PPRuNe Forums - View Single Post - OzJet, will they be a success?
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Old 21st Aug 2005, 03:14
  #14 (permalink)  
Legal_Counsel
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Have to agree

I totally agree Chris Higgins, Leading Edge though has a right to vote with his/her feet and that is not something I would criticise.

The fact is nothing really has changed as far as seating and service is concerned although we tend to believe it has either by way of these forums or by press reports. What has significantly changed is mainly around the way we are treated as customers before we board and how we have now a lack of choice in seat space (e.g. you used to be able to buy ugrades remember?)

I am talking about the introduction of non-refundable fares, delays because the aircraft are operating to tighter schedules, increased anxiety because of internet advertising at the point of sale, tv, radio and billboards, to name a few. All these things have delivered the public with low cost benefits but also with increased stress levels. However, the seat spacing is basically the same in economy.

I have always said that the nature of the beast is such that we will complain publicly because of an incident with service on a Jetstar flight but a hair on a piece of pizza which might cause serious harm is rarely reported by us in the same way.

My view is that you try to match the service you really need for the day. You flew Hamilton to Melbourne, about a 3 hours flight. I can tell you from my research at Cranfield UK that the break point is 2 Hrs 15 minutes. Beyond this you would need to be ergonomically well adjusted to the seating. What I am saying is that the airline has not adjusted its seating to take this into account so you really do have a right to complain.

An Ozjet aircraft on that sector would give you that comfort and it would cost Ozjet about $110 per seat in direct operating costs (fuel/crew/maint/nav charges/land fees). This cost typical is only 50% of the actual costs once airline overhead is added. So could be as high as $220.

Even so Jetstar might charge $163 + GST which is below operating cost and the fully flexible fare $454 + GST but it couldn't afford to sell all the seats at that lower price. At the most maybe 25%.

Based on my research, the current average fare in Australia is $210 + GST (revenue/passengers carried). This would be more realisable on a 2 hr trip. For a 125 seat Boeing 717.

Let me get a bit mathematical here:

If you look at a two tier Jetstar fare structure, and take the load factor to be 75%, the formula is

a 163 + b 454 = (125 seats x $210/seat ave/75%) = 35,000
a + b = 125x75% = 94 passengers

so from the second equation

a 163 + b 163 = 15,322

subtracting this from the first equation gives

0 + b 291 = 19,678 giving a value of

b = 68 passengers and

a = 25 passengers.

ChecK === > 25 x 163 + 68 x 454 = 4,075 + 30,872 = 34,947 OK
and 25 + 68 = 93 OK

Some rounding error to make passenger number a whole number.

Now this means that Ozjet will compete against the 68 passengers on this flight who will pay $454 per seat. This suggests that Ozjet will try to take anywhere between 44% and 88% of Jetstar's fully flexible market (Avalon excluded) and that seems incomprehensible. If it were lucky to get 10% that would still only be 7 passengers. I cannot see it personally, so Leading Edge you might be better directing your complaint to Qantas.

Of course, a new entrant could challenge this whole system by introducing a product like Delta have. Hopefully that will happen and perhaps return some sanity to personal space.