Jetstar wins a free kick in Singapore
But in a sign of the tough business environment, the International Air Transport Association has trimmed its forecasts for combined airline earnings in the Asia-Pacific by $US1.5 billion to $US3.1 billion for this year.
The peak airline body blamed slower growth in the emerging economies for the lower forecast.
But in 2014 it expects airlines in the region to experience a modest improvement in profits to $US3.6 billion, mainly because of a pick-up in demand for cargo, growing demand in China's domestic market and the benefits of industry restructuring in Japan.
Jetstar's biggest flying operations are in Singapore but it also has joint ventures in Japan and Vietnam.
It also is seeking approval to launch services from a new base in Hong Kong.
Jetstar gained approval from the Competition Commission of Singapore to co-ordinate with its regional offshoots on matters such as flight scheduling and pricing, despite "some parts" of the plans raising competition concerns.
Highlighting that budget airlines often increased competition on air routes, the Singapore watchdog said those concerns would be offset by economic benefits.
The decision will also allow Qantas to better co-ordinate services with Jetstar's network.
It follows the Australian regulator giving approval in March for Qantas and Jetstar to co-ordinate with the budget airline's joint venture operations across Asia for the next five years.
The Australian Competition and Consumer Commission said at the time that the better co-ordination of passenger and cargo services posed "little, if any, detriment" because the airlines faced stiff competition from other carriers on the mostly intra-Asian routes.
The clearance in Singapore comes as Jetstar awaits a decision from regulators in Hong Kong about whether to approve its plans to launch operations from the Chinese territory.
Jetstar has faced stiff opposition to its plans from Cathay Pacific, its offshoot Dragonair and Chinese-backed Hong Kong Airlines.
Cathay chief executive John Slosar has outlined its case against Jetstar in his airline's magazine, arguing that "granting a licence to what is essentially a franchise of a foreign airline . . . would actually break the law".
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The Competition Commission of Singapore cleared Jetstar to coordinate with its regional offshoots on passenger and cargo services, including flight scheduling and pricing. The regulator noted some parts raised competition concerns but decided the economic benefits would offset those concerns.
The Singapore decision allows Qantas to better coordinate services with Jetstar’s regional network. This follows the Australian Competition and Consumer Commission’s earlier approval in March for Qantas and Jetstar to coordinate with Jetstar’s Asia joint ventures for five years.
Jetstar is seeking regulatory approval to launch services from a new base in Hong Kong and is awaiting a decision. Its plan has faced strong opposition from Cathay Pacific, Dragonair and Hong Kong Airlines.
Cathay Pacific and affiliates, along with Chinese-backed Hong Kong Airlines, have opposed Jetstar’s plans. Cathay’s CEO John Slosar argued in his airline’s magazine that granting a licence to what he described as a franchise of a foreign airline could be unlawful.
The International Air Transport Association trimmed its combined airline earnings forecast for the Asia‑Pacific by US$1.5 billion to US$3.1 billion for the year, blaming slower growth in emerging economies. It expects a modest recovery to US$3.6 billion in 2014, helped by stronger cargo demand, growing domestic demand in China and industry restructuring in Japan.
Jetstar’s largest flying operations are in Singapore. The budget carrier also has joint ventures in Japan and Vietnam, and it is pursuing approval to establish a base in Hong Kong.
Regulators acknowledged parts of Jetstar’s coordination plans raised competition concerns. Singapore’s watchdog said those concerns would be offset by economic benefits and noted that budget airlines often increase competition on routes. Australia’s regulator (the ACCC) similarly judged that better coordination posed little or no detriment because of stiff competition from other carriers on most intra‑Asian routes.
Investors should note two points from the article: regulatory approvals in Singapore and Australia could help Jetstar and Qantas improve network coordination across Asia, which may support operational efficiency; at the same time IATA has downgraded near‑term profit forecasts for Asia‑Pacific airlines, signalling a tougher trading environment driven by slower emerging‑market growth, with a potential modest improvement expected next year from cargo demand and recovery in China and Japan.
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