In order, the 3 big Opex costs to an airline:
1. Fuel (from 2003 - 2013, once adjusted for inflation - has increased on average, 100%. Approx $46 a barrel US crude to $92). Try building a successful model around erratic costs like this. Fuel price is incredibly complex - so many unpredictable variables; war / politics / supply.
2. Air navigation / airport charges: privatisation in Australian airports = disaster costs for airlines.
3. Labour: labour intensive, highly unionised, highly regulated (in most areas); cost vs productivity (measured in yield in an airline) is comparatively low compared to most other businesses.
The above got me thinking. If it is bye bye QANTAS, Jetstar should have to pay their own:
1. Fuel, including associated costs for an increase in staff numbers in 'their' fuel department as the corresponding fuel department numbers at QF decrease.
2. Air navigation / airport charges including associated costs for an increase in staff numbers in 'their' staff numbers that work on such charges as the corresponding department numbers at QF decrease.
3. As above and all other areas such as reservation staff, check in staff, baggage handling, accounting, IT, marketing, catering, engineering (sorry they are no longer needed at JQ are they?) etc as the QF numbers decrease.
Then there's the 'new' lounges to reflect that they are Jetstar and hence, massive savings for QF as they close their lounges.
All of a sudden, the JQ costs rise and the QF costs drop but we all know it won't work like that.
Another thing that we at home have just found recently is comparing JQ to VA on flights to PPP for 'schoolies'. Son is going up with the son of a QF staff member. We have purchased VA flights for our son and his mate has told him that the JQ flights have plenty of seats. I had a look just yesterday and the flight out of PPP to BNE on the VA site stated 'only 2 seats left, apparently the JQ flight on the same day has 66. Indicates to me that many parents and kids I assume much prefer VA over JQ. We won't ever know but I would say that if it was only QF flying to Phuket, Denpasar and Honolulu to name just 3 and not JQ, the flights would be chockers. Wait a minute, wouldn't plenty of you staff be able to advise if it is hard to get on the QF flights to HNL say in school holidays and that there are perhaps seats available on JQ?