ECONOMICS OF OPERATIONS

Jetstar teams up with AirAsia, Services sector still struggling: Economy Roundup
Wednesday, 06 January 2010 11:11
Patrick Stafford

Jetstar has formed an alliance with budget carrier AirAsia in order to cut costs, which will see the two companies produce a joint specification list for a new generation of aircraft.

Additionally, the two companies will also develop arrangements for passenger and ground handling, and will combine inventories for aircraft components and spare parts.

"Jetstar and AirAsia offer unmatched reach in the Asia Pacific region, with more routes and lower fares than their main competitors, and this new alliance will enable them to maximise that scale," Qantas chief executive Alan Joyce said in a statement to the ASX.

"Just as both carriers have pioneered the development of the low cost, long haul airline model, today's announcement breaks the mould of traditional airline alliances and establishes a new model for achieving reduced costs and increased efficiency."

Joyce also said after a press announcement the alliance would remain non-equity, but there could be arrangements made to look at co-share deals.

Also in the travel industry, Webjet shares have risen following an announcement from the company detailing a lift in the value of ticket sales for the first half of the financial year.

The company's performance has also prompted investors to expect similar results from Flight Centre and Wotif, both of which could amend their guidance statements.

Webjet announced a 37% rise in the value of ticket sales to $248 million, with managing director David Clarke saying the figures "totally defied" the downturn.

''We are seeing a massive increase in shopping activity, which would suggest pent-up demand, but we are not necessarily seeing that same growth in bookings yet,'' he told The Age. ''Consumers are still hoping that fares will go back to July levels [when they reached decade lows].''