Geez Qantas that was quick!
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What a steaming crock of Management inspired hogwash Reality !
Czech this !
Jetstar is the bastard child of Geoff Dixon and WorkChoices !
It was introduced as a greenfield enterprise to take advantage of the ability to introduce AWA’s under WorkChoice, unfortunately for Geoff ( who happened to be the ex head of the Australian Business Council and they stumped up money for Freehills to draft WorkChoices , thus Geoff had intimate knowledge of what would be in the new legislation !)
Unfortunately for Geoff the dream of waiting for all Qantas EBA’s to expire and then offering new AWA’s on a take it or leave it basis as WorkChoices was first written didn’t eventuate because of the ACTU campaign that spooked Howard into watering down the WorkChoice legislation.
That was when the rapid expansion of Jetstar occurred.
It was purely a Management inspired stalkinghorse to reign in the more recalcitrant militant unions in Qantas and to put downward wages pressure on all Mainline staff ,a form of reverse whipsawing .
Let’s face it your poor excuses of
Could have just as easily been achieved with deeply discounted seats offered down the back of Mainline aircraft without all the duplicated back office staff , management , ground staff, training departments ,engineering staff , checkin staff ,ground equipment , ,etc , etc.
Hardly an efficient use of capital if your main aim is to block foreign competition !
Czech this !
Jetstar is the bastard child of Geoff Dixon and WorkChoices !
It was introduced as a greenfield enterprise to take advantage of the ability to introduce AWA’s under WorkChoice, unfortunately for Geoff ( who happened to be the ex head of the Australian Business Council and they stumped up money for Freehills to draft WorkChoices , thus Geoff had intimate knowledge of what would be in the new legislation !)
Unfortunately for Geoff the dream of waiting for all Qantas EBA’s to expire and then offering new AWA’s on a take it or leave it basis as WorkChoices was first written didn’t eventuate because of the ACTU campaign that spooked Howard into watering down the WorkChoice legislation.
That was when the rapid expansion of Jetstar occurred.
It was purely a Management inspired stalkinghorse to reign in the more recalcitrant militant unions in Qantas and to put downward wages pressure on all Mainline staff ,a form of reverse whipsawing .
Let’s face it your poor excuses of
One of the main purposes of Jetstar is to protect mainline, wedge Virgin and to discourage foreign competition entering the domestic market and thereby making mainline less profitablle. Jetstar is key to mainline success.
Hardly an efficient use of capital if your main aim is to block foreign competition !
Last edited by blow.n.gasket; 28th Feb 2018 at 07:02.
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What a steaming crock of Management inspired hogwash Reality !
Czech this !
Jetstar is the bastard child of Geoff Dixon and WorkChoices !
It was introduced as a greenfield enterprise to take advantage of the ability to introduce AWA’s under WorkChoice, unfortunately for Geoff ( who happened to be the ex head of the Australian Business Council and they stumped up money for Freehills to draft WorkChoices , thus Geoff had intimate knowledge of what would be in the new legislation !)
Unfortunately for Geoff the dream of waiting for all Qantas EBA’s to expire and then offering new AWA’s on a take it or leave it basis as WorkChoices was first written didn’t eventuate because of the ACTU campaign that spooked Howard into watering down the WorkChoice legislation.
That was when the rapid expansion of Jetstar occurred.
It was purely a Management inspired stalkinghorse to reign in the more recalcitrant militant unions in Qantas and to put downward wages pressure on all Mainline staff ,a form of reverse whipsawing .
Let’s face it your poor excuses of
Could have just as easily been achieved with deeply discounted seats offered down the back of Mainline aircraft without all the duplicated back office staff , management , ground staff, training departments ,engineering staff , checkin staff ,ground equipment , ,etc , etc.
Hardly an efficient use of capital if your main aim is to block foreign competition !
Czech this !
Jetstar is the bastard child of Geoff Dixon and WorkChoices !
