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Future of Jetstar

Old 12th Apr 2020, 01:42
  #21 (permalink)  
 
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In lean economic times, Qantas uses Jetstar domestic more because of the low operating cost base compared to mainline.

When times are good, the profit margin is greater on domestic mainline and Jetstar tends to suffer.

So, in view of the undoubted recession (or depression, depending on your view) ahead, I don't see Jetstar domestic going anywhere soon.

However, Jetstar's international 787 operation has a huge question mark over it, as worldwide border controls are likely to force massive reductions in operations even after the initial restrictions are slowly removed. If it resumes, the 787 operation will be very small for some time. During this period of restarting international routes, Qantas will also probably want to take advantage of greater margins using the mainline fleet by removing the LCC element. This is a significant advantage, given that there will probably be fewer international operators and at a much less frequency.


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Old 12th Apr 2020, 02:08
  #22 (permalink)  
 
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Originally Posted by Des Dimona View Post
In lean economic times, Qantas uses Jetstar domestic more because of the low operating cost base compared to mainline.

When times are good, the profit margin is greater on domestic mainline and Jetstar tends to suffer.

So, in view of the undoubted recession (or depression, depending on your view) ahead, I don't see Jetstar domestic going anywhere soon.

However, Jetstar's international 787 operation has a huge question mark over it, as worldwide border controls are likely to force massive reductions in operations even after the initial restrictions are slowly removed. If it resumes, the 787 operation will be very small for some time. During this period of restarting international routes, Qantas will also probably want to take advantage of greater margins using the mainline fleet by removing the LCC element. This is a significant advantage, given that there will probably be fewer international operators and at a much less frequency.

Probably more depends on leasing arrangements. I believe for domestic, QF own most of its 737 and over half A330 fleet whilst Jetstar relies more on leasing, but it does own some. I would expect it much easier to arrange cheaper storage leases than when the aircraft are flying. Thus, using mainline with its fully owned fleet could be the cheapest option.
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Old 12th Apr 2020, 02:12
  #23 (permalink)  
Whispering "T" Jet
 
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Originally Posted by Chris2303 View Post
And what if Qantas Group just tells the Government "If you want JQ as a separate entity you pay for it or we close it down."
The last thing the Government will want (even if it could afford it - and it won't) is an airline. This country (and the world) is headed for one of the biggest recessions we will probably ever witness and it will be deep and long lasting. "Things" are not going to be as they were in six months time. Tourism, sport, theatre, small business, big business etc., are going to take years to regain profitability, many won't rebuild and those that do will come out a very different model.
Forget about overseas travel as most of the countries that the tourists frequent will be in the same boat as Australia (probably worse, (given the demographics). Most of us won't be able to afford it anyway.

On the bright side, we will be able to tour this fine country and this may be the catalyst for reestablishing the manufacturing industries in Australia that were sold off during the "good times"! The AFL,NRL and Cricket Australia will, through necessity, be leaner and more attuned to the needs of the supporter rather than the corporates. We may even get to see a AFL Grand Final for a reasonable priced ticket!

Priority now is to look after our families and Mates so we can come out the end of this in reasonable shape.

Happy Easter to all and don't eat too many eggs!!!!
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Old 12th Apr 2020, 02:45
  #24 (permalink)  
 
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Originally Posted by Des Dimona View Post
In lean economic times, Qantas uses Jetstar domestic more because of the low operating cost base compared to mainline.

When times are good, the profit margin is greater on domestic mainline and Jetstar tends to suffer.

So, in view of the undoubted recession (or depression, depending on your view) ahead, I don't see Jetstar domestic going anywhere soon.

However, Jetstar's international 787 operation has a huge question mark over it, as worldwide border controls are likely to force massive reductions in operations even after the initial restrictions are slowly removed. If it resumes, the 787 operation will be very small for some time. During this period of restarting international routes, Qantas will also probably want to take advantage of greater margins using the mainline fleet by removing the LCC element. This is a significant advantage, given that there will probably be fewer international operators and at a much less frequency.
And what data do you base that on? During the GFC JQ was 3 years old. Qantas took advantage of the vacuum left by Ansett and the cheap aircraft at the time to expand aggressively. It also did this to leverage a growing virgin with a cheaper cost base.

Times are different now and Qantas is Qantas. If it comes down to it, it’ll save itself and mothball or shed the rest.

Jetstar is a great operation. It stimulates the
market and allows many to fly who ordinarily wouldn’t. However it caters to a price sensitive market and that market will be savaged by what’s coming.

