Jetstar Hong Kong, the proposed new fledgling start up airline, backed by The QANTAS Group, China Eastern and Shun Tak Holdings is facing further set backs. It seems unlikely that its operating licence will be approved any time soon therefore there is little chance of the airline starting operations this year.

What is more concerning is the commitment the airline has made for up to 18 Airbus A320 aircraft. At the moment there are five parked A320 aircraft at Airbus’ factory in Europe destined for Jetstar Hong Kong.  A further two A320s are set to be ready for delivery in June this year. A report in the South China Morning Post (10 Jan 14) suggests that Jetstar Hong Kong is in talks with Airbus to sell these new aircraft and then lease them back in an effort to drastically reduce the sky high costs of these aircraft which are not providing any revenue to the airline whatsoever. It is believed the leasing costs per aircraft are upwards of USD 400 000.00 per month. In the event Jetstar HK does not accept these aircraft as agreed and on schedule, it faces further penalties. The parking fees at Toulouse airport where these aircraft are parked are not included and are additional to these leasing costs. The picture shows three aircraft parked with no where to go at Airbus Tolouse on 20 November 2013 (picture by Clement Alloing (c) 2013).

The implications are quite severe and have impacted negatively on QANTAS the airline. The airline’s CEO Mr Alan Joyce has been largely silent since his hysterical “call to the arms” email from 18 November 2013 about the “Level Playing Field” . Industry analysts are suggesting that Jetstar Hong Kong’s woes coupled with other dubious Jetstar offshoots such as Jetstar Pacific and Jetstar Japan have contributed to QANTAS shares being downgraded to “junk status” by S&P and most recently Moody’s. A recent memo to staff from QANTAS however suggests that there is no problem for the Jetstar Group’s parked planes and attributes this to ”  a flexible approach with the allocation of flying resources”. Regardless what QANTAS likes to call it, the reality is that aircraft on the ground make no money and represent massive costs. One has to question the sensibility of those that have committed to such a large aircraft order whilst are far from receiving any regulatory approvals.