Originally Posted by
Des Dimona
In lean economic times, Qantas uses Jetstar domestic more because of the low operating cost base compared to mainline.
When times are good, the profit margin is greater on domestic mainline and Jetstar tends to suffer.
So, in view of the undoubted recession (or depression, depending on your view) ahead, I don't see Jetstar domestic going anywhere soon.
However, Jetstar's international 787 operation has a huge question mark over it, as worldwide border controls are likely to force massive reductions in operations even after the initial restrictions are slowly removed. If it resumes, the 787 operation will be very small for some time. During this period of restarting international routes, Qantas will also probably want to take advantage of greater margins using the mainline fleet by removing the LCC element. This is a significant advantage, given that there will probably be fewer international operators and at a much less frequency.
And what data do you base that on? During the GFC JQ was 3 years old. Qantas took advantage of the vacuum left by Ansett and the cheap aircraft at the time to expand aggressively. It also did this to leverage a growing virgin with a cheaper cost base.
Times are different now and Qantas is Qantas. If it comes down to it, it’ll save itself and mothball or shed the rest.
Jetstar is a great operation. It stimulates the
market and allows many to fly who ordinarily wouldn’t. However it caters to a price sensitive market and that market will be savaged by what’s coming.
It also depends on what happens over the fence. If the worst happens, Qantas has no urgent need to stoke up the Jetstar boiler. It can focus on yield and it’s core business. If the competition survives, Jetstar will be needed as before. It’ll also be needed if another player enters the market.