and see how far we can go....

[From a distance]

Has China Eastern lost patience with Jetstar HKG. This from "The Standard" newspaper in HKG.

Eastern Airlines to launch budget carrier
(07-02 18:56)

China Eastern Airlines said Wednesday it would transform one of its units into a budget airline, the first Chinese state carrier to do so.
China's second biggest airline by passenger volume said its Beijing-based domestic carrier China United Airlines would become a low-cost flyer as the country liberalises its commercial aviation market, AFP reports.
"We believe the low-cost carrier market has enormous growth potential in China given its low penetration rate,'' the airline's company secretary James Wang said.
Ticket prices may be reduced by up to 40 percent, the company said according to the official Xinhua news agency, as it seeks to compete with several private budget carriers already operating there, including Spring Airlines and Juneyao Airlines.
Last year, the government lifted a six-year ban on establishing new airlines as it deals with growing air-traffic demand.
China United Airlines, which operates 26 Boeing 737 aircraft flying to around 70 locations in China, plans to triple the size of its fleet to 80 aircraft by 2019.
China's airlines carried 350 million passengers last year, up nearly 11 percent from 2012, according to official figures.
The country's civil aviation authorities said it will have more than 230 airports by 2015, up from 193 last year.
China's huge and growing high-speed rail network, however, has resulted in some shorter flight routes being terminated.

[Sunfish]

..and if Jetstar HongKong has any staff who understand the Jetstar / LCC business model, then Eastern will poach them.

Its a lethal technique in Asia - offer your competitors critical staff a tiny equity stake in your business and they will always jump ship. Ownership is a very powerful incentive in Asia.

[Mstr Caution]

Sunfish.

Word is that the intellectual property has already left the JQ HGK building.

I don't know numbers but believe there is only a handful of people left in HKG in a last ditch effort to get JQ HKG approvals.

MC.

[HIALS]

This announcement by MU, is another harbinger of doom for JHK. It joins a long list of increasingly pessimistic markers for the embattled wannabe in HKG.

First mover advantage has now gone. Hong Kong Express has taken the yellow jersey and is the first LCC domiciled in the fragrant harbour.

Slots get ever more constrained as the 'noise lobby' grows increasingly powerful and the incumbent carriers expand into, and soak up the available capacity at CLK.

The Jetstar pan-asia strategy is visibly struggling. Jetstar Asia is unprofitable. Jetstar Pacific is a political nightmare. Jetstar Hong Kong is a distant dream. Jetstar Japan is slow and problematic. I won't mention the issues emerging with the Jetstar mothership in Australia and New Zealand. And, of course, we are all abundantly aware of the existential problems that Qantas faces.

All of which shines a very bright light on the implications from this announcement by MU that they are going it alone with the development of a LCC in China. It has long been my view that Jetstar Hong Kong was a beach-head operation. An opening ambit. A foothold on the mainland. A way of gaining access to the Peoples Republic of China.

As we all know, the growth potential of the PRC is gigantic. I have long suspected that Jetstar saw the Hong Kong operation as a first step toward the ultimate goal - spawning their franchise into China. China Eastern was seen as a suitable partner - not only because Cathay spurned Qantas, but because MU presented access to China.

Therefore, the announcement that China Eastern is now 'going it alone' with a LCC in China, is the starkest evidence yet that MU has lost confidence in the ability of Jetstar to deliver on their undertaking to establish an airline in Hong Kong.

In a world of rational self-interest - Jetstar was using China Eastern (for local credibility and market access) and China Eastern was using Jetstar (for know-how). Now that it has become evident that Qantas and Jetstar lack the requisite know-how - China Eastern have quite rightly decided to go it alone.

Perhaps Qantas could come to an arrangement with China Eastern; to sell them all the surplus airframes that are dotted around France. That way MU gets it's LCC up and running quickly and Qantas/Jetstar are able to reduce the burden of countless idle aircraft???

[Sunfish]

Hials:

As we all know, the growth potential of the PRC is gigantic

NO! NO! NO!

The growth potential for Chinese owned and controlled businesses is gigantic.

The growth potential for non Chinese businesses that do not have ironclad control of their intellectual property or another barrier to entry is flat effing ZERO!!!!

