Originally Posted by
Romulus
But here's the fundamental question - where did the Jetstar 67% come from? Jetstar hasn't been around that long, yet they're running 2/3 full based on lower service and lower fares. Those people have CLEARLY chosen to purchase on lower fares. Sure people PREFER to fly full service but out of your argument a very significant number of people have chosen exactly the opposite of what you have stated will happen.
And by keeping those 67% on QF group aircraft you prevent them going to other carriers and helping your competition cover costs. AND you also help keep QF mainline ticket prices at higher levels by making people choose the clearly differentiated lower service brand.
So having Jetstar available to suck up the budget traveller dollar is doing EXACTLY what you think is such a revolutionary idea - it is helping mainline keep the average price of a ticket higher. You can argue an extra $10 or so if you like, but what the JQ strategy delivers is a much more substantial premium than that.
Hopefully that answers your question and isn't too longwinded a reply.
Romulus,
You summarised the theory of having a dual brand (premium and low cost) very well. Unfortunately Joyce's execution has been very far from the mark. Joyce has gotten significantly distracted by using jetstar as an industrial sledge hammer or in an attempt to deal with the challenges of the QF sale act (bypassing it by transferring pax to jetstar, growing off shore jetstar companies, driving down QF int and finally creating a political crisis in an attempt have the act amended).
Both the industrial sledge hammer and the QF sale act strategies are not coincident with the dual brand (premium/low cost) strategy. As a result there are unions bleating, disengaged front line staff, confused middle managers, burnt out executives, investors asking questions, plummeting share price, poor returns, devaluing of credit ratings, agitated politicians, disgruntled loyal passengers, .... the list is getting longer.
If there is a concerted focus on the dual brand strategy then everything else will fall into line. Until then we will get more of the same confusion.