Qantas to Decline as Jetstar Soars
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And right you are.
Those premium carriers [Qantas included] with their large "economy class" cabins are ALSO able to leverage a premium for their full service offerings.
First and Business class are the cream.
From a passenger's perspective why would you, if you were seeking the lowest longhaul fare, choose to fly the Jetstar international model when there will be competing carriers from developing countries who offer full service for the same cost????
You wouldn't. Unless you were a complete f@#king dope.
"Onya Jetstar"
Those premium carriers [Qantas included] with their large "economy class" cabins are ALSO able to leverage a premium for their full service offerings.
First and Business class are the cream.
From a passenger's perspective why would you, if you were seeking the lowest longhaul fare, choose to fly the Jetstar international model when there will be competing carriers from developing countries who offer full service for the same cost????
You wouldn't. Unless you were a complete f@#king dope.
"Onya Jetstar"
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Yields have been declining since passenger revenues were first collected. One of those great truths of life like death and taxes.
Business death, or at least trauma awaits those who rely solely on high yields in a way that takes the mind off the other great aviation concepts: average sector length, aircraft utilisation, competitor behaviour, cost per ASK overall and by class, yield variation across the market segments, Load Factor by aircraft and by market segment and barriers to entry.
This particular table has well over 4 legs under it, not just yield, and good management will understand and balance all of them. The high yield ends of the QF mainline fleet are doing well and JQ is carrying close a lot of passengers (4.5 million in the first 6 months of 2007/8-guessing over 10 million for 2007/8) so I would guess that someone's getting the mix near right, at least for now.
Mr Speedbirdhouse, a while ago maverick US writer H.L. Mencken looked ahead, no doubt foresaw internet boards such as this and as put together that unforgettable quote, which applies today as it did then, to simplistic posts such as yours on yield:
"For every complex problem, there is a solution that is simple, neat, and wrong."
Business death, or at least trauma awaits those who rely solely on high yields in a way that takes the mind off the other great aviation concepts: average sector length, aircraft utilisation, competitor behaviour, cost per ASK overall and by class, yield variation across the market segments, Load Factor by aircraft and by market segment and barriers to entry.
This particular table has well over 4 legs under it, not just yield, and good management will understand and balance all of them. The high yield ends of the QF mainline fleet are doing well and JQ is carrying close a lot of passengers (4.5 million in the first 6 months of 2007/8-guessing over 10 million for 2007/8) so I would guess that someone's getting the mix near right, at least for now.
Mr Speedbirdhouse, a while ago maverick US writer H.L. Mencken looked ahead, no doubt foresaw internet boards such as this and as put together that unforgettable quote, which applies today as it did then, to simplistic posts such as yours on yield:
"For every complex problem, there is a solution that is simple, neat, and wrong."
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Hey speedhouse why the hatred you need to chill out a little. Jetstar are here to stay and wil be eveloping new routes into Europe very soon. Hopefully the price will be competitive and will be supported by Australians rather than your want to see cheaper Asian Airlines with lower costs succeed over an Australian product.
I guess this hatred was spawn through cheaper airfares at the cost of a so called premium product. Whats a joke.
I smell a traitor
I guess this hatred was spawn through cheaper airfares at the cost of a so called premium product. Whats a joke.
I smell a traitor
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019360,
Is that the best you can do?
It doesn't matter how many people fly Jetstar if there is no profit left after carrying them. ie YIELD.
Even scrotum face himself [incredulously
] conceded that it was the mainline profits that were underpinning the groups excellent results.
Which reminds me.
How are our friends at Jetstar doing on the Japan run
Only dickson would have the blind arrogance and stupidity to impose a business model on a market that [culturally] sees it as an insult.
Those who know more of the market in Japan than I do suggest passengers are being booked on bullet trains to NRT to avoid Jetstar.
"Onya Jetstar"
______________________________
Captaintunedog,
who would you choose to fly return to Europe????
Full service on an Asian carrier or Jetstar for the same fare??
Don't tell me you're a dope
"Onya Jetstar"
Is that the best you can do?