How do I get this message through the thick heads around here? The only people in China allowed to make money out of other Chinese are Chinese!

Even if Jetstar HK was ever established, the chances of it (a) making a profit and (b) repatriating that profit to Australia are plain ******* zero! There is no way Jetstar HKG can ever make a profit for the Qantas group, at best you might get one dollar more than you invested.

[HIALS]

I disagree.

It's not about the Chinese. This is an issue of Australian failure.

China Eastern is simply moving on - having been victims of an abject failure by the Australians to produce what they promised.

The partnership fidelity of MU has never been tested. The Australians let them down.

[Sunfish]

Hials, my family has traded with Asia since 1935. There is a wealth of experience, often bitter, to back up my contention.

For the record, that is that every cent Qantas puts into Asia will be lost because people like you think that Asians think like Westerners and have the same values; they don't.

It is possible to make money in Asia, but not with the Qantas mindset. To make money, plan to spend many millions over Twenty or more years with no prospect of reward to establish relationships.

Just jumping in and announcing you are open for business, as Qantas has done, will get you exactly what Jetstar has got; zero.

P.S. Relationships with not just anybody, I watched an I.T. company waste $3 million on a tender for a non existent I.T project brought to it by "the nephew of the Chinese Minister". F.F.S. Australian companies are wood ducks when it comes to dealing with Asia, start with Rio Tinto, then look at various coal companies.

[HIALS]

Whatever the merits of your arguments might be - they are lost. You are a vitriolic racist.

[V-Jet]

There is no question the idiots running QF/Jet* would have contributed to any failure, but I would argue the Chinese Govt saved them from a more catastrophic long term failure by (how can I put this most politely?) a very, very detailed consideration of any regulation that might ever affect the operation. Especially when said regulators would have been all too aware that their careful consideration was sending idiots with bigger egos broke. Much as I would like to lay blame on the most incompetent bunch of Australians since fund managers loaded up on Bond Corp, I cannot and most could not see regulatory approval ever happening. They should be taken out and shot for trying it on, but blaming them for failing after deciding the idiotic thought bubble might be a good idea is being a bit harsh.

I think as Sunfish pointed out, it is extraordinarily lucky for the Coward St Muppets that the Phantom Airline is mostly parked in Europe and not China.


HIALS: I might be so bold as to suggest Sunfish is not a Vitriolic Rascist, more an analyst with a keen interest in nationalistic business perceptions. I see nothing other than experience based on facts (certainly nothing I have seen suggests he is wrong with his assumptions) being pointed out. Most nations I feel are similar, the Chinese simply have more money thrown at them than others....

[Sunfish]

Hials, my family has traded with Asia since 1935. There is a wealth of experience, often bitter, to back up my contention.

For the record, that is that every cent Qantas puts into Asia will be lost because people like you think that Asians think like Westerners and have the same values; they don't. this is not just an Australian problem either.

It is possible to make money in Asia, but not with the Qantas mindset. To make money, plan to spend many millions over Twenty or more years with no prospect of reward to establish relationships.

Just jumping in and announcing you are open for business, as Qantas has done, will get you exactly what Jetstar has got; zero.

[Sunfish]

Hials, you are a fool. Asia is not Europe. Western values are not Chinese values. It is not racist to say so.

In Asia face is everything, it is an insult to refer to a written contract or to require someone to sign one.

Relationships are everything. You do not do business like you do in Sydney.

There are business ethics in China, but they are not your Western ethics. In some ways they are tougher, in others looser.

If you do not understand these things then God help you. I have one friend who suicided over a failed Asian venture and a few acquaintances who lost their shirts the same way.

If you think that its racist to try and explain that you are dealing with a culture that has different values, then more fool you.

[Gas Bags]

Sunfish you lose credibility when you throw your toys out of the pram and resort to name calling simply because someone has a different view to yours. Yes you can sprout about your families 80 years of experience in business with "Asia", and in this environment you will be supported by the anonymous masses because you are attacking the employer everyone hates at the moment, but let others have there view as well.

[Blueskymine]

Sunfish is in the money.

For the record, sunfish is Asian :)

[RATpin]

HIALS,you might start by reading "Taipan":E.

