Jetstar Singapore Qantas' budget offshoot, Jetstar, faces a significant threat to its plans in Asia after Singapore Airlines revealed it would set up a low-cost carrier to fly medium to long-haul routes. Singapore Airlines said it planned to launch the yet-to-be-named, low-cost offshoot within a year, using wide-body aircraft. It would be operated independently and managed separately from Singapore Airlines, which would have a 100 per cent stake in the carrier.
Singapore Airlines did not reveal the routes for the new airline but it was possible Australia could be on the list of destinations. "All options are open," a spokeswoman said. The launch of another low-cost airline is a direct threat to Jetstar and Malaysia's long-haul airline AirAsiaX, in which English entrepreneur Richard Branson has a stake. Jetstar began flying between Auckland and Singapore in March in direct competition to Singapore Airlines, while AirAsia X launched a Christchurch-to-Kuala Lumpur service last month.
Shares in Qantas fell A2c to A$2.07 in trading yesterday. The airline is also facing industrial action from its long-haul pilots and aircraft engineers in the next month over demands for job security clauses to be inserted in contracts. "[Singapore Airlines' plan] is definitely a competitive threat [to Jetstar] as it is squarely aimed at the same market," said Angus Gluskie, managing director of White Funds Management. "It is logical that others look to it as well, and seeing another player go for the same market has to be expected."
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