Sunday, January 20, 2008
JETSTAR may use Changi as overseas hub.
Summary:
The Qantas-owned budget airline Jetstar is considering the use of Changi Airport as its key long-haul overseas hub. It follows growing speculation that the low-cost carrier might ultimately team up with its Singapore affiliate Jetstar Asia to offer joint services to destinations in Europe. Flight between Australia and Britain are seen as the nest step in the burgeoning budget-price international air travel market. Five cities including Singapore have been considered as possible hub for Jetstar Australia, but media reports suggested that Singapore would be the likely location. The advantage of using Singapore as a hub was that Changi Airport was also fed by Jetstar Asia’s intra-Asian network which helps to drive costs down and enable Jetstar to utilize the more liberal air rights enjoyed by Singaporean carriers into Europe. With both airlines keen to exploit the low-cost, long-haul travel market, a joint operation on the European leg would make economic sense.
Comment:
The budget airline has to make a rational choice in their decision-making of its key long-haul overseas hub. The marginal benefits in this case are the low cost and the ability to utilize more liberal air rights enjoyed by Singaporean carriers into Europe. As costs are driven down, there is also productive efficiency where market output is produced using the least-cost combination of inputs.
Haslina and Jiani
7:32 AM
