SINGAPORE - Singapore-based low-cost carriers Jetstar Asia and Valuair Ltd. announced Sunday that they were merging — the first consolidation in Asia's cutthroat, crowded budget travel market.
The companies issued a joint statement announcing the formation of a new entity that will "own and operate both airlines."
Australia's Qantas Airways Ltd. holds a 49 percent stake in Jetstar Asia, while the Singapore government's investment arm, Temasek Holdings, controls 19 percent.
Valuair is owned by a group of Singapore-based executives.
Qantas chief executive Geoff Dixon will be chairman of the new airline while Jetstar Asia chief executive Ken Ryan will hold a similar executive portfolio after the merger.
No information was provided on the role that former Valuair executives would play following the merger.
"Mr. Dixon said Jetstar Asia and Valuair would operate in their own right for the foreseeable future, with little or no change to the service offered by either airline," the statement said.
Analysts have said airlines are suffering due to soaring jet fuel prices. Valuair, the first budget carrier launched in Singapore, has yet to turn a profit.
Earlier this month, Singapore Airlines Ltd. chief executive Chew Choon Seng said the global airline industry needs to consolidate as rising oil prices continue to undermine profits.
Singapore Airlines, the world's second largest carrier by market capitalization, controls the third Singapore-based budget airline, Tiger Airways.
Jetstar and Valuair face stiff competition from Tiger Airways, as well as from Indonesia's Lion Air, Malaysia's AirAsia and Thailand's Nok Air.
Jetstar Asia flies from Singapore to India, Hong Kong, Bangkok, Manila and Taipei. Valuair flies from Singapore to Hong Kong, Jakarta, Perth and Bangkok.