[RATpin]

HIALS,sorry,the Author is James Clavell.
"The only thing new in the world, is the history you don't known yet"

[600ft-lb]

I think the one high profile businessman in Australia who actually understands the game the Chinese like to play is Clive Palmer. From the ramblings it seems like Citic Pacific came here and tried to take Clive Palmer's mining leases for what they worth and got played for all they're worth in return. In getting burned big time they are trying to take him down on a technicality relative pocket money that's been allegedly misappropriated.

But at least Citic got a mine out of it

Seems to me that Qantas didn't get anything out of Jetstar HKG, just the opportunity to do some LCC ground work with an interested partner, MU, who then decided to start up their own LCC. Seems like MU did well out of this, saved them a lot of R&D and groundwork.

[Sunfish]

Gasbags:

resort to name calling simply because someone has a different view to yours.

Its not opinion, its fact. Ask any of the Thousands of Westerners who have lost their shirt in trying to invest in China. You require a great deal of patience, very deep pockets and eyes in the back of your head. Qantas displays none of these traits.

[1A_Please]

We seem to have degenerated into a petty argument when really it seems everyone is agreeing. Doing business in Asia is different from western cultures; not better or worse, just different. Whichever way you look at it, QF have been played in their JQ Asian ventures. Through a combination of stupidity, arrogance and hubris they have managed to lose and continue to lose millions.

Jetstar Hong Kong has been terminal for months and MU's announcement just confirms it. If QF's auditors are any good, they will be demanding that Qantas write off their entire investment as part of the FY14 accounts because it is unlikely this money will ever be recovered.

AJ's pipe dream of an Asia wide Jetstar operation returning millions to QF is now shown to be the pipe-dream it always was. He could have made much more money properly developing Jetstar and reinvigorating mainline here in Australia. Instead, he has left these businesses moribund with little strategy and has been attacked from competitors who sensed the weakness. In years to come, people will get MBAs writing thesis about the mismanagement that has go on in Mascot.

[FYSTI]

If QF's auditors are any good, they will be demanding that Qantas write off their entire investment as part of the FY14 accounts because it is unlikely this money will ever be recovered.That would fit perfectly into the "the sky is falling in", faux Chapter 11 narrative. Of course, creative, I mean segment accounting allows the write-offs to be mimised & masked [saving face] via transmutation onto other business segments. The true losses in Asia will never be publically admitted under the AJ/LC administration, possibly ever.

If you are going to have a bad year, make it a shocker. Think of it as a toxic waste barge allowing the all the trash to be floated away in one go. And never let a crisis go to waste.

[Jack Ranga]

You are a vitriolic racist.

Bull**** he is, and your comment is idiotic. Grasping for something when you've got nothing. You've got no argument so you scream rascist knowing that other uneducated idiots will brand people.

[Jackneville]

This being the first week of FY 15, I find MU's timing interesting, are they hoping to achieve maximum damage to QF ?
It would appear that Qf were going to write down as many losses as they
could during FY 14, making FY 15 appear to be the start of the 'miraculous' turn-around.

The end of any hope for JHK would have to be the worst possible way to start the new financial year.

Can they attribute the losses of winding-up JHK to FY14 when they gave no such guidance to the market that this was a possibility ? I don't know.

In respect to Sunny's observations, they all seem to come true, unfortunately.:{

[Jack Ranga]

Sunfish you lose credibility when you throw your toys out of the pram and resort to name calling simply because someone has a different view to yours.

Calling a fool a fool is losing him credibility? Don't think so.

[1A_Please]

Can they attribute the losses of winding-up JHK to FY14 when they gave no such guidance to the market that this was a possibility ? I don't know.
Yes, they can writedown their investment and make a provision for shutdown costs in their FY14 accounts. It is unlikely QF will close thier books on FY14 for another few weeks. At that point, they cannot make any additional changes, except those demanded by the auditors. Any subsequent major issues would be disclosed in their accounts as Significant Matters Arising Subsequent to Close and would be in FY15 figures.

If you are going to have a bad year, make it a shocker.
I have no doubt that QF will provision everything and make sure the year is terrible but FY15 is a massive improvement. It will be therefore incumbent on analysts and the press to ask lots of questions of QF management when the results are released as AJ/LC will be trying to "hide the bodies" of all sorts of disasters behind lines like General Provision etc.