It was introduced as a greenfield enterprise to take advantage of the ability to introduce AWA’s under WorkChoice, unfortunately for Geoff ( who happened to be the ex head of the Australian Business Council and they stumped up money for Freehills to draft WorkChoices , thus Geoff had intimate knowledge of what would be in the new legislation !)
Unfortunately for Geoff the dream of waiting for all Qantas EBA’s to expire and then offering new AWA’s on a take it or leave it basis as WorkChoices was first written didn’t eventuate because of the ACTU campaign that spooked Howard into watering down the WorkChoice legislation.
That was when the rapid expansion of Jetstar occurred.
It was purely a Management inspired stalkinghorse to reign in the more recalcitrant militant unions in Qantas and to put downward wages pressure on all Mainline staff ,a form of reverse whipsawing .
Let’s face it your poor excuses of
Could have just as easily been achieved with deeply discounted seats offered down the back of Mainline aircraft without all the duplicated back office staff , management , ground staff, training departments ,engineering staff , checkin staff ,ground equipment , ,etc , etc.
Hardly an efficient use of capital if your main aim is to block foreign competition !
No it couldn’t have been achieved that way. Jetstar needs a lower cost base to offer lower fares for that segment of the market. Most of those functions were not duplicated. They were introduced commensurate with the increase in overall capacity as Jetstar grew and the overall market grew.
So duplicating a whole airline as a way of reducing costs Czech? Sorry.....try again.
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No it couldn’t have been achieved that way. Jetstar needs a lower cost base to offer lower fares for that segment of the market. Most of those functions were not duplicated.
- Aircraft acquisition costs? NO
- Fuel costs NO
- Maintenance not substantially
- Air navigation charges? NO
What Qantas has created is a duplicated structure.
Low Fare airlines face pretty much exactly the same fixed cost.
The are LOW YIELD HIGH VOLUME businesses, they need consistent high load factors.
- Leisure travel airlines are very demand elastic. This means any increase in price sees a substantial decline in passenger numbers. It is a paradox of the LFA manager, how to raise yield when passengers are not loyal to anything other than cheap prices.
- Ryan Air and Air Asia etc need ancillary revenue because their fixed costs are very similar.
What Qantas saw was an opportunity to step around the QSA and 'create competitive wage tension'.
If they saved 3% on crewing costs, the expense of JQ far outweighs any actual economic benefit.
They persist because of ideology.
The hero myth of Mr Joyce relies on JQ and his fanciful story of 'creation' that he somehow was responsible for it. He was merely chosen by Mr Dixon.
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Publicly available 2018 half year results for a listed company state Jetstar results as:
1.936 Billion revenue, 318 Million EBIT.
Search for QANTAS AIRWAYS LIMITED DIRECTORS’ REPORT
ABN 16 009 661 901 HALF-YEAR ENDED 31 DECEMBER 2017
1.936 Billion revenue, 318 Million EBIT.
Search for QANTAS AIRWAYS LIMITED DIRECTORS’ REPORT
ABN 16 009 661 901 HALF-YEAR ENDED 31 DECEMBER 2017
- The Qantas group has six operating segments.
- Qantas is broken into TWO segments, DOMESTIC and INTERNATIONAL
- Jetstar has ONE segment although it operates more aircraft, wonder why?
There is a threshold of revenue and other parameters that necessitate a segment being reported. JQ presumably do not meet these thresholds.
If JQ does not meet the threshold MANAGEMENT can CHOOSE to report the JQ segment as Domestic and International if;
'Operating segments that do not meet any of the quantitative thresholds may be considered reportable, and separately disclosed, if management believes that information about the segment would be useful to users of the financial statements'
Qantas management prefer not to report both segments. The mind boggles why not, particularly if it is as they claim, somehow a 'standout'. Many with whom I consult, say JQ is a standout, for all the wrong reasons.
Qantas management choose not to. Why not?
JQ has a role in the leisure segment, but it has grown beyond its paddock and is arguably a real drain on the performance of the Qantas segment.
