Jetstar and AirAsia form alliance

Qantas subsidiary Jetstar and Malaysia-based low-cost carrier AirAsia have formed an alliance which the airlines say will reduce costs, pool expertise and result in cheaper fares.

The airlines said the key to the agreement was a proposed joint specification for the next generation of narrow-body aircraft.

Both airline groups will also investigate opportunities for the joint procurement of aircraft.

Qantas Airways chief executive Alan Joyce said the non-equity alliance would give Jetstar and AirAsia an advantage in the Asia-Pacific region, one of the world's most competitive aviation markets.

"Jetstar and AirAsia offer unmatched reach in the Asia Pacific region, with more routes and lower fares than their main competitors, and this new alliance will enable them to maximise that scale," Mr Joyce said in a statement on Wednesday.

"The aviation market in Asia is a growth market, and has proven resilient over the past 12 months despite the tough operating environment, with significant growth in passenger numbers forecast in the region.

"This partnership will ensure that both airlines can capitalise on these growth opportunities."

AirAsia Group chief executive Tony Fernandes said a common aircraft type specification in terms of the next generation narrow-body offering should be proactively pursued by both airlines because of the many efficiencies it would bring.

"With joint purchasing power it means that we can potentially work with airline manufacturers on the right configuration and design of an aircraft specifically for AirAsia and that best suits our operational needs for the future," Mr Fernandes said.

"A strategic arrangement with Jetstar focussed on investigation of operational synergies is a logical development for us."

- AAP