[Jackneville]

Thanks 1A, I didn't know that.

[Chocks Away]

Well QF have got alot of answering to do now their joint partner - China Eastern has turned their back on them, TO START THEIR OWN LCC (http://atwonline.com/finance-data/china-eastern-converts-subsidiary-china-united-airlines-lcc)!

More here. (http://www.bloomberg.com/news/2014-07-02/china-eastern-sets-up-budget-carrier-rivals-may-follow.html)

[Boe787]

Interesting indeed, although China Eastern have been quoted as saying they are looking for a strategic investor in their proposed LCC! Qantas/Jetstar Hong Kong?

[Prince Niccolo M]

Why would that be such an obvious conclusion? My Machiavellian side suggests otherwise...

After BCG helpfully derailed the J*HK process by fully displaying the arrogance of youth :mad:, China Eastern gained unexpected access to a reputably experienced LCC set-up team (sans BCG) that allowed them to advance their schedule for a domestic Chinese LCC before too many other players get a foothold. I don't understand why people think that China Eastern see the issue as a binary decision between J*HK or a domestic Chinese LCC. :=

Why wouldn't you have a LCC strategy that allows you to grab both ends of such a significant market pair as HK and mainland China? Moving in both camps must lessen the overall risk of failure in one place or the other.

Turned their back? I don't think so... :E

[Captain Dart]

Companies can launch all the low cost carriers they want, but the issue is that Hong Kong's airspace is saturated. The 'cousins' up north have, predictably, not released any airspace since their takeover in 1997, and one line of CBs shuts the joint down for hours. I won't even start on the typhoons. The ATC delays have got worse over the last five years, and I speak from experience.

The full service carriers with widebodies are flat out making a go of it, let alone yet more cheapos with smaller aircraft.

[FYSTI]

High Rollers - High Risk? (http://www.abc.net.au/news/2014-09-15/high-rollers---high-risk/5747828)

Updated 17 Sep 2014, 3:55pmWed 17 Sep 2014, 3:55pm
Australian casinos and the threat posed by organised crime.

MGM owned a major casino on the Atlantic City strip. It wanted a Macau licence by partnering with Stanley Ho's daughter, Pansy Ho.
This triggered a probity investigation by local regulators to examine whether Stanley Ho would exercise undue influence over the joint venture.
The four-year investigation was painstaking. And it was not the first time that Ho's children had come under scrutiny from casino regulators. Sometimes they were approved and other times not.


SANDY BOUCHER: It's true that, that some of, er, Stanley Ho's children have applied for licences and they've been refused.


LINTON BESSER: Sandy Boucher is a former Royal Hong Kong Police detective, now in the private sector. He has worked on several casino regulator investigations that probe Macau and its underbelly.


SANDY BOUCHER: I think the primary issue that they would have been dealing with is: who is their father? In other words, they would have been seen as fronts in those days, as a, as a way to get around the regulatory issues that Stanley Ho himself clearly had.


LINTON BESSER: In 2010, New Jersey regulators found Pansy Ho's associations with organised crime posed too great a risk. Authorities here ordered MGM to either sever its relationship with Stanley Ho's daughter or to leave New Jersey altogether.
It chose the latter and it promised to divest its interest in this Atlantic City mega-casino.


LINTON BESSER: Late last week, after Pansy Ho had removed herself from day-to-day management of the venture, New Jersey allowed MGM back into Atlantic City.


Back in 2008, the Victorian gambling regulator found Lawrence Ho was not under the ongoing influence of his father. It described its investigation as "rigorous" but, unlike in New Jersey, the details of the Victorian investigation were never made public.


