Qantas and China Eastern team up on new Hong Kong budget airline

In the first tie-up of its kind, Australian carrier Qantas and China Eastern Airlines are putting together a new passenger airline with the goal of tapping into the booming Chinese market.

Due to launch in 2013 and subject to regulatory hurdles, Jetstar Hong Kong will be a US$198-million joint venture, with both parties holding equal stakes.

Previous partnerships between Chinese airlines and overseas carriers have been passenger codeshares or freight-only operations.

Fares slashed

Jetstar Hong Kong intends to target the budget air-travel market -- a sector currently underdeveloped in the region.

With fares 50 percent lower that traditional carriers, the new airline aims to serve greater China, as well as Japan, South Korea and Southeast Asia.

Hong Kong is a hub for around 40 million passengers a year, while China, Hong Kong and Taiwan combined account for almost 400 million passengers annually.

Given that the regional figure is predicted to swell to 450 million by 2015, it’s also highly likely that Jetstar Hong Kong won't be the last new budget airline aiming for the Chinese pocket.

More on CNNGo: Jetstar starts Singapore-Beijing flights