It doesn't matter how many people fly Jetstar if there is no profit left after carrying them. ie YIELD.
Even scrotum face himself [incredulously
] conceded that it was the mainline profits that were underpinning the groups excellent results.Which reminds me.
How are our friends at Jetstar doing on the Japan run
Only dickson would have the blind arrogance and stupidity to impose a business model on a market that [culturally] sees it as an insult.
Those who know more of the market in Japan than I do suggest passengers are being booked on bullet trains to NRT to avoid Jetstar.
"Onya Jetstar"
______________________________
Captaintunedog,
who would you choose to fly return to Europe????
Full service on an Asian carrier or Jetstar for the same fare??
Don't tell me you're a dope
"Onya Jetstar"
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Jet Star European Routes
I will be surprised if they materialize.
You need landing slots.
They are pretty scarce in Europe...particularly at major airports.
Ryanair and other LCCs seem to have all the satellite airport slots tied up.
Slots would only be avaialble from mainline.
This has occurred in Japan where a lot of other airlines waiting for landing slots into NRT are not happy about Jet * Q jumping.
Qantas was in danger of losing these slots after it reduced services.
The Japanese government,JAL and those airlines in waiting are not happy.
The new Aviation Agreement with the European Union and Australia may also put a dent in Jet* European expansion plans.
With Dixon almost gone and Leigh Clifford exercsing more control over the Qantas Group Operation...Jet* may be restricted to the domestic market.
The next two years will be interesting...Qantas mainline needs to expand its network or merge.A partner may also have some influence over Jet* expansion particulalrly if it(Jet*) flies routes in competition with Qantas' Partner Airline
You need landing slots.
They are pretty scarce in Europe...particularly at major airports.
Ryanair and other LCCs seem to have all the satellite airport slots tied up.
Slots would only be avaialble from mainline.
This has occurred in Japan where a lot of other airlines waiting for landing slots into NRT are not happy about Jet * Q jumping.
Qantas was in danger of losing these slots after it reduced services.
The Japanese government,JAL and those airlines in waiting are not happy.
The new Aviation Agreement with the European Union and Australia may also put a dent in Jet* European expansion plans.
With Dixon almost gone and Leigh Clifford exercsing more control over the Qantas Group Operation...Jet* may be restricted to the domestic market.
The next two years will be interesting...Qantas mainline needs to expand its network or merge.A partner may also have some influence over Jet* expansion particulalrly if it(Jet*) flies routes in competition with Qantas' Partner Airline
Packrat you have hit the nail on the head. I was at a meeting regarding code share agreements last month, and the talk around the table was Jet* International has been told already by the Italian government they wont be giving them any landing slots into Rome unless they have a dedicated business class, and no I don’t think * class is what they have in mind.
They reason for such a move was they already have enough low cost carriers servicing Rome, they wanted premium passengers because they bring in the money and with slots becoming harder to find they can be choosy.
They reason for such a move was they already have enough low cost carriers servicing Rome, they wanted premium passengers because they bring in the money and with slots becoming harder to find they can be choosy.
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Originally Posted by Muff Hunter
Mst Ctn, make no mistake...if the ****e hits the fan the JQ drivers will be the last to lose their jobs!!
Still, I admire your unfettered optimism that JQ's leisure and budget-conscious travellers will still be packing its jets to the rafters if the economy stalls and rates rise. It's certainly a unique point of view, and we should encourage such lateral thinking.
The only way you won't lose your jobs in such a scenario is if QF mainline syphon huge amounts of cash over to you to prop you up and absorb your costs. Wait....hang on......don't we do that already?
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From the latest annual results:
Jetstar made $80.1m profit on revenues of $1564.4m or 5.12%
Qantas made $653.6m profit on revenues or $12717.0m or 5.13%
The return on revenue is a useful tool to show how well costs are being contained. So it appears both entities performed very similarly.
The question is what strategic direction the group will take moving forward.
