Jetstar doubts fuelled by poor Singapore profit figures
This glaring absence of Asia network at full service fare levels in the Qantas offerings is not something that the partnership with Emirates can ever fix. There is no doubt that Emirates can take over some of the Qantas business flying between Australia cities and Asia, but it can't provide Qantas with alternatives to a Silk Air or a Dragonair.
Qantas has always been cagey about releasing precise financial details about Jetstar and other components of its business on the grounds that such data could assist its competitors. However the truth about Jetstar’s under performance on some routes could also embarrass management.
Apart from saying inconsistent things about the fortunes of the Qantas long haul business, Qantas CEO Alan Joyce has a record of talking up Jetstar’s performance, but not dealing in public with the specifics, and the latest results from Jetstar Asia reflect dismal returns over eight years regardless of whether fuel prices are up or down.
If Jetstar Asia can’t outperform the food sellers in Singapore’s Changi airport over this period of time, when will shareholders get some concise and revealing accountability for a venture that has hundreds of millions of dollars worth of airliners on firm order for delivery in the rest of this decade?
The Asian miracle promised for the Jetstar franchise isn’t working elsewhere in the hemisphere either. It hasn’t worked in Vietnam, where Jetstar Pacific has never reported a profit, and it can’t even begin to work in Hong Kong until the approvals for a joint venture in Jetstar Hong Kong with China Eastern that were supposed to be granted early last month come through.
Jetstar Japan is up and running, and it is too early to say whether it will generate anything like the returns vaguely alluded to in past pronouncements about the Japan venture.
Of even larger interest is the fate of offshore based Jetstar international wide body jets. The A330-200s services that operate out of Singapore to Melbourne, Auckland and Beijing do not appear to be fully utilised according to the schedules. Yet Qantas is repatriating A330s from Jetstar long haul to Qantas domestic services as a tranch of eight Boeing 787-8s are added to the Jetstar fleet from later in the year.
Part of the problem with the Jetstar business model may be that it physically deters people of size from ever flying on its services a second time. There is no shortage of fare bargains on full service carriers throughout the Asia Pacific, and even Qantas is adept or maybe inept at times in offering its full service product at a lower price than Jetstar is, at the same time, for similar journeys.
Similarly, although Qantas has repeatedly talked up the desirability of creating a network of Asia services that will attract more business and higher value fare buying customers, it has failed to develop an offering.
Changing to a Jetstar Asia offering at Changi to continue into other parts of the hemisphere is not a competitive option placed beside the full service and often keenly priced offerings of Singapore Airline’s single aisle subsidiary Silk Air.
Qantas under Joyce is now into the second year of talking up, or at times, no longer talking up, the creation of a premium network in Asia, while Virgin Australia has already started rolling out its code share options with Singapore Airlines and has signaled that more is to come.
This glaring absence of Asia network at full service fare levels in the Qantas offerings is not something that the partnership with Emirates can ever fix. There is no doubt that Emirates can take over some of the Qantas business flying between Australia cities and Asia, but it can’t provide Qantas with alternatives to a Silk Air or a Dragonair.
Nor can derisory returns from an eight year investment in Jetstar Asia ever pay for a significant part of an order for more than 100 Airbus A320s.
Ben Sandilands has reported and analysed the mechanical mobility of humanity since late 1960 - the end of the age of great scheduled ocean liners and coastal steamers and the start of the jet age. He’s worked in newspapers, radio and TV in a wide range of roles as a journalist at home and abroad for 56 years, the last 18 freelance.