No it couldn’t have been achieved that way. Jetstar needs a lower cost base to offer lower fares for that segment of the market. Most of those functions were not duplicated.
Other than salaries what part of the 'cost base' is lower?
- Aircraft acquisition costs? NO
- Fuel costs NO
- Maintenance not substantially
- Air navigation charges? NO
What Qantas has created is a duplicated structure.
Low Fare airlines face pretty much exactly the same fixed cost.
The are LOW YIELD HIGH VOLUME businesses, they need consistent high load factors.
- Leisure travel airlines are very demand elastic. This means any increase in price sees a substantial decline in passenger numbers. It is a paradox of the LFA manager, how to raise yield when passengers are not loyal to anything other than cheap prices.
- Ryan Air and Air Asia etc need ancillary revenue because their fixed costs are very similar.
What Qantas saw was an opportunity to step around the QSA and 'create competitive wage tension'.
If they saved 3% on crewing costs, the expense of JQ far outweighs any actual economic benefit.
They persist because of ideology.
The
hero myth of Mr Joyce relies on JQ and his fanciful story of 'creation' that he somehow was responsible for it. He was merely chosen by Mr Dixon.