As for the General Purpose Audit conducted by the big four, it shows nothing about how management assign costs. To see that would require a different sort of audit, the sort of audit Qantas would never CHOOSE to have...
Not to mention the global franchise dreams, all leases through friendly pockets of course
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Sooooo, the alternative is to shut down JQ and grow Qantas mainline????
Seriously?
Apart from being Borgetti’s wet dream, who on gods green earth would benefit?
Customers - not those flying JQ. They will not / cannot pay QF prices
Shareholders - they seem pretty happy with the share price
Staff - yes QF mainline pilots and some others would love it. Meanwhile 7000 JQ people unemployed
With JQ out of the way, and given Virgins ‘me too’ strategy, the LCC space would be vacant for a new entrant. Lion, Air Asia etc., who will happily step in and eat your lunch (commands) and then greedily go for seconds.
Be careful what you wish for.
Seriously?
Apart from being Borgetti’s wet dream, who on gods green earth would benefit?
Customers - not those flying JQ. They will not / cannot pay QF prices
Shareholders - they seem pretty happy with the share price
Staff - yes QF mainline pilots and some others would love it. Meanwhile 7000 JQ people unemployed
With JQ out of the way, and given Virgins ‘me too’ strategy, the LCC space would be vacant for a new entrant. Lion, Air Asia etc., who will happily step in and eat your lunch (commands) and then greedily go for seconds.
Be careful what you wish for.
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Sooooo, the alternative is to shut down JQ and grow Qantas mainline????
I did say that separating the segments would give 'transparency'. That may actually show how poor a contributor the 'International' JQ business actually is.
With JQ out of the way, and given Virgins ‘me too’ strategy, the LCC space would be vacant for a new entrant. Lion, Air Asia etc., who will happily step in and eat your lunch (commands) and then greedily go for seconds.
How precisely would a foreign entrant operate domestically?
The only way currently under consideration would be cabotage. That would allow foreign competitors onshore flying domestically.
With charateristic classic hypocrisy Qantas oppose that, but want crew cabotage with Jetconnect. Cognitive dissonance anyone?
Staff - yes QF mainline pilots and some others would love it. Meanwhile 7000 JQ people unemployed
As I have restated several times, JQ have a role, but nowhere near the scale management ideologically cling to.
Want to see who makes what? Separate the JQ segments into International and Domestic. Then we would more clearly see which 'business' carries its weight.
Nunc est bibendum
I’m not sure anyone is suggesting to shut down JQ. That genie is out of the bottle. It does seem pretty pointless though to be launching a 737 and an A320 between SYD and MEL at the same time.
There was a time pre JQ when QF was making bloody good money with a full 767 every half hour or so between SYD- MEL- SYD and SYD- BNE- SYD. Over the subsequent 15 years that could have expanded to an A333. Instead we now launch a 737 and an A320 along with the duplicated back of house structures. Doesn’t seem all that efficient to me when you could have simply quarantined the back half of an A330 and declared it a ‘pay for stuff as you go’ zone.
There was a time pre JQ when QF was making bloody good money with a full 767 every half hour or so between SYD- MEL- SYD and SYD- BNE- SYD. Over the subsequent 15 years that could have expanded to an A333. Instead we now launch a 737 and an A320 along with the duplicated back of house structures. Doesn’t seem all that efficient to me when you could have simply quarantined the back half of an A330 and declared it a ‘pay for stuff as you go’ zone.
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Doesn’t seem all that efficient to me when you could have simply quarantined the back half of an A330 and declared it a ‘pay for stuff as you go’ zone.
Hire new cabin crew, use the same 'back of office' functions and all of a sudden you had product differentiation, a new product at that and most of the costs absorbed by the pre-privatisation Qantas (taxpayer). Efficent and almost seamless in the Qantas system. New pilot contracts if you want, but given they already flew the aircraft, why bother when the cost is already 'sunk'.
Ideology is rarely found in the same room as common sense.
-Anon
How precisely would a foreign entrant operate domestically?
They didn’t set up an entirely new airline for Jetstar anyway. It used to be called Impulse.
