CEA creates budget airline with Qantas

Shanghai (CNS) -- China Eastern Airlines (CEA) is making its first foray into low-cost aviation; their investment will create a regional low-cost airline based in Hong Kong with Australia's flagship carrier, Qantas, according to an announcement on March 26.

The firms will both incorporate capital of US$57.5 million in an equal joint venture. Jetstar Hong Kong will commence operations in the middle of 2013 with three Airbus A320, and expand the fleet to 18 aircraft by 2015.

CEA is China's third largest airline by market value, and ranks among the top ten globally in terms of annual passenger volume. At present, it manages 380 passenger and freight aircraft with networks linking 928 destinations in 173 countries.

Currently the Jetstar brand, as a subsidiary of Qantas, operates 89 planes and a broad number of budget airline company members.

Asia is the fastest-growing airline market in the world, and Hong Kong has great potential to develop low-cost airlines, said a source from CEA. This potential is set to be tapped by a joint venture that leverages CEA and Qantas assets to secure a better position with respect to market competition.