Qantas Tightlipped on Singapore Subsidiary Report

CANBERRA, KOMPAS.com — Qantas Airways is planning to create a new airline in Singapore as part of a strategy to increase Asian business and cut costs, a newspaper reported on Friday.

Qantas was considering the Singapore-based full-service subsidiary as a way of bypassing the high cost base and geographic isolation of Australia, The Australian Financial Review newspaper reported, citing unnamed sources. The airline declined to either confirm or deny that the Singapore airline was an option under consideration.

"Qantas has previously indicated that our international business has not been performing to expectations, our market share has fallen in recent years and we need to relook at this area of the business," the airline said in a statement.

"A project team has been established to look at Qantas' international product and service, possible new routes and ways to reinvigorate our offering," it said.

"The team is considering a range of options, but no decisions have been made about the direction Qantas will be taking at this stage," it added.

Qantas already has a budget subsidiary, Jetstar Asia, based in Singapore. To create a premium alternative, Qantas would have to acquire an airline license from Singapore.

To gain such a license, Qantas would have to create a holding company that was at least 51 percent locally owned, the newspaper said. Singapore is the preferred Asian base for the new airline although other Asian cities were also being considered, the newspaper reported.

The aircraft mechanics union announced Friday that it had canceled strike action by its 1,600 members employed by Qantas in Australia that had been planned for next week. The union claims that Qantas is moving their jobs offshore but has decided against striking for safety reasons.