LAWRENCE HO, CO-CHAIR AND CEO, MELCO CROWN ENTERTAINMENT LTD (archive): I think we have a wonderful partner in, you know, Mr James Packer and Crown Limited.
(Footage of James Packer and colleagues officially opening City of Dreams resort, Macau, 2009)


But Mr Joyce said Jetstar HK chairman Pansy Ho, “one the most credible, biggest people in Hong Kong’ (http://www.theaustralian.com.au/business/aviation/jetstar-hk-case-for-approval-solid-says-alan-joyce/story-e6frg95x-1227101169387)’

[Popgun]

The executives responsible for this ongoing fiasco should lose their heads:

Jetstar HK off to rocky start (http://www.smh.com.au/business/jetstar-hk-off-to-rocky-start-20150322-1m4twa.html)

PG

[spelling_nazi]

The executives responsible for this ongoing fiasco should lose their heads:

Jetstar HK off to rocky start (http://www.smh.com.au/business/jetstar-hk-off-to-rocky-start-20150322-1m4twa.html)

PG

The buck stops at the top

[OneDotLow]

They've still got more A320's than JQ Pacific had when they kicked off in Vietnam! :}

[The The]

"As the establishment of Jetstar Hong Kong is taking longer than initially expected, the sale of aircraft under the aircraft sale agreements will optimise the fleet plan in the short term," Shun Tak told the Hong Kong Stock Exchange.

Read more: Jetstar HK off to rocky start (http://www.smh.com.au/business/jetstar-hk-off-to-rocky-start-20150322-1m4twa.html#ixzz3V6aeaCPo)

Classic! I guess the optimal fleet plan in the short term is zero!

[Alien Role]

I know where there is a cheap 1966 model C172 they could lease if they want to offload the last A320 to create some cash-flow !!
Role on....

[Shark Patrol]

Think of the fuel savings!

And catering, crewing, engineering, accommodation, baggage handling, spares ..... It'd be an amaaaaaaaaaaaaazing business!!!!

[Sunfish]

It is perfectly clear that Qantas will lose every cent it invested in Asia, however it's the opportunity cost of the Asian ventures that saddens me.

All the management and Board time wasted on this wild goose chase can never be recovered and could have been far better spent on the mainline product.

[Toruk Macto]

Nearly there Alan ! I know Ive said this before mate but need another 20 mil and it's all fixed . You got a pen mate i got a couple account numbers for you to write down .

[caneworm]

No matter what it costs,
No matter what it takes, and
Contrary to all known logic,
It WILL come to fruition.

Even a box of rocks could see the folly in this.

[27/09]

This saga reminds a bit of the Kenny Roger hit, The Gambler

Every gambler knows
That the secret to survivin'
Is knowin' what to throw away
And knowin' what to keep
.......................
.......................
You've got to know when to hold 'em
Know when to fold 'em
Know when to walk away
And know when to run

The trouble is the clowns in charge of the circus don't know what to keep or throw away, or, when to fold and run away.

[AEROMEDIC]

I wonder what Jane has to say about all this.

[Juliet Alpha]

HAPPY VALLEY WAN CHAI CHECKERBOARD NIGHT NOODLE LADIES JADE MARKET PANSY OCEANIC SAME DAY LAUNDRY SERVICE AT SPECIAL PRICE AIRWAYS - just ain't goin nowhere. delusional dot kai tak at whitecoat dot org

The MILLIONS lost over this vs the money that is being saved on QF by there being no trays in E/Y class on 16 hour flights, less dunny's, more seats, less cabin staff and them getting 15% less allowances is criminal.

The entire Leadeship, Board and EXCO people should be in jail.

Oh and that pink and red. WTF?

Qantas's Jetstar Hong Kong venture down to one plane (http://www.smh.com.au/business/aviation/qantass-jetstar-hong-kong-venture-down-to-one-plane-20150322-1m4rm5.html#ixzz3V9rEJADC)

[B772]

Looks like the HKG ATLA has denied the application for a licence for Jetstar Hong Kong on the basis of the level of foreign ownership ie QF

This is proving to be an expensive exercise for Joyce. If it was anyone else they would have fallen on their sword long ago.

[V-Jet]

I'm looking forward to the triumphant J* HKG profit announcement on the front page of Qantas Pravda. There is no doubt that brilliant decisions from Management have once again saved the day.

[The Green Goblin]

Think of the money they'll save with no airline and no staff?

I just feel for the staff who got caught up in this franchise. You would have thought the company would have done its due diligence before embarking on such an experiment.

I particularly dislike the way Jane signed off the company announcement with 'warm regards' after admitting it's been torpedoed.

It should have been 'yours sincerely'.

