.... the further an LCC plane flies the less of a cost advantage it has over traditional airlines. Fuel can rise from 30 to 50 per cent of operating costs shrinking profit margins.
This is precisely why Mr Evans wants to lower unit cost; his unit cost is much higher the longer the stage length and his revenue remains soft.
Last year, Jetstar’s earnings before tax was $461 million. Qantas doesn’t factor out Jetstar’s international revenue, however, only saying it had “strong earnings”.
This is because the Jetstar International business is elastic.
Imagine if Qantas had decided lowering unit cost at the 'transformed' Qantas International was met with a new fuel efficient fleet.
Qantas could have much improved RASK/CASK margin, lower fuel spend, generate less pollution and do so generating more revenue.
“Many of the markets developed under the long-haul low-cost banner may prove sustainable, but the operating model seems likely to be lower cost rather than true low cost,” said Flight Global's Lewis Harper.
Then, axiomatically if the model can't deliver revenue premium then operating margins continue to shrink the further a low fare airline flies.
https://www.news.com.au/travel/trave...82a6d22ab19415
Qantas, not Jetstar need the new fleet.