The following article from The Australian is the most spot-on in terms of strategy, etc.
Looks like it will be all-change in Asia shortly!
Qantas joins the Asian fray
By Geoffrey Thomas
April 07, 2004
AT the launch of Jetstar Asia yesterday, Qantas chief executive Geoff Dixon claimed that commercial aviation would be completely changed within the next two years. Some analysts, say, however that at the current rate it will be completely different within one year.
In fact, aviation is changing faster than Concorde, but the trouble for Qantas and many other airlines is that the regulators are still bumping along in Tiger Moths.
That's one of the reasons Qantas has turned northwards. Frustrated with Australian and New Zealand regulators not seeing the big picture, Dixon has found willing partners in the Singapore Government and its investment arm Temasek.
There is far more behind the announcement than just the setting up of another low-cost airline.
For Qantas, it is a stake in potentially the world's biggest travel market, with up to 3 billion people - the overwhelming majority of whom have never flown. It also has the ability to build traffic into its largest hub.
Dixon quips that the airline market in Singapore may be crowded but so are the countries he intends to serve.
The move to Singapore and another low-cost airline also pressures the Qantas international unions to moderate pay demands, just as Jetstar in Australia is a response to Virgin Blue's union-blessed, significantly lower pay structure.
For Singapore, the issue is ensuring that its Changi Airport remains the major hub in South-East Asia.
Qantas has received strong support from Temasek, which is the largest shareholder in Singapore Airlines (SIA). Separately, Temasek is also a stakeholder in SIA's new low-fare initiative, Tiger Airways.
By aligning itself with Temasek, which has taken 19 per cent in the new airline, Qantas ensures that it will get critical traffic rights to countries such as India, China, Hong Kong, and Vietnam.
Temasek's ownership of SIA is 56.76 per cent, which is worth $S7.54 billion ($5.9 billion). Additionally, it owns Changi Airport, in which it has invested $S6.5 billion.
Altogether Changi Airport and the aviation industry contribute $S13.3 billion or 9.2 per cent to Singapore's GDP.
However, Temasek executives have made it quite clear to SIA unions that in a choice between preserving its assets in SIA and protecting Changi's hub status, the priority is definitely Singapore's hub status.
The Singapore Government is aware that Emirates and the Dubai hub are emerging as a major threat to the viability of both SIA and Changi and also for Qantas's hub operations in Singapore.
Emirates can offer passengers many more one-stop destinations - 17 at this stage - into Europe than can SIA (eight) and Qantas (three). Tourists are flocking to Dubai, with a 30 per cent rise in 2002.
On the drawing boards is Dubailand, a $US4.9 billion tourism city development of six different entertainment worlds. The Mall of the Emirates, which is under construction, will be the largest mall outside the US and will have the world's largest indoor ski resort.
While Dubai has seen tourism soar, Singapore has experienced a steady decline. Since 1993 Singapore's tourism receipts have dropped, by 21 per cent to $S8.8 billion in 2002, and the sector's contribution to GDP declined from 6 per cent to just 3 per cent. Worse, this decline was against a backdrop of increasing tourism in the region, with Thailand, Malaysia and China the big winners.
Meanwhile Hong Kong's $US3 billion ($3.95 billion) Disneyland theme park is due to open by the end of 2005, while Macau is rapidly moving to become the "Las Vegas" of Asia.
Changi also faces stiff competition from Kuala Lumpur International Airport (KLIA) and the new Bangkok Airport.
For Qantas, Bangkok offers a more direct route to Europe, while KLIA's landing charges are the lowest in Asia.
Dixon, however, dismisses the suggestion that Qantas's move will allow SIA to gain access to the Sydney-Los Angeles route. "SIA can set up an airline in Australia with a minority shareholding, just as we have done in Singapore," Dixon says. "Qantas is still limited in its traffic rights beyond Singapore."
Jetstar Asia has enormous upside for Qantas and while it will have a modest start with just four aircraft, insiders suggest that 40 aircraft within three years is the growth target.
According to Centre for Asia Pacific Aviation managing director Peter Harbison, this latest move clearly shows an aviation industry in a massive transition phase.
"The old competitive rules are gone forever. The opening of aviation markets and low-cost operating models are a cocktail for rapid change and every airline in this region will have to think twice," he says. "For Qantas, the move recognises the crucial role low-cost airlines will play in the development of point-to-point leisure travel in the Asia-Pacific region and at $S50 million, it is a fairly small investment for Qantas to defend its Singapore operation and participate in what should be a very high growth market."
BTW -- since when did Qantas operate a domestic carrier called JetBlue! Seems the BBC needs to do a bit of spot-checking (or at least hire someone who knows something about the industry)!