Qantasflyer
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Will Jetstar Cannibalize Qantas?

Tue Apr 13, 2004 6:05 pm

Qantas' new low cost carrier begins operations in May, do you think that Jetstar will eventually cannibalize Qantas. Will the quality of product and service detiriate and will prices rise on mainline QF or do you think that Qantas will be able to focus on trunk routes and improve product and service. Also will you presonally fly Jetstar on routes which are jointly served with QF or would you shed out that bit extra to fly QF?

Regards
Qantasflyer That's the spirit. The Spirit of Australia!
 
QantasffCL
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RE: Will Jetstar Cannibalize Qantas?

Tue Apr 13, 2004 6:16 pm

Jetstar will steal market share from Qantas but it will make its financial stituation better. Jetstar is (within the first 2yrs) being given all of the un-profitable Qantas routes. The 'hourly' SYD-MEL, SYD-BNE which are usually operated by A330's (for the moment anyway) and 767's will be gradually changed to 737's as Jetstar eats into Qantas' market share to an approximate 35%.

Qantas' service shouldn't meagerly deteriorate if anything. In the past three years they have updated economy (domestic) meals thrice and retrained all staff that come in contact with passengers. Whatever happens Qantas probably won't loose out on hourly SYD-MEL, SYD-BNE, BNE-MEL as they can easily transit from 763's to 738's. Its logical.

I would definitely spend extra to fly Qantas, as those flights add up to lifetime status. I mean look at my other post (link below) and you will see more of my reasons. http://www.airliners.net/discussions/general_aviation/read.main/1509471/
 
Qantasflyer
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RE: Will Jetstar Cannibalize Qantas?

Tue Apr 13, 2004 6:24 pm

Read your posts earlier today and just wanted to say that i agree with your views. So you do you think that QF domestic mainline will not be expanding as rapidly?
Qantasflyer That's the spirit. The Spirit of Australia!
 
Alitalia7e7
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RE: Will Jetstar Cannibalize Qantas?

Tue Apr 13, 2004 7:58 pm

I really think that the trunk routes SYD-MEL and MEL-BNE will not affect QF dramatically nor change the aircraft type. dont forget that flights to BNE and SYD via MEL will be operated via Avalon Airport (This will create a new and different leisure market).

The business traveller will still want easy seamless travel to Tullamarine. Dont forget that QF from Tullamarine has great connections via Tullamarine internationally.

 
Beno
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RE: Will Jetstar Cannibalize Qantas?

Tue Apr 13, 2004 8:14 pm

Even if JQ does eat into QFs market share it doesn't matter because all the money ends up in the same bank account at the end of the day.
 
MidnightMike
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RE: Will Jetstar Cannibalize Qantas?

Tue Apr 13, 2004 10:39 pm


If done correctly, they will probably supplement each other.
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Qantasflyer
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RE: Will Jetstar Cannibalize Qantas?

Tue Apr 13, 2004 10:45 pm

What i am afraid of is if jetstar start replacing QF flights and the remaining QF flights turn into an express service like on most European Airlines and now on ANZ.
Qantasflyer That's the spirit. The Spirit of Australia!
 
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ClassicLover
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RE: Will Jetstar Cannibalize Qantas?

Wed Apr 14, 2004 12:47 pm

Well, the purpose of Jetstar is to combat competition from Virgin Blue (DJ).

They have a market share at present of around 30% domestically, and Qantas have 70%.

I believe Qantas will be happy for Jetstar to have whatever market that it happens to capture, as long as Virgin Blue doesn't go above 30-35%.

You have to remember that a lot of Australians are used to full service, and will continue to expect that, not to mention the legions of Qantas frequent flyers. Additionally, Qantas has major brand loyalty both within Australia and around the world.

The other thing that will keep Qantas with full fare domestic is the international passengers. You'd hardly want to arrive in Sydney from London and then have to transfer to Jetstar for your connection to Adelaide - especially if you're a high yield first or business class passenger.

So to answer the main question - Jetstar may take some Qantas market share, but I don't believe it'll be anything like what some people say on here, expecting Australia to lose its only full service domestic carrier!

Trent.
I do quite enjoy a spot of flying - more so when it's not in Economy!
 
Q330
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RE: Will Jetstar Cannibalize Qantas?

Wed Apr 14, 2004 1:22 pm

I don't see why Qantas mainline service would deteriorate at all. Jetstar isn't 'stealing' from Qantas. As Beno said, the money ends up in basically the same place.

