Thanks for the reply.
What you say WRT leasing is correct. The more equipment leased, the lower the depreciation costs but the higher the operating costs. However this raises more questions than it answers.
1. Under the current setup, Qantas own quite a few A320s, which they lease to Jetstar. What is the advantage in this arrangement? Presumably, if Qantas is following senior management's philosophy of each part of the Group being profitable, the costs which Qantas pays for depreciation, maintenance etc on these aircraft should be less than the leasing payments Jetstar pays Qantas. If this is the case, wouldn't Jetstar reduce their costs by owning the aircraft themselves?
2. Why is the best way of structuring one part of the group with leased aircraft, and another part of the group with owned aircraft?
3. Virgin's fleet is slightly larger than Jetstar's with the majority of aircraft also leased. Virgin's depreciation costs were just under $200m vs $17m for Jetstar. Why such a big discrepancy between two similar businesses?
Anyway, all this speculation could go away tomorrow if Qantas would publish a breakdown of depreciation, property, tax etc between the different segments of the group in their annual report. But they choose not to.