Originally Posted by
a_pilot
Rated De,
And what is the point here ? What are you trying to say ?
An issue of scale.
If you look at the segment revenues, deploying an additional ASK (at the margin) to Qantas instead of Jetstar delivers more revenue.
In the absence 'like for like' cost apportionment (management deciding who pays for what) Qantas can claim that 'lower unit cost' means Jetstar has better operating margin.
Mr Evans admits that the unit cost at Jetstar is somewhere between an established and a low fare airline, stating,
Should it be like the much-derided Irish carrier Ryanair, which charges passengers £20 ($36) if they haven't printed their own boarding pass and £55 ($100) if they haven't checked in online?Or closer to a "hybrid" carrier, which impinge the on full-service market like JetBlue in the US or even Virgin Australia.
Evans says Jetstar has landed somewhere in the middle, because that's where its customers want it to be
Thus, as a
mid cost airline its margins are narrow, particularly with respect to how
little revenue it generates from flying its ASK.
It is highly probable that the parent picks up the cost of many things including the aircraft capital cost, some engineering and port costs. Be creative there is literally no limit!
Thus, it needs a new fleet to again lower its unit cost, a fact to which Mr Evans also alludes. Bruce Buchanan (former JQ CEO) lamented this problem during his tenure.
Comparing Qantas unit costs to competitor airlines shows Qantas mid way. Qantas enjoyed, until management trashed the brand a substantive yield premium for product.
The trick to remember is what the late CEO Herb Kelleher of Southwest said;
(paraphrasing)
"You can have the lowest cost airline, or the highest revenue airline and still go broke. What matters is the gap between the two."
If Little Napoleon has really 'transformed' Qantas it ought have a lower unit cost and better operating margin.
This operating margin would be orders of magnitude better if they had, like all their competitors, re-equipped the fleet with fuel efficient long range wide body twins.
Instead, they persist pouring capacity into Jetstar, in a forlorn attempt to grow. The may grow capacity, but the (revenue) return from the additional capacity indicates rather strongly that the growth in revenue is sub optimal.
A new fleet of Qantas International would have almost halved their CASK (fuel included).