It also depends on what happens over the fence. If the worst happens, Qantas has no urgent need to stoke up the Jetstar boiler. It can focus on yield and it’s core business. If the competition survives, Jetstar will be needed as before. It’ll also be needed if another player enters the market.
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Old 12th Apr 2020, 02:58
  #25 (permalink)  
 
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The cost base difference between QF and JQ would be totally different now than it was at JQ's inception or the GFC. I doubt the future of JQ is in doubt, but it too won't be the airline it once was.
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Old 12th Apr 2020, 03:11
  #26 (permalink)  
 
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Originally Posted by Blueskymine View Post
Times are different now and Qantas is Qantas. If it comes down to it, it’ll save itself and mothball or shed the rest.
I think this quote highlights a misunderstanding of the structure of the Qantas Group. The ‘us and them’ mindset that some frontline staff have between the airlines I don’t believe is the mindset at a CEO/Board level.

The Qantas Group is just that, a group of airlines. Qantas domestic, qantas international, QantasLink, Jetstar. Each a seperate and equal part of the group.

Joyce came from Jetstar, now group CEO. His most likely successor, Gareth Evans, currently the Jetstar CEO. This idea that Qantas will ‘save itself’ doesn’t really stack up. Jetstar is as much a part of the Qantas group as any other airline from a CEO/board level perspective.

Even now, with zero demand we’re running 1 qantas 737, 1 Jetstar A320 and 1 qlink Dash 8.
Each part of the group still running.
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Old 12th Apr 2020, 03:16
  #27 (permalink)  
 
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It remains to be seen if Virgin will return its Tiger brand. They said they would, and was fairly defensive when questioned, but things have deteriorated further since then, and it’s more overheads gone if they are going down the route of a more basic 2008 level of 50 73s and 4 777.

Tiger had 17-18 aircraft recently. That’s a lot of capacity given to Jetstar when the Dom market bounces back in 2021.

JQ also have a monopoly in many markets. Cairns, Gold Coast. These flights largely are filled with Chinese tourists. And it appears these travelers will be back again more so before our own domestic local traffic.

They operate 6 flights a day A321 Melbourne to Cairns between May to September. Tiger had 1. Virgin and have one. These flights are full. They also have 15 flights a day Melbourne to Sydney A321. On some days they carry more passengers than Virgin. It’s the price sensitive corporate traffic which is growing and even more so now.
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Old 12th Apr 2020, 03:27
  #28 (permalink)  
 
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Originally Posted by ECAMACTIONSCOMPLETE View Post

Even now, with zero demand we’re running 1 qantas 737, 1 Jetstar A320 and 1 qlink Dash 8.
Each part of the group still running.
I don’t think that point is true. I think what AJ meant was these aircraft operating between Syd-Mel, as He was comparing the group to VA in that they would operate 1 flight a day on that route. There are many 737’s operating out west, for example.
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Old 12th Apr 2020, 03:35
  #29 (permalink)  
 
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Originally Posted by SandyPalms View Post
I don’t think that point is true. I think what AJ meant was these aircraft operating between Syd-Mel, as He was comparing the group to VA in that they would operate 1 flight a day on that route. There are many 737’s operating out west, for example.
ah, I may have misunderstood! Happy to be corrected if wrong

but I guess it still backs up my point, even in these dark times they’re splitting the flying between the different parts of the business.
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Old 12th Apr 2020, 03:40
  #30 (permalink)  
Keg

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Originally Posted by ECAMACTIONSCOMPLETE View Post
I think you’ll find that businesses who have been using Skype/zoom meetings for 6,12,18 months (however long this crisis lasts) will begin to wonder why they’re spending the time and money to send people around the country for business meetings. That’s the feedback from my friends in the corporate world.
The feedback from friends and siblings in the corporate world is that Zoom meetings have enforced how important it is to get proper face to face time. Body language, verbal inflections in the voice that are hidden in Zoom meetings, the ability to have quick side chats with multiple players once the ‘formalities’ are done. They all indicate that they can’t wait to get moving again.

They also won’t be travelling Jetstar. Not reliable enough in terms of OTP, not enough schedule flexibility, too many cancelled flights without the fallback of another flight in 15-30 minutes, no lounges.
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Old 12th Apr 2020, 03:48
  #31 (permalink)  
 
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Originally Posted by Keg View Post
The feedback from friends and siblings in the corporate world is that Zoom meetings have enforced how important it is to get proper face to face time. Body language, verbal inflections in the voice that are hidden in Zoom meetings, the ability to have quick side chats with multiple players once the ‘formalities’ are done. They all indicate that they can’t wait to get moving again.

