Qantas had a "line in the sand" that they wanted 2/3 of the market. With most of the growth being in low cost they needed Jetstar to avoid stagnating. If Virgin hadn't tried to take on QF head on at the premium end, there could have been a cosy duopoly with Virgin and Jetstar not competing too aggressively while mainline carried the full service/high fare pax.
If Qantas had been too aggressive, the ACCC might have become involved, a single domestic airline with no competition wouldn't have been acceptable and QF new this, hence they were willing to allow a competitor 1/3 of the market. Virgin could have been an Australian Southwest Air with Jetstar operating on routes were mainline couldn't compete with a low cost, such as SYD - OOL.