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Jetstar soaring but Changi fees may push up fares

March 7, 2018 Headline News No Comments Email Email

Jetstar Asia sees its operation out of Singapore’s Changi Airport as “a great example of how global we have become” – but the carrier has warned that new fees at Changi could lead to fare hikes of up to 25% and force Jetstar to shift flights away from the Singaporean hub.

Changi seems to be everyone’s favourite airport, but airlines see its proposed new fees as very steep.

Jetstar group chief executive Gareth Evans told the CAPA Global Low-cost Carrier Summit in Singapore that Jetstar now operated more than 30 codeshare and interline agreements with airlines as diverse as Emirates, Ethiopian Airlines, Jet Airways, LATAM and United.

“It’s not common for full service airlines to connect their customers on to a LCC, so this is a real credit to Jetstar Asia,” he said.

Evans said Jetstar Asia’s on-time performance was exemplary. “In 2017 they were the most punctual airline – of both full service carriers and LCCs – in the Asia Pacific, and the second most reliable LCC in the world.”

Evans added that Qantas would be putting “even more of its customers on Jetstar Asia from later this month, when it will be redirecting more of its flying from Australia to the UK through Singapore.

Jetstar chief executive Gareth Evans addresses CAPA LCC Summit

“Combined with Jetstar, this makes the Qantas Group the second largest airline group in Singapore after the national carrier.

“It’s great news for Jetstar Asia, great news for Changi Airport, and great news for Singapore.”

Evans warned, however, that fees Changi is introducing to help fund expansion works, including Changi’s new Terminal 5, could prove a deterrent.

The fees include a new tax of SGD 10.80 per passenger from 1 July 2018 for departing travellers and SGD 3 for those in transit.  The airport’s passenger service and security fee will rise by SGD 2.50 to SGD 30.40 from 1 July 2018 and landing, parking and aerobridge fees will climb.

Evans told AirlineRatings.com he was “very disappointed” in Changi’s fees decision.  “We believe this will lead to fare increases of 10% to 25%.”

He said 80% of Jetstar Asia passengers travelled for under SGD 100, so a SGD 10 increase was “significant”.

Evans said there were now more Jetstar aircraft flying in Asia or to and from Asia than in Australia and New Zealand, “which has been our traditional heartland”.

“Fifty per cent of the Qantas Group’s capacity is dedicated to Asian routes. Jetstar flies to 10 Asian countries and territories and 54 Asian destinations. We have over 100 services per week to China and its territories.”

Another key to the Qantas/Jetstar business model, Evans said, was “what we call the dual-brand strategy.

“This is where Qantas and Jetstar work together to segment the market and jointly make network, scheduling and sales decisions. It makes us a pretty formidable competitor.

“In the Australian domestic market the dual brands account for more than 80% of the profit pool.”

Written by Peter Needham

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