The way I see it, Jetstar serves 3 purposes for the Qantas Group:
1. To operate routes at a lower cost base than mainline to destinations where mainline’s higher cost base cannot achieve a worthwhile return.
2. To make business difficult for any other competing low-cost operators (or indeed medium-cost carriers such as VA, which has sadly had an identity problem ever since JB took over).
3. To provide a point of significant differentiation from the full-service mainline product.
It does not exist to directly add a significant profit to the bottom line, although it’s nice when it does. The bottom line is improved merely by it’s existence and it’s negative effect on competition.
No matter what anyone might like to think, this strategy has been enormously successful for the Qantas Group. It has kept VA struggling and has successfully neutered any new or potential entrants to the market. Of course I am talking about JQ domestic here, the JQ 787 operation is a different animal, and no-one has ever worked out why that still exists.
Selling JQ would completely go against the entire philosophy.
Being forced by the ACCC to split off JQ (in the event of a failure of VA), whilst not impossible in the current environment (nothing is!), would be extremely unlikely in my opinion. QF would easily be able to argue that the two airlines are complementary, and there is plenty of room for a new entrant once the market picks up.
In fact, many would argue that if JQ was spun off, it could struggle to even survive. Its critical mass could make it possible, but QF has bigger pockets, and if QF decided that the company they were forced to sell is now the enemy (which it would be), they could go on the offensive against it! And probably succeed. Network would pick up a whole bunch of cheap A320’s and crew overnight, and suddenly we’re back where we started, only worse.
Furthermore, Government leaders have already suggested that should VA fail, they would assist a new start-up to prevent an ongoing monopoly (whatever that means). Will it be Richard Branson’s Virgin MkII, Strategic MkII, SilkAus, LionAus, AirNZAus, RyanAus? Who knows. Maybe SouthWestAus, that could be nice. Or Alliance might just decide to fill in the gap, that could be nice, too.
Please let me end by saying that I desperately hope that VA makes it. I really feel for my VA colleagues going through this, I think about it several times per day.
Last edited by Derfred; 11th Apr 2020 at 12:58.