And how exactly would they get the volume that is potentially required by simply using a few rows down the back of Qantas?
morno
3.636 Billion revenue, 452 Million EBIT
2015
3.464 Billion revenue, 230 Million EBIT
2014
3.222 Billion revenue, (116) Million loss
2013
3.288 Billion revenue, 138 Million EBIT
2012
3.076 Billion revenue, 206 Million EBIT
2011
2.613 Billion revenue, 169 Million EBIT
2010
2.197 Billion revenue, 131 Million EBIT
2009
1.646 Billion revenue, 107 Million EBIT
2008
1.564 Billion revenue, 102 Million EBIT
There is a threshold of revenue and other parameters that necessitate a segment being reported. JQ presumably do not meet these thresholds.
If JQ does not meet the threshold MANAGEMENT can CHOOSE to report the JQ segment as Domestic and International if;
'Operating segments that do not meet any of the quantitative thresholds may be considered reportable, and separately disclosed, if management believes that information about the segment would be useful to users of the financial statements'
Qantas management prefer not to report both segments. The mind boggles why not, particularly if it is as they claim, somehow a 'standout'. Many with whom I consult, say JQ is a standout, for all the wrong reasons.
Qantas management choose not to. Why not?
How do you figure that? Do you want a regulated market? Should Jetstar stop growing in the hope that Qantas grows into the market ahead of the competition? What about the competing airlines, should they also hold off expansion to allow Qantas to grow into the market?
Nunc est bibendum
So on a SYD- MEL- SYD route you’d have less rows of lite service in the morning and arvo peaks and more rows in the middle of the day. You’d also fly bigger aeroplanes when you needed to instead of two smaller aeroplanes. That way the QF group wouldn’t have lost a bunch of Gold Coast pax to VOZ when QF mainline pulled out.
An example. The QF A330 red eye PER- BNE often has pax connecting to CNS including frequently some in J/C so they can get sleep in the lie flat bed. If the group sent an A330 PER- CNS we’d carry the ‘lite’ pax for 180 seats that the JQ A320 currently does and the remaining 60 pax would be J/C and a few economy pax who were prepared to pay a bit more.
Anyway, it’s done. It’s not going to change. To deny it could have been done differently though (and far more transparently) and probably equally successfully is just myopic.
Keith - thanks for that.
So, assuming around $2.5b setup for JQ, and without making allowances for the extremely rubbery accounting QF utilises, the costs worn by QF that support JQ, the duplication of services (undercutting itself) maintenance, crewing, catastrophic failure of JQ HKG and the semi nationalisation of an entity with the jailing of staff in Vietnam (among other things) that still shows a back of envelope loss of around $800m.
That's an EXTRAORDINARILY large ($3.3b?) opportunity cost in terms of 777's and Gamechangers to QF
What's 15 years of heavy jet fuel at 5-7,000kgs of fuel per hour for EACH jet worth??
So sad....
So, assuming around $2.5b setup for JQ, and without making allowances for the extremely rubbery accounting QF utilises, the costs worn by QF that support JQ, the duplication of services (undercutting itself) maintenance, crewing, catastrophic failure of JQ HKG and the semi nationalisation of an entity with the jailing of staff in Vietnam (among other things) that still shows a back of envelope loss of around $800m.
That's an EXTRAORDINARILY large ($3.3b?) opportunity cost in terms of 777's and Gamechangers to QF
What's 15 years of heavy jet fuel at 5-7,000kgs of fuel per hour for EACH jet worth??
So sad....
Last edited by V-Jet; 1st Mar 2018 at 07:02. Reason: Punctuation
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I love the “LCC need lower costs to be competitive” followed by “It is all profit, why are you worried?” comments.
QF international was lambasted a few years ago for being unprofitable while flying gas guzzlers when it should have had the new 787-8s that were initially ordered for it! (Lets not mention those old tech 777s!
)
Wood for trees guys! If Jetstar needs lower costs because tickets are so cheap then imagine how much money was made to CG and Hammo etc when QF fuff fare, high yield traffic was going to those ports!
