Jetstar off to Asia

Qantas CEO Geoff Dixon must be a very happy man as his long awaited masterplan to reduce the carrier’s operation costs continue to develop, with the cornerstone, the creation and emergence of international carrier Jetstar, continuing at an amazing pace, alongside other cost slashing activities, including decisions and announcements regarding Qantas maintenance and flight attendant locations.

Jetstar’s first Asian flight will leave Melbourne for Bangkok next Thursday, with the Sydney to Phuket service leaving the next day and Vietnam the following week.

Jetstar’s flights from Melbourne and Sydney to Bali will begin in early December and to Honolulu later in the month.

Masterminding one of the speediest international service rollouts possible, Jetstar CEO Alan Joyce told The Australian, “In the space of essentially four weeks we have six services starting to different destinations, so it won’t end until you get into January, when you’ve got everything up and established.”

It actually won’t even end then, with a fourth 303-seat Airbus A330-200 arriving in March to be utilised on the Sydney/Brisbane/Osaka service, with the fifth and sixth aircraft consolidating Jetstar’s position in Osaka and allowing it to enter Nagoya from August next year.

Joyce told The Australian, that this is before the expected arrival in August 2008 of the first Boeing 787 “Dreamliners”, a next generation of aircraft which will significantly change the dynamics of the new carrier, giving it significantly greater flexibility and operational capability.

With costs reportedly 40%  below owner Qantas and up to 25% lower than absorbed  Australian Airlines, it is becoming ever clears that Jetstar can operate where its full service owner cannot, with industry leaders expecting a very significant takeover by Jetstar of Qantas’ less profitable routes, in particular those that are leisure dominated  with some pundits even saying that they expect that Jetstar will be the ultimate recipient of a number of the new Airbus A380 being ordered by Qantas, with the mainline carrier moving into ultra long haul premium yield and business dominated routes only, the only ones that can support the traditional cost model.

With Asia-Pacific the initial focus, Jetstar has made it clear that it plans a bigger leap, launching services to both the US and Europe, with the 787s, initially the 311-seat 787-8 model, arriving at a stellar rate of about one a month with Jetstar running a split fleet with the A330s until enough arrive to allow the Airbuses to return to service with Qantas.

The arrival of the 787-9s from 2010 will allow it to make non-stop flights to the US west coast and one-stop flights to Europe with full passenger loads and freight.  Joyce also suggests that Manchester, Rome, Athens and even Amsterdam are potential destinations, adding “We’ve always said southern Europe initially has a very strong attraction to us.”  

Joyce told The Australian that he hopes to account for 22% to 23% of Qantas Group’s international travel, but he dismisses any claims that the airline is simply an industrial relations tool aimed at replacing Qantas, with that argument resurfacing yesterday with Qantas announcing Jetstar is replacing Qantas services to Osaka and Nagoya, formerly operated by Australian Airlines.

Joyce says that the Qantas group has been “very, very good” at picking which domestic routes are best suited to which airline and believes it will have a similar success internationally, adding “I hope what will happen is both brands will end up finding the niches that they found domestically and both of them end up growing.”

The Mole believes that this division of routes will be a much more marked and extensive process than Joyce alludes to at this time, with Jetstar ultimately becoming a much bigger airline than its parent Qantas – a bit like the cuckoo growing in the nest except in this case it is growing in the parents’ nest under their very careful nurturing, protection and feeding!

Report by The Mole