SINGAPORE : Singapore-based budget carriers Jetstar Asia and Valuair have merged, the firms said Sunday, in the first major consolidation of Southeast Asia's crowded low-cost airline industry.
"Jetstar Asia and Valuair today announced the formation of a new Singaporean company that will own and operate both airlines," the companies said in a joint statement.
Qantas-backed Jetstar Asia and Valuair said they would continue to operate their normal routes under their own brands "for the foreseeable future, with little or no change to the service offered by either airline".
Qantas chief executive officer and Jetstar Asia chairman Geoff Dixon will chair the new company, which has yet to be given an official name publicly.
Jetstar Asia chief executive officer Ken Ryan has been appointed as chief executive of both airlines.
The announcement comes after nearly a month of speculation about consolidation within the region's budget airline industry.
The Jetstar Asia-Valuair merger had already been floated in the press and rejected publicly by the two firms, while Malaysian low-cost heavyweight AirAsia had also revealed it had held talks with Valuair.
Southeast Asia's fledgling low-fare airline industry has been under pressure to consolidate amid tough competition, soaring jet fuel costs and reluctance by governments to open up their domestic aviation sectors.
Jetstar Asia, Valuair, AirAsia and Singapore Airlines-backed Tiger Airways had all begun services in and out of Singapore since the middle of last year with some tickets costing less than a train fare between the same destinations.
Jetstar Asia, in which Qantas has a 49 percent stake, and Valuair did not reveal any details on Sunday of the merger.
However the Business Times newspaper said last week the deal was expected to hinge on the injection of more than 50 million Singapore dollars (30 million US) in fresh capital into the new entity, largely to be provided by Qantas.
Investment company Temasek Holdings, which owns 19 percent of Jetstar, could also put up fresh capital, the report said.
Shareholders of Valuair, including airline industry veteran Lim Chin Beng, Malaysia's Star Cruises and Asiatravel.com, would become minority shareholders in the merged company, according to the paper.
Jetstar Asia flies between Singapore India, Hong Kong, Bangkok, Manila and Taipei. Valuair flies between Singapore and Hong Kong, Jakarta, Perth and Bangkok.
- AFP /ct