China Eastern, Qantas to start Hong Kong budget airline

China Eastern Airlines (600115.SH) and Australian national carrier Qantas (QAN.ASX) announced plans to launch a Hong Kong-based budget carrier to tap into Asia’s booming budget-airline market, Reuters reported. China Eastern Airlines and Qantas’ low-cost unit, Jetstar, will form a 50-50 joint venture and invest US$198 million over three years, beginning in mid-2013. The initial fleet of three Airbus 320s is set to expand to 18 A320s by 2015. The new carrier will fly short-haul routes to China, Japan, South Korea and Southeast Asia and other destinations, the Australian Business Traveller reported. Qantas Chief Executive Alan Joyce said Jetstar Hong Kong is “a historic opportunity to continue the successful expansion of the Jetstar brand in this region.” Nomura airlines analyst David Fraser said the alliance would help Qantas gain a foothold in a market where only about 5-10% of capacity was served by budget carriers, compared with half in Australia.