Yep, Jetstar has a place, but not at the expense of HIGH YIELD traffic. Give punters too much of a choice and they might just take the cheaper option which nets “the group” less money.
If Jetstar didn’t exist, and QF had changed a few things and expanded then the “group” would have been better off. (In my opinion)
Ask the 20+ year FOs who still cannot get an east coast command what Jetstar has cost them. (While newbies have commands at Jetstar who, in a different circumstance, would have joined the larger Qantas.)
QF international was lambasted a few years ago for being unprofitable while flying gas guzzlers when it should have had the new 787-8s that were initially ordered for it! (Lets not mention those old tech 777s!
)Wood for trees guys! If Jetstar needs lower costs because tickets are so cheap then imagine how much money was made to CG and Hammo etc when QF fuff fare, high yield traffic was going to those ports!
Yep, Jetstar has a place, but not at the expense of HIGH YIELD traffic. Give punters too much of a choice and they might just take the cheaper option which nets “the group” less money.
If Jetstar didn’t exist, and QF had changed a few things and expanded then the “group” would have been better off. (In my opinion)
Ask the 20+ year FOs who still cannot get an east coast command what Jetstar has cost them. (While newbies have commands at Jetstar who, in a different circumstance, would have joined the larger Qantas.)
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Also V-Jet don’t forget the $50-60 million every 6 months being pumped into that amazing Japanese Business just to cover wages now that partners JAL & Mitsubishi have disowned that Jetstar franchised opportunity !
It would appear Management are scrambling to cover their tracks prior to the IFRS new reporting requirements coming into effect.
Transparency of cross subsidisation amongst entities this year and off book leasing cost bought on balance next year.
Wonder what that outlay will do to P/E ratios ,share price and the potential to trigger debt covenants ?
It would appear Management are scrambling to cover their tracks prior to the IFRS new reporting requirements coming into effect.
Transparency of cross subsidisation amongst entities this year and off book leasing cost bought on balance next year.
Wonder what that outlay will do to P/E ratios ,share price and the potential to trigger debt covenants ?
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Also V-Jet don’t forget the $50-60 million every 6 months being pumped into that amazing Japanese Business just to cover wages now that partners JAL & Mitsubishi have disowned that Jetstar franchised opportunity !
It would appear Management are scrambling to cover their tracks prior to the IFRS new reporting requirements coming into effect.
Transparency of cross subsidisation amongst entities this year and off book leasing cost bought on balance next year.
Wonder what that outlay will do to P/E ratios ,share price and the potential to trigger debt covenants ?
It would appear Management are scrambling to cover their tracks prior to the IFRS new reporting requirements coming into effect.
Transparency of cross subsidisation amongst entities this year and off book leasing cost bought on balance next year.
Wonder what that outlay will do to P/E ratios ,share price and the potential to trigger debt covenants ?
RedQ? Smartest men in the room?
What's 15 years of heavy jet fuel at 5-7,000kgs of fuel per hour for EACH jet worth?? So sad....
As an aside, I think I've answered my own question. It's worth about $25m a year to the most incompetent leader since a German Corporal decided Russian winters wouldn't be a problem. God knows what Scrotum face extracted. That's a whole 'nother issue...
Again, nothing against Jetstar crew and staff at all. Just so very, very sad. The only thing I can say is that crew and engineering costs (until there is a giant hole in the ground) are a relatively minimal expense.
PS: I saw and got chatting to a Thai JQ Cabin crew in BNE a few months ago on the tail of something just appalling. What they go through as a matter of course in their working lives is horrific. Not out of pity, but out of respect I handed my duty boarding pass to the senior guy to hand out to whoever he felt deserved it best. For a 'Group' who 'prides itself on a great work/life balance' I was disgusted at what these people are 'required' to perform domestically in Australia, where I see it as straight out illegal, let alone internationally.
As a well known QF F/O often states (when he's not stealing cars of course
) R E S P E C T....