Jetstar should have its cost base near minimum so it will concentrate on increasing revenues (fares up or expansion), though expansion may not necessarily change returns on revenue much as the economic benefits of scale begin to decrease.
Qantas can also try to increase revenues in the same manner but probably has more ability to decrease its cost base (ie think sustainable future ongoing initiative!). The problem is that it appears the cracks are showing in Qantas' efforts to reduce costs (maintenance, service levels etc).
Fleet replacement would benefit Qantas far more than Jetstar as it has a much older fleet.
It is surprising that the group is continuing with the plan to deploy the 787's initially with Jetstar. There is a very strong argument that they would generate a much bigger return with QF by being able to significantly reduce the cost base. With a softening economy, increasing fares and expansion may not be a viable option.
Just my thoughts.
Jetstar made $80.1m profit on revenues of $1564.4m or 5.12%
Qantas made $653.6m profit on revenues or $12717.0m or 5.13%
The return on revenue is a useful tool to show how well costs are being contained. So it appears both entities performed very similarly.
The question is what strategic direction the group will take moving forward.
Jetstar should have its cost base near minimum so it will concentrate on increasing revenues (fares up or expansion), though expansion may not necessarily change returns on revenue much as the economic benefits of scale begin to decrease.
Qantas can also try to increase revenues in the same manner but probably has more ability to decrease its cost base (ie think sustainable future ongoing initiative!). The problem is that it appears the cracks are showing in Qantas' efforts to reduce costs (maintenance, service levels etc).
Fleet replacement would benefit Qantas far more than Jetstar as it has a much older fleet.
It is surprising that the group is continuing with the plan to deploy the 787's initially with Jetstar. There is a very strong argument that they would generate a much bigger return with QF by being able to significantly reduce the cost base. With a softening economy, increasing fares and expansion may not be a viable option.
Just my thoughts.
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"It is surprising that the group is continuing with the plan to deploy the 787's initially with Jetstar. There is a very strong argument that they would generate a much bigger return with QF by being able to significantly reduce the cost base"
They are looking at it, they are looking at the entire group and seeing where the biggest gains can be made and where equipment is best suited. No brainer really, QF need the new kit, they can reduce costs while still bringing in the higher revenue and at the same time repair their public image. If on the other hand the new frames went to J* they still have the same public perception problem to battle and the operating costs are reduced to a lessor degree.ie less savings.
They are looking at it, they are looking at the entire group and seeing where the biggest gains can be made and where equipment is best suited. No brainer really, QF need the new kit, they can reduce costs while still bringing in the higher revenue and at the same time repair their public image. If on the other hand the new frames went to J* they still have the same public perception problem to battle and the operating costs are reduced to a lessor degree.ie less savings.
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Maybe little AJ knows just a little more about running an airline than maybe all of you put together multiplied by a factor of 3000. I reckon Jetstar will get at least the first 25 and prob have red tails on some of them.
My understanding of Airline Economics 101 is that new aircraft are allocated to routes that have high yield which offsets their aquisition costs. Low yield routes normally are allocated aircraft that are fully paid off.
Therefore, as posted by Captain Marvel:
I worry about Tunedog's handle. His posts indicate that he doesn't have the maturity to be a Captain.
Muff Hunter, I believe that you missed your mark with your attack on Speedbirdhouse - he's a very experienced cabin crew member and if he actually stayed in Speedbird House in the days that Qantas flew B707's to London via Karachi, then he may even be retired.
Therefore, as posted by Captain Marvel:
Fleet replacement would benefit Qantas far more than Jetstar as it has a much older fleet.
It is surprising that the group is continuing with the plan to deploy the 787's initially with Jetstar. There is a very strong argument that they would generate a much bigger return with QF by being able to significantly reduce the cost base. With a softening economy, increasing fares and expansion may not be a viable option.
It is surprising that the group is continuing with the plan to deploy the 787's initially with Jetstar. There is a very strong argument that they would generate a much bigger return with QF by being able to significantly reduce the cost base. With a softening economy, increasing fares and expansion may not be a viable option.
