Former Jetstar boss Alan Joyce is taking over at Qantas just as the Jetstar model runs into real problems.
The lower fare paying passengers, those that were suckered by a five-cent fare in one direction and screwed with a $200 fare return, aren’t rocking up like they once did.
Source: Guidance from Geoff Dixon, the Qantas CEO in the executive departure lounge.
Reason: The so called ultra low fare customers that spawned Ryanair, the Jetstar template which is currently losing financial altitude faster than QF 30 did when it dropped in on Manila, can no longer afford the petrol to get to an airport, never mind being gouged for the parking.
Jetstar International is in serious trouble in Japan because it is considered an insult by consumers, and doesn’t have the support of the major tour wholesalers who control on-line and off-line leisure sales.
Dixon’s decision to replace many Japan flights with Jetstar services is not just bad strategy according to tourism insiders, but a factor in the disastrous collapse of Japanese travel to Queensland.
The myth that Jetstar somehow saved Qantas from the wicked Virgins is also turning into a problem.
By the time Jetstar started flying in 2004, Virgin Blue had already stopped the massive and unsustainable rate of expansion it underwent through 2002-2003. Instead it began replacing near-new jets with brand new jets bought outright or at better leasing rates.
Before Jetstar, the Virgin Blue share of contested domestic routes was measurable by DOTARS data on passenger numbers boarded. It sat at just over 30%.
It is still hovering around 32% and looking at Virgin and Qantas capacity cuts, it could stay there even in a shrinking total market.
What Jetstar really achieved was to drive higher yield Qantas customers across to Virgin Blue (which had wisely stopped the involuntary face painting of persons in suits) when they were confronted with routes from which most if not all Qantas full service flights had been withdrawn.
Jetstar is poison for regular business flyers, or “new world travellers” as Virgin Blue CEO Brett Godfrey calls them.
The cosy little duopoly that has now emerged on the mainline domestic routes between Qantas and Virgin Blue is a division of the spoils in terms of regular travellers who normally fly economy and routinely pay around $250-400 for a one way flight between the SE cities without blinking.
Joyce’s other problem is that Jetstar is despised at many levels in Qantas, including senior managers who will presumably soon leave, who insisted that the original Jetstar offering be so bad that customers would know they were being punished for not paying rip off fares to the full service carrier.
If Joyce had been freer to act on his instincts, Jetstar could have done enormous damage to Qantas and Virgin Blue. All it would have taken was a bit more legroom and check-in procedures and ticket conditions that didn’t treat customers like sh-t.
But the real and legitimate agenda for Jetstar has always been higher productivity. It’s an agenda for Qantas that’s stencilled on Joyce’s forehead.
Many in Qantas hope that Joyce’s alleged disdain for “legacy” concepts of engineering and piloting excellence vanishes (if it really ever existed).
Jetstar’s worst incident, a bungled attempt at a foggy landing at Melbourne Airport in July last year, not only put lives in jeopardy, but raised doubts that the carrier even understood its obligations in the transitional training of pilots to the A320 airliner or the inadequacy of its flight standards oversights.
The incident was inexcusable. Two pilots sat there wondering why a jet kept descending on lower than expected power without actually checking that the throttle was in the right detent and then blamed a system’s failure, an excuse that lasted as long as a snowflake in Surfers when the ATSB finally demanded to see the data.
Given the meeja hysterics over a trivial and routine problem with a Qantas flight that returned to Adelaide last night, it won’t get away with anything without intense scrutiny.
But we may not have seen the full Alan Joyce in action. Now that some of the restraints of his Jetstar brief are gone so are all bets about what sort of Qantas it is that Joyce and the notably engaged chairman Leigh Clifford really have in mind.