Unless QFdom fixes its cost base it will shrink to oblivion, just like QFint
They have been doing this for years. Outsourcing ground handling, new hire cabin crew on less than Virgin whilst VR offered to long timers. Engineers on less than Virgin.
As Borghetti says, Pilot wages are within 5% and closing (that is about $0.15 a ticket).
Imagine if at the same time they put 787s into QF. Ordered 737max/A320neo? The cost base could quite easily be BELOW Virgin. Joyce said that with an A330/B737 fleet domestic, the cost base is within 5%, so it is not hard to see that more efficient aircraft would bring that cost base down substantially further.
But QF management choose not to put these aircraft into domestic. They choose to invest in jetstar which has proven to not offer the same potential returns. They put new equipment to enable LOWER prices - how can that possibly lead to increased profitability when the market is saturated? Prices are so low that anybody who wants to fly, can fly, and reducing prices anymore will not add sufficient volume to increase profits.
It is the old Hyundai v Mercedes argument. Offer a quality product, highly regarded and prestigious with the latest innovations and efficient production; and you can charge a substantial premium with high profitability (do you think if Hyundai slashed prices 20% that it would have any effect on Mercedes sales? It would not even boost Hyundai's sales enough to cover the loss). There is an alternative to volume based sales, QF management just can't see it. Borghetti sees it loud and clear.