Muff Hunter, I believe that you missed your mark with your attack on Speedbirdhouse - he's a very experienced cabin crew member and if he actually stayed in Speedbird House in the days that Qantas flew B707's to London via Karachi, then he may even be retired.
Nunc est bibendum
Interesting. Tunedog accuses Going Boeing of taking things too seriously but then resorts to uneducated and rude taunts. Interesting to see tunedog has taken such offense. Perhaps you need to take your own advice and not take the board seriously. That way you can perhaps learn to discuss the issues rationally without resorting to insults. To think that you operate aircraft for a living! 
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No more tunedog.....your comments are becoming rather....well....embarrassing. Not helping the cause if you know what i mean. I've been guilty of it in the past, no doubt, however, this QF vs JQ pilot crap is NOT working. Think about it.
Spot on Capt Marvel....this coming from the wrong side of the tracks! Go figure....we're not all a$@$holes! 
It is surprising that the group is continuing with the plan to deploy the 787's initially with Jetstar. There is a very strong argument that they would generate a much bigger return with QF by being able to significantly reduce the cost base. With a softening economy, increasing fares and expansion may not be a viable option.
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Going Boeing,
I'd re-visit your Airline Economics 101 course notes for the BIG bit you missed. Or, if it wasn't in your course, I'd suggest you ask for your money back!
JetBlue, Ryanair, Southwest, Tiger, Easyjet, VirginBlue, Jetstar and AirAsia (and they're just the ones that come readily to mind) are all low(ish) cost airlines that have either started with, or rapidly transitioned to, brand new equipment for the reasons of greater efficiency, lower operating costs and greater profit potential (and actual strong bottom-line results in most cases).
High yield operators can leverage that high yield to continue to operate older, less efficient equipment (and by that I mean cost-efficient, as opposed to unreliable). High yield operators have to exercise greater caution and be better forecasters of type end-of-life, because those very high yield passengers don't cope well when the older types become unreliable. Until an operator's equipment does lose it's high reliability, passengers couldn't care less how old it is (contrary to what so many say here) so long as it's clean on the inside, punctual, and provides the 'value-added' service that they crave.
Low yield operators, on the other hand, are far more focused on costs - and new equipment is a lower cost proposition than those older, more maintenance-intensive, higher fuel burning types.
Most of you here (or at least the more vocal, regular posters to this thread) - most likely QF crew (and I say that with all the respect that it deserves) would love to see QF get the B787 first - and that's fully understandable when you consider what pilots and cabin crew see as a high priority; shiny new toys to play with. Make no mistake, the average passenger couldn't care less if they flew the first B787 to where they're going, or good-old 20 year old OJA!
The bean counters, on the other hand, care alot whether a low-cost subsidiary like JQ has to operate slightly older, not-quite-right-for-the-job A330's any longer than they have to. The B787 will come to JQ first for that very reason. It has to go there to (a) allow the expansion east and west of the current network and (b) continue to ensure that JQ's costs are kept to the minimum necessary to permit it to compete against AirAsiaX and the like.
Pondoklabu,
If you seriously believe that the regulatory authorities in Italy care a squat about the nature of the slot applicant's aircraft configuration/class, then you're an even greater fool than you have us believe by trying to spruik that kind of twaddle. It's all about size of aircraft, pax numbers, ETA/ETDs, time on the ground, services needed while on the ground, etc.
Packrat,
It's on the record that JQ's expansion plans include a European foray starting with Athens and Rome. There has also been mention of US/Canadian west coast ops as well. It takes three aircraft to do daily to either Europe or US mainland, so it's easy to see how 25 aircraft could be usefully employed on daily services to those markets. Not necessarily daily services to one particular city, but to the geographic area.
lastly,
Captain Marvel,
I'd think that had JQ not taken delivery of 10 aircraft in the fiscal year under consideration (ie, had it had the whole fleet the entire year), then it's profit v. rev's would have been considerable higher. So looking ahead to when JQ have their end-game fleet size, it is easy to extrapolate that its position would be meaningfully better than QFs. The growth phase of an airline is never a good time to compare it's ultimate perceived performance. The bigger the fleet, the lower the detrimental effect on the company's balance sheet, when introducing more aircraft into that fleet. That's the reason why obtaining more aircraft (either for growth or replacement) doesn't have any substantial negative impact on QF's bottom line. So I don't think JQ are doing too badly to have a current return, on a percentage basis, that's already line-ball with mainline.
