Qantas expands Jetstar services into China with Eastern Airlines joint venture

Has Qantas hit clear air at last? 

After reputation-damaging turbulence over its stranding of more than 80,000 passengers over an industrial dispute, and a serious of serious mishaps involving its aircraft, the Australian flagship carrier may even have gained much needed altitude.

Its decision to extend its budget airline service Jetstar to China — and thus tap a potentially huge market for cheaper airfares — has won praise from business analysts and gratitude from shareholders.

According to the Fairfax media, shares of Qantas were up as much as 4.5 cents, 2.6 per cent, to 177.5 cents in early trading on the news of the new joint venture with China Eastern Airlines.

Jetstar, which already has services in Australia, New Zealand, Singapore and Vietnam, will now set up shop in Hong Kong and begin flying short-haul routes not only in China, but to Japan, South Korea and South East Asia by mid-2013.

"A key part of the Qantas strategy is to have expansion of the Asian markets… the largest aviation market in the world, the most profitable aviation market in the world," Qantas chief executive Alan Joyce told reporters in Hong Kong.

Qantas was not, however, seeking to set up a premium airline with China Eastern, with which it had retained a close relationship over 20 years via a code-sharing arrangement.

Reuters quoted China Eastern Chairman Liu Shaoyong as saying the fleet would expand to 18 aircraft by 2015, adding: "I believe this low-cost model, whether in a high or low oil price environment, will be competitive."