Of course I'll want to try Jetstar (once they get their A320s) but most likely I'll just be flying Qantas after that.

-Q
Long live the A330!
 
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ClassicLover
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RE: Will Jetstar Cannibalize Qantas?

Wed Apr 14, 2004 1:28 pm

Same, I'm due for a flight on Jetstar at the start of June. I'm happy to try the airline once, mostly because I haven't had the pleasure of the Boeing 717, and its days seem numbered in Australia.

Be interesting to see Avalon too.

Trent.
I do quite enjoy a spot of flying - more so when it's not in Economy!
 
lauda777
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RE: Will Jetstar Cannibalize Qantas?

Wed Apr 14, 2004 2:33 pm

I think that trends are leaning towards lcc's and if those trends keep leaning then I don't see why Jetstar won't eventually (im talking 10-15 years) take over the whole QF domestic operation.
What will happen is JQ will eat up more and more domestic traffic together with DJ until Qantas realises it's making even less money on domestic than now. So as a lot of you have said why bother keeping a full service domestic carrier going when everybody is flying Jetstar and the money goes into the same accounts anyway.

In an ideal situation I would like to turn the clock back and wish we were still living in an Ansett v Qantas and Virgin Blue v Impulse environment, because that would ensure excellent competition on both the LCC and full service ends of the market having at least 2 rival carriers.

Now we are stuck with just 2 one full service and one LCC which is not good for competition.
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MaverickM11
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RE: Will Jetstar Cannibalize Qantas?

Wed Apr 14, 2004 2:42 pm

Why don't we ask the folks at Delta, USAirways, Continental, Air Canada, and United?

Survey says.....YES! 100 out of 100 surveyed said cannibalization will occur.
E pur si muove -Galileo
 
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ClassicLover
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RE: Will Jetstar Cannibalize Qantas?

Wed Apr 14, 2004 3:05 pm

Australia is not the United States of America or Canada, and the situations are different...

I have faith in Qantas to be doing the right thing for the Australian market and more importantly, for themselves.

Why should I have faith?

I think Qantas profits and success versus other carriers speaks for itself.

Trent.
I do quite enjoy a spot of flying - more so when it's not in Economy!
 
anstar
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RE: Will Jetstar Cannibalize Qantas?

Wed Apr 14, 2004 3:09 pm

I'm sure Qantas will expect some cannibalization....

Even if JQ takes some mainline pax the margins will be better as it has a lower cost base.

I wouldn't be surprsed if it actually was part of the larger plan
 
MaverickM11
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RE: Will Jetstar Cannibalize Qantas?

Wed Apr 14, 2004 3:14 pm

"Australia is not the United States of America or Canada, and the situations are different...

"

Mmm hmm and Tango was different, and Ted was different, and Song was different, and Metrojet was different, and Continental Lite was different, and United Shuttle was different, and Delta Express was different and....
E pur si muove -Galileo
 
airbear
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RE: Will Jetstar Cannibalize Qantas?

Wed Apr 14, 2004 4:26 pm

I may be wrong, but I believe that mainline QF Domestic will be gone within 2 years (5 at the outside), totally replaced by JQ.

I believe this has always been QF's intention, so from the Board's viewpoint, the faster JQ can cannibalise QF, the better! Gets rid of old and expensive industrial awards/costs & conditions, and the costly Freq.Flyer program, whereby a large percentage of the Australian population, are nominally FF's. This way, QF winds up with a relatively small core of REAL Frequent Flyers (i.e., those who fly a lot internationally ).

Like a lot of other large airlines, QF Management is concentrating on providing bottom-line value for SHAREHOLDERS, not on what the market may or may not want. I don't believe they really care if someone has to cram themselves into a 30" pitch cabin after travelling for 14, 20 or 30 hours. In any case, with the smaller Airbuses (332/3's) as opposed to B744's or A380's, they will be able to limit the need for domestic connections by scheduling more non-stop flights between say, SIN or BKK or even LAX (?) and ADL, CBR, BNE, PER etc
 
Gemuser
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RE: Will Jetstar Cannibalize Qantas?

Wed Apr 14, 2004 4:56 pm

QF want Jetstar to take all the domestic "DISCOUNT FARE" traffic and grow that market. Why? Simple, they make more money that way!

QF domestic will become only for "FULL FARE" traffic, Why, because that traffic wont fly Jetstar anyway.

So the Qantas Group will be offering two domestic products, full fare, full service QF domestic, and low fare, low service Jetstar and let the market decide which they want. Economics 101!