This shows a complete lack of judgement in my opinion.

[Ollie Onion]

I don't know, the language in the latest company missive seems to have an underlying tone that they are about to pull the pin altogether. They have blamed all those other local airlines and said that they can't understand the rejection as they only own such a small piece. This together with them asking us to support our Hong kon colleagues during such a tough time makes me think that this was the last shot.

[CamelSquadron]

Publicly Qantas will be disapointed with the decision. Privately they will be content.

The world has not stood still for 4 years. The business case for Jetstar HK is not what it was 4 years ago and they now have other better uses for their capital and resources.

After a 3 year delay, with all the HK slots gone, with an un-supportive local administration, Jetstar HK was going to be a struggle.

Fast forward the 787-9.

[FYSTI]

No, your right Beer Baron, in just the same way that QF International was in "Terminal Decline", until it was saved with the stoke of an accountants pen.
One has to wonder if there was a connection. Losses can't be eliminated, however, they can be transmuted. Was the QFI loss the toxic waste barge that carried away the groups financial sins?

Jetstar HK was going to be a struggle.
You are just figuring it out now?

[Going Boeing]

Fast forward the 787-9.

Camel Squadron, QF senior management are now publicly stating that JQ are keeping the -8's and not getting any -9's - they are all planned to go to mainline.

[CamelSquadron]

Camel Squadron, QF senior management are now publicly stating that JQ are keeping the -8's and not getting any -9's - they are all planned to go to mainline.

Sorry wasnt suggesting otherwise. Just pointing out that Qantas now has better uses for the capital that was going to have to go into Jetstar HK.

[CamelSquadron]

You are just figuring it out now?

In my opinion the business case for Jetstar HK has deteriorated over the past 4 years. The world does not stand still.

[FYSTI]

I think you have it round the wrong way CamelSquadron, business conditions deteriorated because of the establishment of Jetstar Hong Kong. Direct cause and effect.

But realistically, was it ever going to be allowed to fly? Many argued on these pages, that frankly it didn't ever stand a chance given the Swire groups grip on the aviation market in Hong Kong & no doubt tight connection to the CCP.

Losses in Vietnam, Japan & a few miniscule profits in Singapore. If the rumors of the figures of few, now former group managers are close to being true then the total losses for the entire Jetstar experiment are eye an watering $1.6B. The only clawback is a sale of QF's 1/3 stake in Jetstar Japan as a trading asset for some $600M

Asia has been a business graveyard for the white man for a long time, right or wrong, that's just how it is. But, the Masters of the Universe thought they knew otherwise.

[The Green Goblin]

It may be a graveyard for the White man, but who owns Swire?

[SOPS]

But I thought it was a faaaaaaannnnnntastic buisness ?

[FYSTI]

Yep, fully aware of the history of mercantilist triangular trade in cotton/opium/textiles/silver between Manchester/India/China & the East India company.

Notice I said that likely they had a tight connection to the CCP? I should have been more precise, its the graveyard of the outsider white businessman. Swire are don't want competition, they never have & will ruthlessly protect their patch. A quick google search will reveal the sordid history of the family. They are fully integrated into the power structure of the region.

[CamelSquadron]

I think you have it round the wrong way CamelSquadron, business conditions deteriorated because of the establishment of Jetstar Hong Kong. Direct cause and effect.

WOW. That Jetstar HK must be one very influential business.....it has changed the asian market without making a single flight.......:)

[Hardworker]

You can round around about how lucky it was not to eventuate, but really heads should role...Joyce, JQ CEO, both should be gone, the absolute waste of $$$ for no out come, why would you let them run a business, surely the board should question the direction of JQ....Time to re evaluate the operation and put JQ to the dogs....JQ Japan is a loss maker too much competition...Time to do what ANZ did, invest in the core Airline & make $$$

[V-Jet]

WOW. That Jetstar HK must be one very influential business.....it has changed the asian market without making a single flight.......:)

Ummmmm no. If anything It taught an idiot (s)he is an idiot. At least we hope it did.

[Meet the Fokker]

Jetstar HK...capital light..is all one hears...minimal losses etc.

Perhaps someone smarter than I can explain who gets the prickly end of the pineapple on the fleet disposition.

