Jetstar has costs per seat kilometer about 35-45% CHEAPER than QF Domestic! That means that UNLESS the fares recived on QF Domestic are more than 35-45% MORE than what Jetstar recives than the QANTAS Group make MORE MONEY by having people fly Jetstar rather than QF Domestic.
Here's the rub with that statement, and it is the same for all airline-within-an-airline concepts:
Does JetStar operate its own facilities, or are they operated by QF
? See, when an airline is started within another airline, they usually try to save costs by having the mainline operations operate the ground operations for the LCC service. The flight crew are usually separate, and the terminal crews could be one or the other, but the ground crews, MX
, and all that are usually one-and-the-same.
Now, I'm not aware if JetStar is operated by QF
in the ground-services area. However, if it is, then that "35-45%" savings is a bit exaggerated. I don't know what the real savings would be (and there are some savings due to lower wages and probably some increased aircraft utilization), but the figure that the airlines usually quote is usually wrong.
Why? Because the LCC is saving money by piggy-backing on the money-losing legacy system. As the LCC makes more money, the reduced-size legacy carrier has lower revenues, albeit with reduced costs itself. As we saw with CO
-Lite, Delta Shuttle, and will probably see again in Song and TED, this almost always hurts the airline more than helps it.
Too bad I didn't sleep well last night. I can't formulate my thoughts as coherently as I'd like.
Those who fail to learn history are doomed to repeat it in summer school.