A much much younger Sherm for his sins studied economics at some length. And depth. So much beer undrunk, so many hours alone with but a 100 watt globe and many books to keep said Sherm company in his lonely hotel room.
It seemed to this young Sherm then, from those studies, that an entrenched operator, in any business, had an advantage in that it could extend its business by say 10% much more cheaply than could a competitor (wanting to start up a business equal to that 10%) starting from scratch.
That is, properly used, a powerful competitive advantage.
Qantas, (and I am but a lowly shareholder licking my wounds but thankful its not worse) seems to have used this paradigm well. A stand alone Jetstar, completely independent, might have costs per ASK 10% higher. Enough to sink it. But in the process of going under it could, and would (a la Compass Mk1) wound the parent QF by yield reductions an amount way, way more than the cost of starting up a wholly owned LCC subsidiary. The directors of QF would be liable if they chose not to use this sound business option simply to keep current QF employees in their comfort zone.
Then again, Sherm did study those economics a looooooooooooong time ago. On the other hand, so did Keynes.....and Sherm can remember enough of his "General Theory" to reflect that perhaps old economics is not necessarily bad economics. Keynes did after all make a pot of money for the Kings College endowment fund.