Jetstar boss Bruce Buchanan has denied Hong Kong’s high airport costs form an obstacle to the success of the low cost carrier’s new venture Jetstar Hong Kong.
The cost of operating from the airport, set to be the hub for the joint venture with China Eastern Airlines from mid-2013, would be offset by the carrier’s low cost base and the rising value of ancillaries, he told a media briefing. He claimed it would enable the start-up to undercut full service rivals by 50%.
Research had shown Jetstar’s ancillary revenues had hit $30 per passenger, he revealed, making it a “quite significant” source of revenue.
Meanwhile, Qantas chief executive Alan Joyce branded Australian airports as “some of the most expensive in the world,” and referred to the ongoing profitability of Jetstar Australia’s low cost model despite the high charges.
Low fares were vital to grow passenger traffic, according to Joyce, who stressed the “mind boggling” growth potential of the Chinese and Asian middle class markets, as yet largely untapped.
“Extremely low fares allow us to stimulate the market and grow the traffic base quite considerably,” he said. A further boost for the project was the “strong support” it had garnered from the Chinese government who had a keen interest in becoming involved in the aviation boom.
In addition, Jetstar Hong Kong’s status as the first low cost carrier to be based in Hong Kong would also work to its benefit, according to Jetstar, which offered Ryanair and SkyWest as precedents.
China Eastern Airlines chairman Liu Shaoyong yesterday said he expected the joint venture to become profitable in its third year.