They also won’t be travelling Jetstar. Not reliable enough in terms of OTP, not enough schedule flexibility, too many cancelled flights without the fallback of another flight in 15-30 minutes, no lounges.
Not every suit has the same opinion I suppose. Jetstar already carries plenty of SME price sensitive business traffic. When budgets get slashed during recessions, I don’t think lounges matter so much or the minor annoyances of Skype/Zoom.

I’ve read a few articles which differ in opinion as to whether business travel will rebound strongly post COVID 19. I won’t cherry pick the articles that suit my contention but it’s fair to say there are varied opinions. Only time will tell.

Last edited by ECAMACTIONSCOMPLETE; 12th Apr 2020 at 04:00.
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Old 12th Apr 2020, 04:23
  #32 (permalink)  
 
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Theory is all well and good. JQ and QF is a formidable set up. How the new world order will shake out has as much to do with the ownership structure of the aircraft as it does customer demand. There is no V shaped bounce back in demand. For the next couple of years managing the surplus aircraft (lease or debt repayments) will be as important as trying to match segmental demand.
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Old 12th Apr 2020, 04:52
  #33 (permalink)  
 
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Let’s face it everyone, nobody has any idea what will happen, there are just too many variables. Jetstar in Oz and NZ has a lower cost base so could be cheaper to run and will limit losses, although they are primarily leisure airlines which may or may not be the last domestic market to come back to life. When redundancy is needed it will be cheaper in the short term to cut Jetstar pilots but in the long term cheaper for cost to weaken the mainline group. Maybe Joyce can be taken at face value when he says he wants to retain everyone as many are saying recovery of most operations will happen within 5 years. Remember how they were struggling to find pilots, if China has beaten this thing then it won’t be long before their airlines will be wanting people back. Emirates is already starting some limited flying again and will no doubt be straight back in the air when a vaccine is found or international travel starts again. I am sure that airlines like Qantas do not others to get the jump on them, on the other hand they have said they will only increase flights as demand dictates so they may dribble capacity back into the system. Maybe they will shut the whole thing down. Air NZ’s apparent plan to make so many redundant will take 18 months to action with the amount of down training required, this will be a a huge cost and will probably be finished just in time to start recruitment again, maybe Qantas thinks that LWOP is the answer as they expect to need everyone back. The last airline I took voluntary redundancy from during the GFC stated it was required due to the outlook and there would be no recruitment for between 2-5 years, I had only been gone 8 months when they contacted me asking if I wanted to come back, so who the hell knows.
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Old 12th Apr 2020, 05:12
  #34 (permalink)  
 
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Originally Posted by Ollie Onion View Post
so who the hell knows.
Yep. That sums it up
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Old 12th Apr 2020, 05:48
  #35 (permalink)  
 
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Originally Posted by DanV2 View Post

Especially when pointing out the incompetence both SIA and Air NZ had when they had full 100% control on one of their Australian attempts (For SIA that was Tiger Airway AU and Air NZ that was Ansett), and yet still couldn't get that attempt right due to a mixture of incompetence and egos.
You conveniently overlooked something or don't remember history all that well.

In the case of Ansett, yes there was some egos involved, but there was a significant degree of underarm bowling involving the Australian regulator working as a proxy for QF or other entities.

Anyhow I don't see Air NZ bothering with the Australian market for a multitude of reasons. They'll stick to their knitting.
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Old 12th Apr 2020, 05:56
  #36 (permalink)  
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I think we can stop using the word "recession", once the lights go back on we'll realise we're in a depression like we've never seen before. Recovery will be like the aftermath of a major war and there won't be a strong United States to bail Australia out. The lockdown can only last for so long, it won't eliminate COVID-19 and enable us to walk out our front doors into a virus free world. However with everyone now taking precautions that they weren't taking in the early days it might be enough to break the back of the pandemic and reduce it to a manageable level. People will keep getting infected and some will die but hopefully at a rate that the health system can cope with.

The easing of the lockdown will be gradual and in measured stages, we ground to a halt fairly quickly but the return to normality will take a lot longer. Domestic flights will be the first to resume but at a greatly reduced rate as the demand simply won't be there. International will take longer due to dearer flights and much of the world being off limits eg Africa and India won't be able to bring the virus under control in the same way that New Zealand and South Korea have.

