AirAsia and Australia low cost carrier Jetstar form an alliance plan on Wednesday, Jan 6, 2010.

SYDNEY: Jetstar and AirAsia unveiled plans on Wednesday to slash costs and ticket prices by pooling some resources, taking the first step in an alliance which could transform the Asian budget market.

Jetstar chief executive Bruce Buchanan said the non-equity arrangement, described as a world first between low-cost airlines, was expected to save hundreds of millions of dollars in costs.

“By getting together and focusing on areas where we can actually reduce costs we think it’s a really exciting opportunity,” Buchanan told reporters, calling the deal an “important first step”.

“We have identified… many hundreds of millions of dollars of cost saving opportunities, and we think that is an exciting opportunity for us as we launch this partnership going forward.”

Jetstar, a subsidiary of Australian flag-carrier Qantas, will share parts and ground and passenger handling services with Malaysia’s AirAsia, which is Asia’s biggest budget airline.

They will also investigate jointly procuring new aircraft, cooperate on buying engineering and maintenance supplies and will carry each other’s passengers stranded by breakdowns and other disruptions.

Qantas chief Alan Joyce said the deal would give both airlines an edge in the competitive Asian market.

“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,” he said.

Jetstar, operating 60 aircraft, is the world’s largest long-haul budget carrier, while AirAsia leads the Asian low-cost market with 85 planes servicing more than 60 destinations. — AFP