Now if y'all'd be so kind as to excuse any spelling/syntax/grammar errors - I've spent so long typing that I can't be bothered re-reading for editorial accuracy.
I'd re-visit your Airline Economics 101 course notes for the BIG bit you missed. Or, if it wasn't in your course, I'd suggest you ask for your money back!
JetBlue, Ryanair, Southwest, Tiger, Easyjet, VirginBlue, Jetstar and AirAsia (and they're just the ones that come readily to mind) are all low(ish) cost airlines that have either started with, or rapidly transitioned to, brand new equipment for the reasons of greater efficiency, lower operating costs and greater profit potential (and actual strong bottom-line results in most cases).
High yield operators can leverage that high yield to continue to operate older, less efficient equipment (and by that I mean cost-efficient, as opposed to unreliable). High yield operators have to exercise greater caution and be better forecasters of type end-of-life, because those very high yield passengers don't cope well when the older types become unreliable. Until an operator's equipment does lose it's high reliability, passengers couldn't care less how old it is (contrary to what so many say here) so long as it's clean on the inside, punctual, and provides the 'value-added' service that they crave.
Low yield operators, on the other hand, are far more focused on costs - and new equipment is a lower cost proposition than those older, more maintenance-intensive, higher fuel burning types.
Most of you here (or at least the more vocal, regular posters to this thread) - most likely QF crew (and I say that with all the respect that it deserves) would love to see QF get the B787 first - and that's fully understandable when you consider what pilots and cabin crew see as a high priority; shiny new toys to play with. Make no mistake, the average passenger couldn't care less if they flew the first B787 to where they're going, or good-old 20 year old OJA!
The bean counters, on the other hand, care alot whether a low-cost subsidiary like JQ has to operate slightly older, not-quite-right-for-the-job A330's any longer than they have to. The B787 will come to JQ first for that very reason. It has to go there to (a) allow the expansion east and west of the current network and (b) continue to ensure that JQ's costs are kept to the minimum necessary to permit it to compete against AirAsiaX and the like.
Pondoklabu,
If you seriously believe that the regulatory authorities in Italy care a squat about the nature of the slot applicant's aircraft configuration/class, then you're an even greater fool than you have us believe by trying to spruik that kind of twaddle. It's all about size of aircraft, pax numbers, ETA/ETDs, time on the ground, services needed while on the ground, etc.
Packrat,
It's on the record that JQ's expansion plans include a European foray starting with Athens and Rome. There has also been mention of US/Canadian west coast ops as well. It takes three aircraft to do daily to either Europe or US mainland, so it's easy to see how 25 aircraft could be usefully employed on daily services to those markets. Not necessarily daily services to one particular city, but to the geographic area.
lastly,
Captain Marvel,
I'd think that had JQ not taken delivery of 10 aircraft in the fiscal year under consideration (ie, had it had the whole fleet the entire year), then it's profit v. rev's would have been considerable higher. So looking ahead to when JQ have their end-game fleet size, it is easy to extrapolate that its position would be meaningfully better than QFs. The growth phase of an airline is never a good time to compare it's ultimate perceived performance. The bigger the fleet, the lower the detrimental effect on the company's balance sheet, when introducing more aircraft into that fleet. That's the reason why obtaining more aircraft (either for growth or replacement) doesn't have any substantial negative impact on QF's bottom line. So I don't think JQ are doing too badly to have a current return, on a percentage basis, that's already line-ball with mainline.
Now if y'all'd be so kind as to excuse any spelling/syntax/grammar errors - I've spent so long typing that I can't be bothered re-reading for editorial accuracy.