Branson Asia plan may hit Qantas

An extra barrier has been thrown into the path of the $11.1 billion Qantas buy-out, with news that Virgin Group chief Sir Richard Branson is in talks with AirAsia and easyJet to start a discount airline in Asia.
According to reports, Sir Richard is in discussions with easyJet founder Sir Stelios Haji-Ioannou and AirAsia boss Tony Fernandes. They are believed to be looking at forming a large low-cost carrier connecting Britain with Malaysia, India and China.
If the latest Branson initiative is successful, it could affect the expansion plans of Qantas and Virgin Blue. The Macquarie-led private equity team bidding for Qantas is doing so in the expectation that the recently launched Jetstar international strategy will pay huge dividends as it is rolled out in Asia.
Qantas has said it plans to expand this low-cost international strategy in two stages. The first, already under way, is linking Australia to a series of Asia-Pacific region destinations in the hope of introducing international flying to a new generation of Australian tourists.
In the second, more ambitious, stage Jetstar would fly to Europe through Asian hubs.
The Branson initiative could challenge this because it would also focus on linking Asia and Europe.
03/01/07 Rod Myer/The Age, Australia

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