The Qantas Group is more resilient because of its diversification into the premium and low fares airlines of Qantas and Jetstar, each of which now has a strong domestic and international network. While each airline is valuable in its own right, the whole is even greater than the sum of its parts.
The Qantas Group’s Flying Committee includes the CEO and CFO, the Jetstar CEO and other senior executives. It is responsible for managing the Group’s portfolio of flying assets and allocating capital to achieve the highest returns for shareholders and the best outcomes for customers.
The current economic climate has left most conventional full-service airlines with little choice but to reduce capacity and shrink their networks. With the flexibility of the Qantas and Jetstar brands, the Qantas Group has been able to respond to market challenges and opportunities better than its competitors.
Japan
The cyclical Japanese market is a good example of the two flying brands in action. When Qantas’ Japan services failed to generate adequate returns, Jetstar was able to replace some of Qantas’ Australia-Japan services from December 2008, and in the process overturn conventional wisdom that the structure of the Japanese travel market was not conducive to an international low fares carrier with a predominantly online booking model.
In less than six months, Jetstar significantly increased returns on those routes and grew the Group’s presence in Japan – with new Gold Coast-Tokyo flying and increased services between Sydney and Cairns to Tokyo and Osaka. An innovative marketing campaign – featuring Japanese megastar Becky – built strong brand recognition in new Japanese demographics.
Prior to the H1N1 Influenza 09 outbreak of May 2009, load factors were consistently around 80 per cent, while up to 40 per cent of bookings were made directly with Jetstar in Japan. In the final quarter, passenger loads from Japan were significantly affected by the outbreak of H1N1 Influenza 09, resulting in a significant impact on sales in May and June and around a 30 per cent reduction in capacity on Japanese routes.
New Zealand
Across the Tasman, the two brand strategy is delivering more choice, increased frequency, better value and additional jobs.
In the domestic New Zealand market, Jetstar has replaced Qantas, carrying out local recruitment for pilots and cabin crew and continuing to give travellers the opportunity to link into Qantas’ and Jetstar’s Australian domestic and international networks.
Qantas has refocused its Jetconnect subsidiary on trans-Tasman services, offering enhanced product and greater frequency with three new generation B737-800s to be delivered by the end of October 2009 and another three in early 2011. The new aircraft is styled by Marc Newson with in-seat video monitors for every passenger. Qantas now operates more than 140 services each week between Australia and Auckland, Christchurch, Queenstown and Wellington.
