a fair question genex.
I have my own suspicions based upon the reality that to look at the mainline fleet and route structure you see a serious problem.
- Fleet average age increasing
- Poor route structures
- lack of investment
- Tunnel vision with respect to business development
As such reinventing the wheel with a statement of lower cost base implies it is the staff responsible for the inability of mainline to allegedly return its Cost of Capital.
If a market is unviable with a mainline product, an Australian Airlines product what ensures it is viable with a J* product.
If the answer is lower costs, where are they?
- Same fuel burn
- Same enroute charges
- Same terminal and landing charges
- Same acquisition costs of capital equipment
- Same establishment costs at an airport from type writers to telephones..
If your only claimed differential is labour costs, these are at best minimal differences. They are not that different.(however they are closely guarded at Q) What is different is who pays for the infrastructure. Much of it is gifted from mainline Qantas. As such is J* likely to do better?
The cost as claimed by J* may be lower, but the cost to group is little different.
In my opinion no. The brand has little penetration into the target markets. The product inferior than many of its direct competitors. Many of the markets it flies to are thin one way markets, with extremely elastic demand.Combine this elastic demand with low yield and I would ask serious questions as to the justification for this model. What actually underpins it?.,
For me the answer lies not in non seen financial details (they are hidden for a reason) I suspect with a further re-election of the coalition and development of workchoices we would have seen wedge politics on a grand scale. To me it is an industrial tool. The lack of credible financial information(externally audited stand alone accounts-with transfer pricing issues addressed) only deepens my suspicion.