As Willie Walsh alluded to the so called low-cost carriers will struggle. He went as far as predicting the demise of Ryan air and Easy jet.
As I have alluded to all along, it is the yield of the business that matters.
Given;
- Very elastic demand
- One way thin markets
- A"brand" with no penetration
the writing is on the wall. There has been little sense in the exercise of Jetstar particularly as it relates to the international markets. It has gained little traction in any market it serves. Management cannot ignore the impact of oil. The cost base is under huge pressure and it isn't the pesky pilots or engineers.
The contribution margin of this business to the "group" is negative. Every airline that tried it canned it. The folly of this exercise has cost the company a fortune for no tangible results. The industrial aims are far from achievable and as such, it begs the question, who has allowed this self indulgant waste of resources to continue for so long?