AUSTRALIA ORGANIZATIONS REPORT/ TRANSPORT

Domestic Airlines in Australia

Report by: Ngoc Phuong | April 2022

Jetstar Airways Pty Limited

Queensland and Northern Territory Aerial Services is the abbreviation for Qantas,
Australia's major airline. The aviation business of the Qantas Group included Qantas
Airways (a stock limited liability company that operates international and domestic
routes), QantasLink, Jetstar Airlines (low-cost carriers), Jetconnect and Jetstar Asia, as
well as other aviation-related businesses. The kangaroo was chosen as Qantas' emblem
because it represents dependability, security, sophisticated technology, and Excellent
Service.
Qantas Airways, along with its subsidiaries QantasLink and Jetstar, owns and
operates routes throughout Oceania, as well as Southeast Asia, East Asia, and India, as
well as the United Kingdom, Germany, the United States, Canada, and South Africa.
This report will focus on analyzing business strength of Jetstar Airways Pty
Limited, a subsidiary under the management of Qantas Group, in order to give a clear
light on its business situation, as well as the strategy that has been making Jetstar a
successful business throughout the years.
Table Of Contents

1. Introduction:...................................................................................................................1
2. Evaluating the organization’s environment:...................................................................2
3. Analysis of competitive advantage:................................................................................4
4. Strategy formulation and choice:....................................................................................4
5. Recommendations and conclusions:...............................................................................4

1. Introduction:
Jetstar Airways Pty Limited is an Australian subsidiary of Qantas Airways
Limited (established in 1920). This airline focus on national affordable flights throughout
the country, as well as internationally. Founded in 2003, the Jetstar group is responsible
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for approximately 18% of Qantas Airways’ revenue and has a reputation for being a low-
cost airway operator in the air transportation market of Australia (Qantas, 2004). Despite
the long-term reputation and firm stand among other airways, Jetstar, like any other
business, still had to face with tremendous obstacles resulted by the implications of the
pandemic COVID-19.
2. Evaluating the organization’s environment:
According to Iryna Heiets, Tamara Oleshko and Oleg Leshchinsky, the number of
airlines in Australia can be considered quite small, compared to a relatively large market.
As the matter of this fact, the market is quite beneficial for not only Jetstar Airways in
specific, but also the umbrella company – Qantas Airways in general (Heietsa, Oleshkob,
& Leshchinsky, 2021).
Through the use of the SWOT analysis, the first strength of Jetstar Airways that
can easily be seen is that they have the strong foundation coming from the upper brand,
Qantas Airways. With the long history since 1920 and the prestigiously steady and
consistent delivery through a strategic framework, Qantas has become an “extremely
recognizable” brand in the eyes of Australian public. Consequently, the subsidiaries of
this business would be noticed by the target audience easier once they show their
connection to Qantas and be able to grow their reputations and trusts faster through the
trust foundation people have in Qantas. Moreover, with the service business based on
providing affordable air transportation with exceptional service, Jetstar make a difference
out of themselves among competitors, both domestically and internationally. Moreover,
as the Qantas Airways has been a leader in many developments such as the Future ANS
(as known as Air Navigation System) and automatic landings by Global Navigation
Satellite System (Smith, 2019), Jetstar also has a strength of inheriting the advanced
navigation technology from the upper brand, therefore could attract group of customers
that interested in this kind of technology in various class of income. The third strength
that people can find in Jetstar comes from the safety record that maintains long-standing,
both in Qantas airways and Jetstar themselves. This creates a trustworthy image for the
company itself through decades, as long as Jetstar (and Qantas) still be able to maintain
their stands among the safest airlines in the world. Creating a prestigious and safe image
could not only help Jetstar in attracting potential customers of every age but also help the
brand to maintain the relevance and reputation to old customers and encourage them to