In my opinion, and that of others, there is a market for both. The domestic market will change in the next 5 years, of course, and QF want to be positioned to cover those changes. Good luck to them.


Gemuser
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aussie747
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RE: Will Jetstar Cannibalize Qantas?

Wed Apr 14, 2004 7:02 pm

The problem is a lot of these LCC's have gone head to head with their mainline carriers.

JQ initially is flying to leisure destinations that QF will not fly to eg MCY,HTI,PPP etc. Where QF and JQ fly together initially eg out of HBA and LST they are not flying at the same times whilst the golden triangle flights SYD/MEL/BNE you will see QF is using Avalon instead of Tullamarine, with QF trying to use different airports in SYD and BNE but not having much success.

It must be said yield is already at 80% on most flights into and out of Avalon
in it's first month of operation already - forcing QF to hastilly expand operations more quickly.

As soon as JQ competes with QF on more routes expect canibilisation to occur and that is natural even Geoff Dixon had acknowledged that (so long as it didn't come from Qantas he argues).
 
MaverickM11
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RE: Will Jetstar Cannibalize Qantas?

Thu Apr 15, 2004 5:06 am

"QF domestic will become only for "FULL FARE" traffic, Why, because that traffic wont fly Jetstar anyway."

How on earth are you going to fill up A330s with "full fare" traffic while jetstar takes all the discount traffic. If there was that much full fare traffic, that would preclude the need for a discount carrier, doncha think?
E pur si muove -Galileo
 
airbear
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RE: Will Jetstar Cannibalize Qantas?

Thu Apr 15, 2004 9:12 am

"JQ initially is flying to leisure destinations that QF will not fly to eg MCY,HTI,PPP " ... well, has anyone read this morning's edition of the Aust. Financial Review?

The gist of an article entitled "Qantas Takes First Class Flak Over Jetstar", is that QF is getting complaints from - wait for it - CORPORATE travel agencies, because surprise, surprise, their corporate clients still want to go to places like the Gold Coast, Hamiltoin Is., Sunshine Coast, either on their holidays or even more importantly for Qantas, for conferences - sometimes involving arrangements for hundreds of people. And guess what? These folks don't want to go to these places by Jetstar together with the hoi-polloi.

It went on... after JQ begins, for instance, it will not be possible to go mainline QF from MEL to OOL (Gold Coast). It will be all JQ. The Corp.Agents are saying that these holidays and conferences will be simply transferred to overseas destinations (can't you just hear the screams of the Domestic Tourism Lobby? Sounds like time for another general levy on tickets to support tourism). They (the Agents) were also complaining that QF has already transferred pax booked on such flights, without notice, from QF to JQ. So, many of their clients had cancelled, and gone (shock, horror ... this wasn't supposed to happen, Geoff...) to Virgin.

Anyway, they're NOT HAPPY, JAN! It will be an interesting tightrope walk that QF will be making over the coming months. It looks like QF are starting to piss-off the people who fly twice a week , to capture more of the business of those who fly once a year!
 
PITrules
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RE: Will Jetstar Cannibalize Qantas?

Thu Apr 15, 2004 11:37 am

I hope Jetstar works, but there is one thing that really bugs me. Why didn't Qantas just expand Australian Airlines to do the flying Jetstar will do? Jetstar is a very bland and unimaginative name and image. Australian on the other hand has an awesome livery and image. Plus, running two airlines instead of three is more cost effective because of lower overhead.

Can someone tell me exactly where Avalon is in relationship to Melbourne? is that the name of a town or airport? What is at Avalon now? Thanks.
FLYi
 
QF744
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RE: Will Jetstar Cannibalize Qantas?

Thu Apr 15, 2004 12:12 pm

I may be wrong, but I believe that mainline QF Domestic will be gone within 2 years (5 at the outside), totally replaced by JQ

unfortunately Airbear, I think you will be wrong. there will always de a demand for domestic business class in Australia and like many people on this site, i would also not fly on any a/c smaller than a 767 to places such as Perth and Cairns!

QF will do as they say with JQ and i believe the whole situation is great for the local travel industry!

QF744
IT'S ALL ABOUT THE UPPER DECK
 
airbear
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RE: Will Jetstar Cannibalize Qantas?

Thu Apr 15, 2004 12:48 pm

Hi QF744 ... "and i believe the whole situation is great for the local travel industry!" ... buy a copy of todays' Fin Review! As for my predictions, we'll see what eventually happens, but in view of the situation developing in the corporate ttravel market, I believe more strongly than ever, that this is what QF's intentions are. Whether they can pull it off - or whether the whole thing falls flat on its face (with a bit of luck...) - is another matter!

