Loss leaders...
The common wisdom is that the LCC off-shoots bleed the parent carriers in a variety of ways: directly, by in-house accounting hijinks; indirectly, by stealing passengers at an uneconomic fare; and in the never discussed derivative mode whereby a passenger wronged by (say) Jetstar abandons the entire Qantas group.
I suspect that there will always be a place for a LCC or two in Australia, but the total market demand feels like it might need just over half of its current supply.
As has been illustrated before, the LCCs in Australia are actually only relatively lower cost. Since the ONLY avenue for savings is in employee wages and efficiencies, the lower boundary for their cost bases are only marginally cheaper than their legacy parents. Of course since all of human nature is aspirational, time tends to erode any low wage benefit that start-ups enjoy.
The included lie in the term "Low Cost Carrier" is the promise that the ticket cost will be lower. Unbundling the fare to separately charge for its components was a nifty trick on the unsuspecting played by a cynical cadre of consultants 10 years ago. The bulk of the market is wise to that old trick by now, and hates us for it. There are enough apocryphal stories around about intentionally cold cabins to spike blanket rentals to make us all look like RRRRs holes.
So what's next in the MBa bag of tricks? There are no secondary airports in this region to make that model work, employee T & Cs only drift upwards, passengers are more savy regarding the total cost of the ticket. I expect that Tiger will fold...it is the only rational move left to JB. I also suspect that JQ will shrink for the simply expedient reason that the Qantas group is too large, and redundancies in JQ will cost lots less than at Qantas. That calculus is tainted, I admit, by a naive expectation that fiduciary responsibilities will outweigh emotional attachments on the part of the board and its Oberststurnfühers in the executive ranks.