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keep using the service of this airline. This would be the key to keep the business going
and growing from time to time, despite the incoming of new national and international
airways.
As mentioned before in the strength of this business, technology is considered a
strong point of Jetstar and Qantas, and with the future situations, this could also be
considered a tool to open further opportunities to this airline. Not only it can be applied to
the flight operation, but new technologies applied in customer services and airplane
structuring would also help Jetstar Airways and Qantas Airways approach more types of
audience and expand their brand within the market. According to the SkaiBlu’s analysis
made by Hanke in 2018 (Hanke, 2018), Qantas Digital Airline Scores has been placed
fourth in the world. This is the results of digitalization of the group that aides the
improvement in fata security, operational safety, and sales capabilities of all departments.
In terms of route planning and operations, the Qantas Group is fairly adaptable. The
airline fleet is constantly being purchased and upgraded by the corporation. With the
constant changing in aircraft, it is no surprise that 13% of Qantas Group’s airplanes are
leased, with Jetstar holds more than half of them. This not only allows the business to
decrease the cost putting in upgrading and leasing the aircrafts but also opens out an
opportunity for Jetstar to flexibly and immediately changing the airline fleet with ease
whenever needed to follow up with the latest air transportation technology. As a result,
the airline fleet has been able to operate at a high level of efficiency while still meeting
market demand and passenger demands.
However, like most of airline business, Jetstar cannot avoid the fact that costs, of
many aspects, is still a weakness, not to mention a threat to this airline. Particularly, fuel
prices, one of the most expensive cost any airline has to pay, will continue to be an
obstacle that Jetstar need to face with and go through. These days, with the politics
tension between Ukraine and Russia, the fuel prices, especially petrol price, have been
affected directly and negatively as they have climbed up gradually. Climate change is
also a problem for Jetstar Airways as air travel accounts for 2% of worldwide carbon
emissions. To solve the problems, Qantas Group, including Jetstar, has led the way in
cutting down the CO2 emissions by 50% by 2020 and has tried to cut down on fuel usage
through the appliance of new aircraft technologies. Also, through the research of Iryna
Heiets, Tamara Oleshko and Oleg Leshchinsky, Qantas Group (as well as Jetstar), has
planned to educe 75 percent of the company's garbage by the end of 2021 by
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implementing new technology in order to help reducing worldwide carbon emissions
(Qantas, 2019).
3. Analysis of competitive advantage:
According to Wang Xian, one of the biggest existing competitors of Qantas in
general and Jetstar in specific is Virgin Blue with its own international low-cost operation
– Pacific Blue. Through the analysis by R.West, it is clearly seen Jetstar bears the
responsibility of being viewed as the corporate low-cost carrier, and it must continuously
strike a balance between preserving its corporate image and competing with other
airlines. While on the other hand, Virgin Blue (Pacific Blue) has positioned itself as a
"low-cost corporate airline" in order to appeal to both "backpackers and business
travelers." So much so that when a flight is canceled, the sort of passenger who is
expected to be on board is carefully considered. As both of these airlines bear the
pressure of maintain their reputation through the actions to please their customers, Pacific
Blue (or Virgin Blue) is still the one to be at ease as the expectation on this airline is
relatively lower compared to an airline that has infamous umbrella company like Jetstar
(with Qantas). Compared the size of these two airlines, it is no doubt that Qantas has way
huger scale than Virgin Blue. With Operation Profit EBIT of 1,032.1 million AUS$ in
2007, Qantas’s value is approximately 3 times bigger than that of Virgin Blue (Chen,
2010).

Figure 1: Comparing the Size of the Airlines - FY2007

Qantas' average fleet age is higher than the industry average, and the airline is
striving to improve this problem by replacing aging aircraft. In contrary to Jetstar, Virgin
Blue's fleet is quite young. However, despite of that fact, Virgin Blue should not wait too
long to replace its older aircraft in order to keep up its game with the competitors. With

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the constant actions of upgrading and changing coming from Qantas, as well as Jetstar,
the problem of old air fleet will soon not to be a threat to this business. With the financial
management aspect, Qantas (Jetstar upper brand) and Virgin Blue have current liquidity
percentages that are similar (Xian, 2018).