So far 8 brand new A320's have been sold off the parking lot in Toulouse.

Catalog price is USD 94m a copy.

QF got a good discount due the large commitment they made in 2011 for the purchase of 110 of the type. Sail away price of about $70m.

There has been no disclosure of the price on the first sale of 6 of the JQHK fleet but the last two went for $41.5m a copy. All have ended up in the hands of Chinese interests.

So half a billion dollars of kit has been recycled at a 40-50% discount.

Where does this show up and in who's books?

Would it be fair to assume that the Chinese investments/loans in JQHK are already covered via these transactions?

[Ollie Onion]

Interesting to read that the decision was based on the fact that Jetstar Hong Kong is not majority owned by local interests regardless of what the financials say because they could never make an operational decision without the input of Australian based investors.

This to me means that the AOC will never be issued as ALL the Jetstar franchises are run from Melbourne. All I can say is that it is actually good for the Qantas group that a regulator has finally stood up to this smoke and mirror show. I am sick of Qantas saying that they are just minority shareholders in these other airlines when most of the time they are giving interest free loans to some local 'businessman' who then uses it to purchase a majority share in the franchise and has absolutely no say in how the airline is run.

JH says their investment in Jetstar HK is only $10 million dollars, I would say that this is certainly 'bending' the truth, not that we will ever see the true exposure reported.

[rodchucker]

Suspect this lot are unravelling so hang in there.

If there has been any "bending of the truth" then it will come out as the rats try to get to the lifeboats.

[404 Titan]

Oldie Onion

Just for the record JHK was 2/3 foreign owned. China Eastern is a mainland Chinese carrier based out of Shanghai.

I still see AJ is spinning crap in the press about HK not allowing competition. If the roles were reversed and CX applied for an Austrailian AOC to operate internationally out of Australia, he'd be the first to squeal like a stuffed pig to the Australian government. Pure hypocrite.

[swh]

Just for the record JHK was 2/3 foreign owned. China Eastern is a mainland Chinese carrier based out of Shanghai.

That was later on, initially it was 100% foreign owned. Shun Tak Holdings became a 1/3 shareholder in June 2013.

[Sunfish]

Told you so right at the beginning. The true costs will be buried in the accounts. What cannot be recovered is the amount of management time wasted on these stupid Asian ventures.

[Australopithecus]

...which is a good thing. Imagine how stuffed Qantas would be with the benefit of their full attention?

[No Idea Either]

Have to give Sunfish credit here folks, he did call it years agoooooo.

[SandyPalms]

What could be the effect on the other Asian Jetstar franchises of this?
I'm just thinking out load really, but could this "centrally located" airline have been a lynch pin of the whole thing, so to speak?

[Ultergra]

blessing in disguise?

How much would have JQHK lost fighting local airlines and for how many more years to come?

How much have their other ventures made? Really, not much.

So, sure, they blew the money, but has it actually saved money by going no further?

[Jackneville]

Oh what an amazing 'business case' that is, lose six or so million a month...

yet they claim they can't afford a decent pub in LA, integrity ??

[Sunfish]

To be clear,, Qantas will lose the majority of its invested capital in Asia and will never see a dollar of profit from any Asian venture. Qantas has no understanding whatsoever of Asian business environments at all and cannot possibly develop the same. Without that, and the associated personal links, that take about thirty years to develop, you have no hope.

To put that another way, I lost count of the Asian customers we wined and dined, picnics, bb'qs, visits to Healseville sanctuary and the Great Ocean road and the countless children in Australian schools we kept an eye on as I was growing up. We treated them as family, as they would expect us to if we are to do business together, Can Qantas do this? Not so much.

[Meet the Fokker]

Sunfish

You are correct in what you say. If it were only the so-called 'capital invested' that QF shareholders stood to loose I would not be too concerned.

In reality that is the part of the iceberg above the water.

There is no doubt that the other 'equity' investors in the Asian ventures have been indemnified. The half-price sale of the JQHK A320's to Chinese interests is proof of that.

My concern is when and where does this turn up on the QF balance sheet.

But I guess by the time that happens Elaine would have already departed with his bonus.

[404 Titan]

Titan Uranus

There you go again. Attack the person rather than have a sensible discussion. :ugh: