Wirraway
22nd Jul 2004, 15:15
Fri "The Australian"
Next stop Adelaide as Jetstar looks west
By Steve Creedy, Aviation writer
July 23, 2004
JETSTAR is headed west, with a focus on Adelaide as its next big destination and the Northern Territory and Western Australia to follow next year.
The airline will be announcing a series of new destinations within the next few weeks, but gave a hint of its longer-term strategy after a National Aviation Press Club lunch in Sydney yesterday.
Jetstar chief executive Alan Joyce said immediate expansion would involve "joining up the dots" by adding services on routes without enough capacity and opening up new destinations.
"I think our inclination, if we can negotiate a deal with them, is that our next big destination is Adelaide," Mr Joyce said.
"And then we'll start to spread out westward again, heading up to the NT and then into Western Australia eventually at some stage.
"With WA and the NT it's probably not going to be until 2005."
Mr Joyce said Jetstar was also interested in more operations out of Avalon Airport in NSW if the Victorian secondary airport performed well over the next few months.
But he did not see much hope for flying to secondary airports in other cities, although the airline would be interested in operating from Richmond near Sydney if government policy changed.
Asked whether the Jetstar expansion would displace Qantas flights, Mr Joyce said: "We're definitely going forward looking at what's the best next mixture of Jetstar and Qantas on their routes.
"And there are a lot of new routes that we'll start flights for that haven't been done by Qantas Group before."
The Jetstar chief executive would not be drawn on the start-up's continuing profitability, saying market sensitivity meant any comments on that had to come from Qantas chief executive Geoff Dixon.
"We're progressing well," Mr Joyce said. "I think we're meeting expectations but the only thing I can confirm on profitability is what Geoff said, which is our expectation is to make money in July."
However, Citigroup analyst Jason Smith has estimated that Jetstar will post a $10million operating loss in the 2004 financial year, improving to $70 million in earnings before interest and tax in financial year 2005 and $130 million the following year.
Mr Joyce told the aviation press club lunch that Jetstar was still striving to get the balance right but there was no reason for it "not to maintain a steady altitude". He said there were parts of the Jetstar business model that were changed after customer feedback, including schedules, fare rules and policies relating to groups.
But he made no apologies for the airline's sometimes controversial policies of unallocated seating, not allowing baggage to be checked through to other airlines and closing off flights 30 minutes before take-off. He believed the unallocated seating had been well accepted by passengers and the lack of baggage connectivity was "generally well received" by the airline's predominantly point-to-point flyers.
However, he conceded that the 30-minute flight close-out policy had generated the biggest amount of scrutiny and debate.
Although some believed this was not customer-friendly, Mr Joyce said there were strong customer-focused reasons for the policy.
He said many domestic flights were delayed due to the actions of a few latecomers, with the majority of flyers already on an aircraft awaiting departure.
This caused potential loss of slot access into busy airports and excess fuel burn and had a potential domino effect on other flights.
"Such factors can all have a very big impact on an airline's cost base - and an outcome from this impact can result in higher fares," Mr Joyce said.
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Next stop Adelaide as Jetstar looks west
By Steve Creedy, Aviation writer
July 23, 2004
JETSTAR is headed west, with a focus on Adelaide as its next big destination and the Northern Territory and Western Australia to follow next year.
The airline will be announcing a series of new destinations within the next few weeks, but gave a hint of its longer-term strategy after a National Aviation Press Club lunch in Sydney yesterday.
Jetstar chief executive Alan Joyce said immediate expansion would involve "joining up the dots" by adding services on routes without enough capacity and opening up new destinations.
"I think our inclination, if we can negotiate a deal with them, is that our next big destination is Adelaide," Mr Joyce said.
"And then we'll start to spread out westward again, heading up to the NT and then into Western Australia eventually at some stage.
"With WA and the NT it's probably not going to be until 2005."
Mr Joyce said Jetstar was also interested in more operations out of Avalon Airport in NSW if the Victorian secondary airport performed well over the next few months.
But he did not see much hope for flying to secondary airports in other cities, although the airline would be interested in operating from Richmond near Sydney if government policy changed.
Asked whether the Jetstar expansion would displace Qantas flights, Mr Joyce said: "We're definitely going forward looking at what's the best next mixture of Jetstar and Qantas on their routes.
"And there are a lot of new routes that we'll start flights for that haven't been done by Qantas Group before."
The Jetstar chief executive would not be drawn on the start-up's continuing profitability, saying market sensitivity meant any comments on that had to come from Qantas chief executive Geoff Dixon.
"We're progressing well," Mr Joyce said. "I think we're meeting expectations but the only thing I can confirm on profitability is what Geoff said, which is our expectation is to make money in July."
However, Citigroup analyst Jason Smith has estimated that Jetstar will post a $10million operating loss in the 2004 financial year, improving to $70 million in earnings before interest and tax in financial year 2005 and $130 million the following year.
Mr Joyce told the aviation press club lunch that Jetstar was still striving to get the balance right but there was no reason for it "not to maintain a steady altitude". He said there were parts of the Jetstar business model that were changed after customer feedback, including schedules, fare rules and policies relating to groups.
But he made no apologies for the airline's sometimes controversial policies of unallocated seating, not allowing baggage to be checked through to other airlines and closing off flights 30 minutes before take-off. He believed the unallocated seating had been well accepted by passengers and the lack of baggage connectivity was "generally well received" by the airline's predominantly point-to-point flyers.
However, he conceded that the 30-minute flight close-out policy had generated the biggest amount of scrutiny and debate.
Although some believed this was not customer-friendly, Mr Joyce said there were strong customer-focused reasons for the policy.
He said many domestic flights were delayed due to the actions of a few latecomers, with the majority of flyers already on an aircraft awaiting departure.
This caused potential loss of slot access into busy airports and excess fuel burn and had a potential domino effect on other flights.
"Such factors can all have a very big impact on an airline's cost base - and an outcome from this impact can result in higher fares," Mr Joyce said.
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