Figure 2: Liquidity Ratios for FY02/03 to FY06/07

However, Virgin Blue uses its assets more effectively than Qantas, according to
Total Asset Turnover (TAT). Virgin Blue's significantly higher Return on Total Assets
(ROA) and Return on Common Equity (ROCE) further corroborate this (ROE). This
could be the vital threat to Jetstar and Qantas Group through their process of maintaining
the firm stand in the market, financially.
4. Strategy formulation and choice:
Throughout the years, Qantas and Jetstar have been using the dual-brand strategy
in order to develop strongly within the aviation market. The advantage of the dual-brand
approach, according to Oleshko & Heiets (2018) (Oleshko, 2018), is that it gives distinct
offerings to customers while retaining brand competitivity. The dual-brand strategy
ensures precise market positioning as well as a distinct brand image. At the same time,
high-end and low-cost marketplaces supplement the market, according to what given by
Qantas. Qantas has a great reputation and recognition in the high-end service industry,
emphasizing consumer-recognized safety and customer care. Jetstar is also one among
the primary options for budget-conscious travelers. The Group's dual-brand strategy of
Qantas and Jetstar keeps it atop the Australian domestic market. In Australia, the two
brands have a 60 percent market share (Qantas 39 percent and Jetstar 21 percent). This

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could be seen as the result of grouping two brands from the same hierarchy to run the
business along with each other in order to create a bigger share of market and expand the
brand’s strength in front of other competitors.

Figure 3. Numbers of Domestic Destinations operated by Qantas and Jetstar, 2020

In domestic markets, the Qantas Group in general and Jetstar Airways in particular
has maintained a route network with a large number of overlaps across carriers, yet
airlines have a distinct market group to target. Qantas has a significant market share,
making it the first choice for customers and establishing a distinct brand image. The dual
approach is built on their separate full-service network carrier and low-cost airline
operations collaborating and coordinating capacity (network and schedule) and pricing
actions. Through sponsorship and collaboration with renowned cultural events, premier
restaurants, and the news media, the company boosts its brand image, allowing it to
become an exclusive airline partner and enticing tourists. Furthermore, the dual brand
approach allows Qantas and Jetstar to provide a compelling concept to potential joint
venture partners while establishing the Jetstar joint ventures quickly and effectively.
The dual brand strategy aims to guarantee network and capacity decisions match
customer demand by deploying the optimal mix of FSNC and LCC capacity to maximize
profitability for the Qantas Group while keeping the independent business focused on
profit.
5. Recommendations and conclusions:
In my opinion, the corporation should understand the value of individual ability to
the entire organization. Employees have direct connection to clients, and their

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performance reflects the kind of service they provide. Regulated training is vital and
useful to the enhancement of service quality and the competitive advantage of the
company. Furthermore, establishing proper relationships with employees is critical since
it affects employee loyalty. This may be accomplished with a compensation scheme that
encourages staff to put in long hours at work. With the ever-increasing competition, the
corporation must always match the needs of its customers. The most effective method is
to create new services. For example, the organization may create a separate business
lodging class just for those businessmen who don't enjoy the loud environment of a
typical business class but yet want to be productive.
The other recommendation I can make to Jetstar is to make sufficient use of the
media to communicate with the passengers. It might be the internet, a television set, a
promotional pamphlet, a flyer, and so on. In a nutshell, use all of the ways to strongly
impress the plan on your consumer. The airline sector was severely shaken by the global
financial crisis, and a high degree of strategic corporation could successfully avoid price
wars and boost industry competitiveness. As a result, the sector may grow steadily and
healthily.
In conclusion, Qantas, as the most powerful airline in Australia, today has a
number of positive competitive advantages, both in terms of the external and internal
environments. Jetstar, along with its umbrella brand, is also a competitive aviation
operator in the Australia market. After a long period of being held up by the COVID-19
pandemic, Jetstar and Qantas is now facing with not only new opportunities but also
challenges. Therefore, to positively address more new problems, Qantas and Jetstar needs
modify its strategy to match the continuously changing market.
References
Chen, J. (2010). Global airline industry analysis.
Hanke, M. (2018). SKAIBLU 2018 Digital Airline Score (DAS) Benchmark report: an
assessment of airline digital capabilities. SkaiBlu.
Heietsa, I., Oleshkob, T., & Leshchinsky, O. (2021). Airline-within-Airline business
model and strategy:. ScienceDirect, 96-109.
Oleshko, T. a. (2018). Perspectives of the air transportation market in Ukraine. Aviation.
Qantas. (2004). Qantas Factfiles 2004 and 2003/2004 Annual Report .

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Qantas. (2019). Qantas Annual Report 2019: Company Report . Qantas.
Smith, C. F. (2019). WORLD’S SAFEST AIRLINES NAMED FOR 2019,.
Xian, W. (2018). Case Study on Qantas of ITS Strategic Management: The High Flyer of
the. Qingdao Binhai University.