Qantas to ground Asian-based 'Red Q' airline before it launches?

UPDATE 1 | Qantas has now confirmed it has shelved plans for the Asian-based premium airline – click here for full details.

UPDATE 2 | Qantas CEO Alan Joyce has denied a report in today's Australian Financial Review claiming that the airline is set to shelve its Asian-based premium offshoot, internally codenamed Project Darwin and likely to be launched as Red Q or OneAsia (although wags have already tagged it 'Qantasia').

Speaking to The Sydney Morning Herald, Joyce insisted that Qantas was pushing ahead with plans for the airline.

"Nothing has changed in relation to our plans. We still believe we have to have an Asian alternative for our core customer base," Joyce is reported to have said.

"We are still looking at setting up a premium airline in Asia. We are still talking to the Singaporeans and the Malaysians and when we have a more definitive decision about what we are going to do ... and who the partners are ... we will inform the market."

PREVIOUS | Qantas is reportedly set to ground its new Asian-based premium Asian airline even before it launches.

According to a report in today's Australian Financial Review, Qantas CEO Alan Joyce is ready to shelve its plans to establish a new premium airline, which was tipped to be branded Red Q or OneAsia and be based in either Singapore and Kuala Lumpur.

Instead, Qantas will likely accelerate its alliance with Malaysia Airlines which would encompass code-sharing of flights as well as frequent flyer point sharing and reciprocal lounge access.

MAS is expected to join the oneworld airline alliance in late 2012, however, speaking with Australian Business Traveller earlier this year, Qantas' Head of Airline Loyalty Stephanie Tully said "we will aim to do the frequent flyer agreement earlier".

Joyce had previously promised the new airline "will offer same-day services to and within Asia, and overall frequencies from Australia to Asia will grow. For the first time in our history, Qantas intends to fully participate in the benefits of an Asian hub."

Qantas was also splashing out on new fuel-efficient Airbus A320 aircraft for the premium airline, in which it was to hold a 49% stake alongside yet-to-be-named partners.

However, the AFR's Andrew Clearly reports that the "worsening global economic outlook, particularly in Europe, management has been scrambling to cut back capital expenditure", with as much as A$500 million of the Red Roo's money earmarked for the new airline in its first two years.

The MAS alliance will help Qantas tap into the Asian market at far lower cost and risk, although Red Q would likely remain on the cards for when the economic situation improves.

David Flynn

David Flynn is the Editor-in-Chief of Executive Traveller and a bit of a travel tragic with a weakness for good coffee, shopping and lychee martinis.