Two things went wrong for Jetstar today, and for Qantas CEO Alan Joyce’s often repeated claims that it is “an amazing business”.
In the Jetstar Japan venture Qantas came clean on what we all knew two days ago, that it needed to throw another $60 million at the $50 million or so it is widely claimed to have lost in its amazing first year of operation.
But the ASX filing also decoupled the increase in Qantas money at risk in the venture with Japan Airlines, Mitsubishi Corporation and Central Tokyo Leasing from its voting rights. Amazing. More money, but no more say, in a venture where Qantas is always going to have a minority voice. How brilliant is this?
Probably just as amazing as its Jetstar Hong Kong venture, which Mr Joyce repeatedly said would be controlled by Qantas, guaranteeing that it was illegal under Hong Kong’s basic law, where basic common sense and some engagement with marketing intelligence might just have saved the airline from the limbo in which that project currently finds itself.
Or the amazing foray into Jetstar Pacific in Vietnam, which ‘owes’ Qantas what some believe to be hundreds of millions of dollars which are being looked after for it by Vietnamese majority owners who can and will do whatever they like with it.
Which might bring the curious onlooker to today’s critical assessment of Jetstar Asia and Jetstar long haul’s sorry record in the Singapore-China market by the Centre for Aviation (CAPA).
The aviation think tank and conference organiser doesn’t spare Tiger’s previous record in the same market either, but notes that Tiger and Scoot actually seem to have plans which may be working. Amazing.
We have no real guidance from Qantas as to where all the money sunk in the offshore Jetstar franchises has gone, and what realistic plans are in play to deliver the returns needed on that investment to make it worthwhile. It’s all an amazing commercial secret.
Just how likely is it that Qantas has any commercial secrets worth knowing?
There are all sorts of problems arising from Jetstar not performing as an external franchise. One of the most immediate is whether or not Jetstar abroad becomes a drain that may prevent the amazing future Qantas has secured by giving away parts of its business to Emirates so that it can become profitable and invest in optioned 787-9s and bring in a new and prosperous future.
Qantas has an overhang of undelivered promises to keep. Like the Asia based low cost premium single aisle carrier minority owned yet controlled by Qantas that was going to take it to Cathay Pacific or Malaysia Airlines or Singapore Airlines. Or something as basic as restoring dividends.
How long will it take? What is the plan? And what is really going on with the Jetstar vision?