Originally Posted by
ECAMACTIONSCOMPLETE
Have a listen to how many times Joyce says ‘dual brand strategy’ during the next annual profit statement. I don’t think JQ will be sold off under his reign.
As originally pitched to the Dixon era management, the likely elements were to wedge domestic competitors; either follow QF on yield and brand (spend) or follow JQ on unit cost.The unit cost argument is spurious as scant detail exists on JQ. No segment breakdown is forthcoming; noone can see it other than internal managers how things really look. Similarly, former CFO Gregg detailed the competitive wage tension in the 'group' a JQ model would create is a matter for public record. That the JQ fleet accelerated with Little Napoleon and the fossil if likely a result of an IR focus and the desire to drive unit cost outcomes.
The fact that all low fare airlines, no matter what their unit (labour) cost struggle with yield is well known. Their customers are 'price loyal' not usually brand, thus any attempt to raise price and yield is often not successful.
Further, Little Napoleon wants all and sundry to know he created JQ. Factually, he was at Ansett when the concept was pitched to and accepted by, senior Qantas management. This is the hero myth.
The JQ model has merit at a smaller scale. It has little relevance internationally and the lack of transparency is suggestive that subjective management discretion is applied to 'who pays for what'.
Taking Qantas' own figures at face value, JQ can only achieve 29% of the revenue flying 48% of the ASK. Not only is scale an issue but it is evident that the business lacks the ability to do anything than offer 'low fares'.
Whilst Little Napoleon sits in the big chair, there is zero possibility that how much effective subsidy occurs will ever be known. It remains opaque and the accounting standards are exploited (not illegally) to ensure that a little from column A and a little from column B keeps the accounts opaque and thus eye pleasing to the less than curious!