Cut-price airlines Jetstar and AirAsia have announced that they have formed an alliance. The move has been made so that the two budget airlines will be able to cut costs as well as pool their expertise according to sources. Bruce Buchanan, chief executive at Jetstar said that the agreement could potentially end up saving the carrier hundreds of millions of dollars in the long term. He called the move an important first step. Although the alliance is non-equity there is a possibility that in time the agreement could incorporate revenue sharing as well as aircraft procurement deals.

At the moment Jetstar which is owned by Qantas and AirAsia which is based in Malaysia plan to pool their resources on the ground at the Asian and Australasian airports which they both use in terms of passengers and handling. They will also pool spare parts and aircraft components and will be looking at combining their buying power to obtain aircraft supplies.

Talking about the aviation market in Asia Alan Joyce, chief executive at Qantas said that it had proved remarkably resilient to the turmoil experienced by airlines in other parts of the world. He went on to say that the new alliance would mean that both Jetstar and AirAsia would be able to capitalise on what is a growing market but also be able to offer low fares to their customers. News of the alliance is likely to put a bit of pressure on Singapore Airlines backed Tiger Airways which is currently planning to list itself at the end of the month.