Many QF international destinations are direct routes and with Australia not being a hub, QF will be far less impacted than Emirates who will lose substantial portions of their network for a long time and be avoided by passengers who won't want to mix with people from multiple countries when changing aircraft. In the early stages EK may have to operate SYD - LHR with the same aircraft and pax load with the stop in Dubai simply to change crew and refuel. This could build up to limited transfers involving safe countries in a separate terminal after a while, but the major hub operation will take a long time to return. Much of QFs international network is to countries which are likely to be able to recover from the outbreak within a reasonable time. The loss of Africa won't be that important for QF but it will be highly significant for EK. The partner/competitor will be nobbled, QF and BA could be the preferred airlines on the kangaroo route, just like the old days.

The wave hit first in East Asia and this region will likely be the first to recover, a holiday or business travel to Australia may be a better option than Europe or the USA for Chinese, Japanese and Koreans with health certificates.
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Old 12th Apr 2020, 07:43
  #37 (permalink)  
 
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Couldn't agree more with your comments. The longer this hibernation goes on for the more likely there will be barely enough work for a perhaps up to 1/2 of the pre COVID 19 QF. There will be enough space for other entrants to attempt to enter the market once things pick up again.
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Old 12th Apr 2020, 08:02
  #38 (permalink)  
 
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[QUOTE=Keg;10747269]The feedback from friends and siblings in the corporate world is that Zoom meetings have enforced how important it is to get proper face to face time. Body language, verbal inflections in the voice that are hidden in Zoom meetings, the ability to have quick side chats with multiple players once the ‘formalities’ are done. They all indicate that they can’t wait to get moving again.

/QUOTE]
that is not what I have been hearing at all, quite the opposite in fact. My parents in law (both office workers, one self employed) are both planning to switch to more online communication. Especially being of an older generation, this has been a forced introduction to technology. Othes are hoping to push for more working from home, if only a few days a week. On top of that, many businesses will need to recover losses in the years ahead and any non essential travel will be the first to go.

Not to say that business travel is over, of course not. However it will be significantly reduced and I think it isn't hard to draw that conclusion. It's about time too, we weren't fully utilising video conferencing in the way that we should have been.

​​Why do we spend hours each day sitting in cars/trains only to sir at a desk etc when such work can be done from home? Quite frankly it's ridiculous. It isn't 1950 anymore.
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Old 12th Apr 2020, 08:52
  #39 (permalink)  
 
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Joyce came from Jetstar,
And what was he doing before he was CEO at JQ?
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Old 12th Apr 2020, 09:03
  #40 (permalink)  
 
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Originally Posted by krismiler View Post
I think we can stop using the word "recession", once the lights go back on we'll realise we're in a depression like we've never seen before. Recovery will be like the aftermath of a major war and there won't be a strong United States to bail Australia out. The lockdown can only last for so long, it won't eliminate COVID-19 and enable us to walk out our front doors into a virus free world. However with everyone now taking precautions that they weren't taking in the early days it might be enough to break the back of the pandemic and reduce it to a manageable level. People will keep getting infected and some will die but hopefully at a rate that the health system can cope with.

The easing of the lockdown will be gradual and in measured stages, we ground to a halt fairly quickly but the return to normality will take a lot longer. Domestic flights will be the first to resume but at a greatly reduced rate as the demand simply won't be there. International will take longer due to dearer flights and much of the world being off limits eg Africa and India won't be able to bring the virus under control in the same way that New Zealand and South Korea have.

Many QF international destinations are direct routes and with Australia not being a hub, QF will be far less impacted than Emirates who will lose substantial portions of their network for a long time and be avoided by passengers who won't want to mix with people from multiple countries when changing aircraft. In the early stages EK may have to operate SYD - LHR with the same aircraft and pax load with the stop in Dubai simply to change crew and refuel. This could build up to limited transfers involving safe countries in a separate terminal after a while, but the major hub operation will take a long time to return. Much of QFs international network is to countries which are likely to be able to recover from the outbreak within a reasonable time. The loss of Africa won't be that important for QF but it will be highly significant for EK. The partner/competitor will be nobbled, QF and BA could be the preferred airlines on the kangaroo route, just like the old days.

The wave hit first in East Asia and this region will likely be the first to recover, a holiday or business travel to Australia may be a better option than Europe or the USA for Chinese, Japanese and Koreans with health certificates.

which major war? Because both world wars had polar opposite recoveries.
ww1 was followed by recession

ww2 recovery is also called the “golden age of capitalism”
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