The seriousness with which Qantas regards the Singapore Airlines controlled Tiger Airways expansion in Australia was illustrated for two hours this morning with a 10,000 seat one-way $19 giveaway on the Sydney-Melbourne route.
The seats on Jetstar were offered by email at short notice to those enrolled on its Jetmail direct marketing data base.
It is seldom disclosed how many of these types of sales fares actually get sold, but in terms of potential this is Qantas subsidiary Jetstar giving away the equivalent of 40 Qantas Cityflyer 767 flights (at 254 seats each) for nothing, since the $19 is about the total value of the fees and levies payable by the airline in navigation, security and terminal charges.
So much for Qantas not eating its own with the rise of Jetstar.
Qantas also made its displeasure felt in Singapore by announcing its ‘most significant capacity boost in recent times’ with new Jetstar Asia services from Changi to Phuket, extra flights to Manila and an intention to serve mainland China, all foreshadowed yesterday at the Qantas financial year briefings.
It is fairly obvious where the Qantas versus itself versus Singapore Airlines contest is headed. Tiger will add flights all over the Qantas Cityflyer network in the coming year, and it will respond by putting Jetstar up against them even though it will provide Qantas full service customers with the temptation of much lower fares on its ‘cheap’ brand.
The Jetstar strategy will inevitably further stress the relationship between the two Qantas brands, and give management scope to further undermine the pay and conditions of Qantas staff.
The Singapore Airlines strategy, of using Tiger to get a seat at the table when inevitable regional consolidation occurs is also under stress. Tiger was invented when Singapore Airlines appeared to be bullet proof. Singapore Airlines, and the previous dominance of Changi as a SE Asia hub, are both under siege, and risk never recovering their former strengths in a much changed world with consumers who increasingly regard air travel as a commodity.
What is the point of a seat at the table in a tent which is on fire?
2 Comments
The question is simply who has the most to lose?
Qantas has had a cosy domestic duopoly for a long time on a large number of high traffic routes. Singapore airlines on the other hand competes only internationally in traditionally a far more competitive aviation environment. Singapore Airlines and Silk Air also have far greater consumer preference than Qantas. Ask any NZer which they would prefer to fly and it would be Singapore Airlines no contest.
So hands down Qantas has more to lose.
JetStar is a low margin, high risk business currently heavily subsidised by the rest of Qantas group as it seems to recieve priority on any new aircraft. If they keep going at this rate Qantas’s future is JetStar.
BTW, Ben did you see, Qantas’s annoucement they were losing $NZ750,000 a WEEK in NZ pre JetStar, for a total of A$32 million in the last year.
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10591918
I had heard the number was $1m a month back in 2003 but am surprised it blew out to 3 times that amount last year. How do you lose that much money with only 3 planes?!?!?
What a wonderful story….Jetstar a miracle! One must ask how Jetstar aircraft are depreciated? Who pays for fuel? How much does Jetstar pays for maintenance?
If it is such a great airline why doesn’t Qantas sell it? Because I would be surprised it would survive a year. Frequent Flyers are buying Star Class seats and booking on a Qantas service and getting a proper business class seat for one quarter of the price. Many Frequent Flyers would rather fly Virgin than fly Jetstar. Why is Virgin targeting the business class market? Remember it is great to cut costs but one must remember where the revenue comes from. BA had GO, United had Ted, they eventually ate into the main business….
Many questions need to be answered.