Jetstar Asia: A Low-Cost Airline in Trouble

Meanwhile, there were reports that AirAsia , a successful LCC from Malaysia, was also interested in acquiring Valuair and that it had offered SGD 20 million. However, in July 2005, Jetstar Asia and Valuair announced their decision to merge. This was the first merger in the low-cost airline industry in the SEA region. After the merger, a new holding company called Orangestar Investment Holdings (Orangestar) was created to operate both the airlines. Qantas infused SGD 50 million to obtain a 44.5 percent stake in Orangestar. The remaining stake was held by Temasek, Chew, Wong, Star Cruises, and Asiatravel.com (who were the major shareholders in Valuair)...

In April 2006, Qantas applied to the Australian Competition & Consumer Commission (ACCC) to allow it to co-operate with Orangestar in fixing airfares. The application was accepted by the ACCC in May 2006. However, it was only an 'interim authorization' and the ACCC could withdraw it at any stage in future. The approval by the ACCC meant that there would be collaboration between Qantas, Jetstar Airways, and Jetstar Asia with respect to air fares, network routing, and scheduling. Once again, Tiger Airways officials criticized this deal, saying that it might prove anti-competitive to LCCs in Singapore...