Scenario Consider the contrary proposition, that Jetstar Hong Kong should have been ’embraced’ by the SAR’s authorities and its prime opponent, Cathay Pacific, two years ago.
Instead of reading more reports as to how the ‘stalled’ airline has had to reduce its idle fleet, this time by another three of the original A320s, meaning it now has only three left, JQ HK would either be in its last days, or gone.
On its way out it would have weakened through market dilution the embryonic hopes of local LCC rival, Hong Kong Express, if not taken it with it to oblivion. It ought to have hastened the replacement of the current management team at Qantas, which has diverted massive company funds into an LCC franchise that not only failed to perform as repeatedly promised, but weakened the main brand through negative associations, drove higher yielding customers elsewhere, and been the excuse for running down some aspects of Qantas operations.
In this contrarian scenario, Cathay Pacific would not have been as timid as it has been, and realised that with keen pricing and yield management and the superior network and offerings of its own brand and subsidiary Dragonair, it was going to competitively destroy Jetstar Hong Kong in broad daylight.
It would have found it much easier to persuade Australia to increase its access to this market, where it is already flying as near to full as commercially possible on the major routes between here and Hong Kong, on the basis that Qantas and Jetstar had comparable access to the SAR, and had blown it.
Of course this is extolling the merits of boldness with hindsight. The vision for Jetstar championed by the strangely silent of late Qantas Group CEO Alan Joyce, was full of foresight without wisdom, cultural sensitivity, or trade intelligence.
The media has been through six years of bombast as to how Qantas was going to control its Jetstar franchises in Asia, something specifically prohibited in Hong Kong, and verboten in practice elsewhere, including puppet shareholdings in which a putative majority national stakeholder was financed by the on paper minority Australian owner.
When Mr Joyce was quoted in the Australian media, and Asia media, and seen delivering presentations, as to his promise to go into Asia and take business from its established carriers, it was probably all over from that moment onwards.
One of the fundamental rules of trade relations in Asia is that if you are going to do anything in another state, you tell those associated parties about it first, and in their own language, and in a courteous manner, rather than inform them in English through the Australian media.
Jetstar Hong Kong has been a painful screw up from the moment the airline starting taking delivery of A320s for an operation that Qantas management kept insisting was on track for approval, which was contrary to all the official and unofficial signals in Hong Kong.
Each of those jets for various and often quite long periods of time attracted monthly finance, airport parking and other charges. Let’s call them curatorial charges, since they may as well have been in a museum of flight collection. Per jet those charges would have been at least $400,000 a month US, and for the embryonic JQ HK enterprise to even get considered for an operating certificate, it also had to have a local management structure, flight manuals, training, checking and other flight standards and safety procedures in place for scrutiny, plus the pilots and cabin crew and support staff available, and trained, so that they could be assessed as part of the licensing arrangements.
Starting an airline is more than making loud and to some ears, uncouth claims about what it is going to do to the market in the state from which the regulatory approvals are being sought. Qantas does indeed have the resources to meet all of those needs, but they don’t come cheaply, not even if your cost base is in Kuala Lumpur, Jakarta or Ho Chi Minh City, rather than in the very costly working environments of Japan or Hong Kong.
There is still time of course for Hong Kong’s administrators to recognise the comic value of approving Jetstar HK starting operations. To fill each of those three A320s with the 170 odd passengers needed to have any hope of making the LCC model work all Qantas would have to do is put envelopes of money into the hands of people randomly selected on the streets and bussed directly to the airport.
The whole episode would be funny if it wasn’t so damaging to the Qantas enterprise.