Airsider - JetStar - From Australia to the World

10. April 2006

JetStar - From Australia to the World

Geoff Dixon, chief executive of the Qantas Group, has always seen brand diversification as a tool to drive costs down. It was the reason why Australian Airlines was set up, and it was the reason behind the launch of JetStar, which is now going a huge step ahead. Michael Meier reporting from Sydney.

JetStar has it's roots in Impulse Airlines, a low-cost carrier with a fleet of Boeing 717s, which was taken over by Qantas in 2001. After flying under the QantasLink banner for a few years, this subsidiary was used as the base to build up JetStar in 2004, as Qantas' answer to Virgin Blue.

JetStar has since expanded all over Australia to offer a low cost alternative to Virgin Blue and the Qantas mainline service. Its targeted customers are mainly leisure travellers. On-board services are basic, there is no such thing as free food and passengers have to run for their seats, there is no seat allocation as with Qantas, or even Virgin Blue.

After just about one year of flying, the airline announced its ambitions to establish international services, beyond its current markets in Australia and New Zealand; even Europe and America are now on the map of potential destinations.

Initially, JetStar will base the international operations in Melbourne and commence flying to Asia no later than 2007. It does so with a fleet of Airbus A330 planes which will be transferred from Qantas.

At a later stage, JetStar gets factory-new Boeing 787s which will be delivered from August 2008 onward. It is expected that JetStar get's 10 frames out of Qantas' purchase contract for 65 Boeing 787, with another 50 options for further growth. JetStar will get the planes even before Qantas' mainline, which will take delivery of the first 787 by July 2009

Qantas Chief Executive Geoff Dixon said Qantas expected that, within five years, the Jetstar Group would be operating a fleet of 60 narrow and wide body aircraft across its domestic and international network. "However, this expansion will not be in any way at the expense of the Qantas full service domestic and international operations. "Our aim for the Group is to expand in our traditional markets with Qantas and to expand in new markets with the most suitable product, be it Qantas or Jetstar.

It is expected that Qantas could hand over low-yielding routes to JetStar in order to slash costs. While both airline brands operate under the same group umbrella, JetStar's big benefit are lower labour costs.

It has not yet been cleared out what will happen to Australian Airlines, another brand in the Qantas Group. Australian operates on leisure and tourist routes from Asia to Cairns and Sydney with a fleet of Boeing 767-200 aircraft. There is the possibility that Australian will also get a new fleet, but it would probably make more sense to integrate this airline into JetStar, once it goes international. A question yet to be answered.

"We believe Jetstar will deliver the lowest cost air operations of any international carrier operating to Australia, similar to our experience with Jetstar's Australian operations." Mr. Dixon added. It certainly sounds interesting. We will stay tuned!