Kuala Lumpur best for Qantas hub, says AirAsia chief

  • Business
  • Thursday, 15 Dec 2011

SYDNEY: Australian airline Qantas should base its Asian operations in Malaysia rather than Singapore if it is serious about expanding in the region, AirAsia Group chief executive officer Tan Sri Tony Fernandes said.

Fernandes, who is in talks with Qantas and Malaysia Airlines on a three-way alliance, told The Australian Financial Review yesterday that a Qantas operation based in Kuala Lumpur would be the stronger option.

“Singapore is the better business hub for sure, but the majority of Singapore traffic is transit traffic – just like Dubai,” he said.

“Whether you connect in KL or Singapore, the key is connectivity.”

Qantas in August announced plans to establish a joint-venture premium airline in Asia as it repositions itself within the industry’s fastest-growing region and seeks to turn around its loss-making international arm.

Talks were reported to be on the backburner given uncertainty over global economic conditions and volatile fuel prices, but Qantas said on Monday that they were ongoing, with Kuala Lumpur and Singapore the most likely potential bases.

Fernandes, who over the past decade has revived Malaysia-based AirAsia to turn it into Asia’s biggest budget carrier, said Qantas would have lower costs if it chose Kuala Lumpur. “The main thing is cost saving, avoiding wasteful competition.”

Fernandes refused to comment on the status of talks with Qantas.

Qantas chief Alan Joyce wants the Australian carrier to have, within five years, a hub in Asia feeding traffic into Qantas and budget offshoot Jetstar’s networks.

“Our aim is to position ourselves within the South-East Asian marketplace in advance of planned aviation liberalisation,” Joyce said on Monday.

“This is how we will end the disadvantage of being an end-of-the-line carrier, ” he said.

The announcement in August of Qantas plans to establish a premium Asian airline sparked a fierce backlash from unions concerned at the outsourcing of jobs, which culminated in the carrier grounding its entire fleet in October.

The government’s industrial relations umpire was forced to step in and, with unions representing pilots, engineers and ground staff unable to resolve their disagreements with the airline, the dispute is now headed to arbitration. — AFP

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