And, Pitrules.. hi to you. Avalon is an airfield about 1 hours drive (at non-peak traffic hours) west of Melbourne city. Till now, its main functions over the years have been variously, aircraft manufacture , flight training for major carriers, a/c maintainance & modification, shady/secret govt./defence activities and bi-annual airshow venue. Till now, it has had no public transport facilities/capability, but it is now privately owned, and as of next month it becomes an RPT airport. If next month's pax are lucky, it will also get some terminal and ground transport facilities in a hurry.

And if Jetstar seems to you to be a "very bland and unimaginative name and image", that is because Qantas is a very bland and unimaginative airline (with admittedly occasionally good to very good service and attitude), but you could never accuse them at a corporate level, of being innovative.
 
QF744
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RE: Will Jetstar Cannibalize Qantas?

Thu Apr 15, 2004 1:04 pm

i do however believe, as you said Airbear, they should have gone for Australian... Jetstar doesn't say Australian to me.... and i dont even know if they will have a flag on the plane!
IT'S ALL ABOUT THE UPPER DECK
 
airbear
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RE: Will Jetstar Cannibalize Qantas?

Thu Apr 15, 2004 1:13 pm

That was Pitrules who said that btw, and he's right, it would have made more sense. But, IMO, "sense" is a commodity in very short supply in this whole Jetstar affair.
 
miami1
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RE: Will Jetstar Cannibalize Qantas?

Thu Apr 15, 2004 4:09 pm

Have you noticed the Red-e-deal fares are now much more than JQ? Like 30 odd dollars for MEL-HBA. Full fare is over $100 cheaper! (Makes a box with an tiny apple and a biscuit, one inch of legroom and a couple of FF points seem a bit silly!) Australians now have lower fares than ever before. With the DTP (direct to passenger) program from GateGourmet customers have more control over their travel experience. I have had the priviledge of sampling some of the food they propose to offer and it is quite nice.

The no seat allocation thing is being viewed as a test. If there is negative feedback from crew and customers it will change. I understand Chairman's Lounge and Platinium FFs will recieve some recognition when flying JQ (such as pre boarding).

The seats are only 1 inch less than mainline yet over and inch wider.

I would have to say the Jetstar operation is very appropriate. It will lower the cost base on the routes it operates and allow QF to focus on the routes where it makes money. IF anything the JQ operation further secures the future for QF's full service product. I believe QF are planning to further upgrade domestic Y class over the coming months.

BTW Jetstar is much less "bland" than a name like Australian. Think about it. Australian (simply the name of a country) required much less thought than Jetstar. Also Jetstar is much better than some of the names they had planned! I think the name is dynamic and will create strong brand recognition.
 
aussie747
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RE: Will Jetstar Cannibalize Qantas?

Thu Apr 15, 2004 6:46 pm

Avalon in relation to Melbourne city is 70km west. Where as Melbourne Tullamarine (current airport) is 32km North West of Melbourne City.

Avalon Aiport currently is used for Retrofitting of QF's 747's (installtion of Skybeds, PTV in Economy etc) and the biennial Australian Air show. Rotates annually with the Singapore Air show.

 
Akumas
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RE: Will Jetstar Cannibalize Qantas?

Thu Apr 15, 2004 7:56 pm

Miami1 - Regarding Reply #25 - Excellent POST!!


http://www.gategourmet.com/797/828/867/1060/2456/2757/2758.asp Here is an official link.

[Edited 2004-04-15 12:56:36]
 
Gemuser
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RE: Will Jetstar Cannibalize Qantas?

Fri Apr 16, 2004 9:22 pm

MaverickM11

1) The A330 are or shortly will be history for most domestic flights. They are being reconfig for international ops.
2) QF domestic will be a 738/763 airline
3) Yes they can fill 738/763's enough (NOT full, but enough) with full fare pax. SYD-MEL is the third or so busiest single airport to airport route in the world & SYD/MEL-BNE is not far behind.
4) It seems to me that the plan is to size QF domestic to be the right size to operate for the full fare market only. If there are too many 763's then Australian can expand faster. There will be problems and adjustments - see Airbear, reply 19. Such things will need fixing and I am sure will be, to maxamise profit, after all thats what a business is about is it not?
5) Jetstar will grow the total market, not only take discount fare traffic from QF.
6) Jetstar lets the Qantas Group compete with Virgin on a level playing field, which is not the case when QF domestic competes with Virgin.

Gemuser



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