The Qantas plan to expand Jetstar to long haul deals with a number of issues.
Firstly. It is a response to a serious decline in the proportion of passengers flying in premium cabins and actually paying for them.
This deterioration has been gradually going on for years, and not just at Qantas or in these markets, but in general, while business travel is important and indeed growing strongly on some routes, the willingness or capacity to pay premium fares is in decline.
Secondly. A long range Jetstar will address routes that Qantas has abandoned or neglected in terms of flying its own aircraft. They are likely to include Manchester, Amsterdam, Rome and Honolulu. This has the material strategic value of also attacking part of the base load traffic in EK
,SQ and TG
who have all intelligently and diligently worked up a good franchise in one stop flights to leisure or low yield destinations that require a transfer over London if flown by Qantas, rendering price matching those deals a loss making exercise.
Thirdly. The new carrier will develop new routes. It may even try to make Darwin or Perth to Frankfurt/Munich work, simply because EK
now dominates the German inbound market, and is threatening to use a high capacity format in an A380 to Adelaide where it just happens to have unlimited traffic rights.
I note that one of the national aviation writers has discovered that half the Germans who fly to Australia each year spend half their time in the red centre and top end and really couldn't give a potatoe dumpling if they arrive and depart from a secondary airport as they are going to 'do' Sydney, Melbourne and the Gold Coast anyhow in trips surveyed as lasting between 6-12 weeks.
Fourthly. The long haul Jetstar will be used to collapse the benefits and unsatisfactory productivity of mainline Qantas long haul (in the opinion of management), just as Jetstar domestic is now entering the crunch phase of migrating its work practices but please the Almightly not all of its propduct standards to core domestic city pairs. Prediction. Significant Jetstar long haul maintenance and staffing will be offshored.
Fifthly. Jetstar long haul will in time seek to fly non-stop to Vancouver which has pathetic business travel support, and it will pay close attention to cheap flights pout of Brisbane to destroy and demoralise any Virgin Blue plan to capitalise on its Air Queensland stature as a launch pad for trans Pacific services. I'm inclined to the view that it will in fact destroy any desire by the Virgin Blue board to enter the long haul market through a new subsidiary.
Sixthly. The long haul jetstar isn't going to take much pressure off the core A380 routes to London, since the passengers that Qantas is seeking to recapture with the new division aren't flying on its jets to Heathrow anyhow, and in many cases will be smart enough not to do so twice if they have to make a transfer there to get to some other destination.
Fine print. I may be wrong about all of the above...but I don't think so and I have reasonable grounds for coming to these views.