Date
23 August 2017
Views Inside Auckland Airport And CEO Adrian Littlewood Interview

INTERVIEW: Jetstar seeks short-haul lift from China and beyond

Travel may be taking off in China but it may not reach its potential without more-open skies and a serious expansion of aviation infrastructure, so says one of the heads of Australian budget carrier Jetstar Group.

“China’s aviation industry requires more infrastructure for airports to encourage more growth,” Jetstar Group chief commercial officer David Koczkar told the Hong Kong Economic Journal’s EJ Insight. “Optimizing air access is also a key.”

Jetstar’s interest in China’s growth is keen. The low-cost carrier set up a Hong Kong arm in 2012 with backing from Shun Tak Holdings Ltd., Qantas and China Eastern Airlines Corp. Ltd. (00670.HK, 600115.CN), aiming to make Chinese tourists a significant part of its revenue. 

The mainland is certainly core to the Hong Kong travel industry — it accounted for three-quarters of the 49 million arrivals in the city in the first 11 months of last year, according to the Hong Kong Tourism Board. But China is only part of the growth picture for Jetstar — it aims to spread its wings throughout the region. 

“We are seeing huge passenger growth in not only China, but the whole Asia-Pacific region, as the middle class in those countries keeps rising,” Jetstar Hong Kong chief executive Edward Lau said.

Lau said that according to the International Air Transport Association, the Asia-Pacific region is the fastest growing market in the world. 

And that means plenty of room to move for low-cost carriers. Koczkar said low-cost airlines in mature markets, including North America and Europe, account for about 30 to 50 percent of the total industry. “[But] in the Asia-Pacific region, [it's] only up to 20 percent,” he said.

Koczkar expects “the average annual passenger growth on low-cost airlines to be more than 10 percent for the rest of this decade,” exceeding the average 6 to 10 percent growth for the total market every year.

Hong Kong or bust

Jetstar says its Hong Kong base puts it within an easy, five-hour reach for half the world’s population. That access, combined with its low-cost model, network and experience in customer service, will make the carrier competitive. And Hong Kong could do with more competition, it says.

“Low-cost airlines only take up 6 percent of the total seats [in Hong Kong],” Jetstar Hong Kong’s Lau said. “And Hong Kong passengers are paying about 40 percent or more for airfares compared with [people in] Singapore.”

He said Hong Kong was already among the top three destinations for Southeast Asian travelers, and with more carriers serving Hong Kong-Southeast Asia routes, there will be more travelers from that part of the world as well.

– Contact the reporter at [email protected]

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Ayishah Ma is a financial reporter on Greater China issues.

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