Deano969 wrote:Ok so a token LCC is one that is started by a legacy carrier to stop a new entrant starting up
Virgin Blue and Impulse (preceded by Compass and East West) kicked off
East West gobbled up by Ansett
Compass 1 + 2 were competed with heavily by AN and QF and failed
Impulse, bought out by QF and morphed the fleet into Jetstar
VB had an inside run when Ansett failed
QF finally realized that LCCs were going to be their greatest threat, Impulse were there for the taking, so rather than compete on price with QF, better to buy them out and start their own LCC, Jetstar, thus warding off and new potential LCC start ups
Jetstars small fleet was mainly on the holiday market, but never really competed with QF and had minimal opps on the triangle
Fast forward to post Covid and JQ started to move their birds to the FIFO market in WA and shrunk their fleet, releasing 717s to the east coast so QF could grow their fleet and move into JQ dominated markets MCY, OOL, NTL ect...
All while deferring NEO replacements for JQ
In a nutshell, aside from REX, no other likely LCC entrants into the Oz market for the foreseeable future, so wind back JQ a bit and move more assets into a leaner QF
A true LCC would be grabbing as much market share as possible
A true LCC would have lower fares than JQ
A true LCC would have a much larger share of the triangle
QF created JQ because they had to and will use it when needed
During the recovery JQ will shrink in frames, while QF will expand, as they both already have
JQ will only expand again when a new threat is on the horizon
After a capacity war between QF and VA, there was some agreement that was well published, that the capacity war was over and both would be slightly cutting capacity by 2 or 3 percent to maintain margins PRICE FIXING!!!
This can be easily done with a duopoly, much harder when there is a third player....
QF 14.4 years
VA 9.7 years
ZL 14.1 years
QF 13.2 years
VA 9.7 years
ZL 24.6 years
QQ 26.6 years
ZL SAABs 26.1 years
Dash-8s 14.7 years
QQ has and older fleet than ZL lol
Jumping into routes
Putting 6 737s into the SYD - MLB or a couple of flights to OOL or ADL is not the same as
Orange adding 100 seats per day into a 100 seat market
Merimbula adding 70 daily seats to a 100 seat market to Sydney and Melbourne
Kangaroo Island adding 70 daily seats into a 50 seat market
Others post that REX can't compete where there is competition, only on subsidised routes
How about Wagga, Albury, Dubbo, Armidale etc... All have been served by ZL and QF for years...
Where do I start? Maybe I could say punctuation.
Insofar as start-ups are concerned, their history is poor in Australia. Both Compass', Ozjet and Impulse all failed because they were all under-capitalized and insufficiently differentiated to attract a profitable segment of the market. REX's attempt at jet operations appears to be following the same pattern. East-West was different as it was very much a regional carrier until Ansett morphed into a leisure carrier. It never really competed on trunk routes. Only Virgin Blue has succeeded as a truly new entrant mainly because it could occupy the share that Ansett vacated but also because it adopted a new approach introducing a lower cost option to the Australian market.
QF didn't see LCCs as its greatest threat. At the time, it was trying to finish off Ansett. Impulse was a flawed model but Qantas saw it could gain a new fleet on a much lower cost base and initially used it a subset of the Qantas fleet much like it is now but, when Jetstar was conceived, the 717s were used because they had low costs (crew etc) and were available immediately and covered until the new JQ A320s could be delivered. Virgin Blue was a greater threat because it was initially a very disciplined operation and very profitably gathered up a lot of the market share that appeared when AN collapsed. It was the threat of the mid-market operator DJ that led to the creation of JQ but it was also a device whereby QF could force some massive industrial changes on the QF business and this still continues today.
You seem to confuse a ULCC with a LCC. JQ is a good example of a LCC but is different from a ULCC such as Spirit or Ryanair. Tiger was as close as we have ever gotten to a ULCC but it appears the Australian consumer is not quite ready to accept the deliberately poor service these businesses provide and there is also the issue that a lack of airport competition in major Australian cities makes is hard for a ULCC to massively undercut the costs of a well run mainline operation.
I don't know where you get the idea that JQ will shrink as we recover from Covid. If anything, it will grow faster as most of the recovery is in the domestic leisure sector which is where JQ operates best.
Your comment that there was a price fixing agreement between Qantas and Virgin is without basis. Both were losing massive amounts in a capacity war and both withdrew. There is no evidence of collusion however.
I'm not sure what you are trying to show with your fleet age list. For example, you comment on Alliance's fleet age but its fleet is predominantly concentrated in FIFO operations where utilisation can be quite low and the F100 is shown to be a truly excellent candidate for these type of services particularly as Alliance managed to buy a lot of them for almost nothing. If there is an issue with fleet age, it is that Qantas and Virgin are both acting on plans that will renew their NB fleets over the next 6 or 7 years whereas REX does not have the ability to follow them particularly as its core regional fleet is also approaching urgent replacement.
ZL is currently too small to significantly affect the profits of either QF or VA but that doesn't mean they would accept the entry of a third player without responding. ZL has chosen a poorly differentiated product so is competing solely on price. This is never a good approach particularly when you have competitors with deeper pockets than you. You talk about the opportunity for a ULCC in Australia. I don't know how well that will work in Australia but at least it is different. As it currently stands, the REX jet operation looks decidedly half-hearted and it is hard to see how it can succeed with its current trajectory.