Whatever else happens in Australia’s airlines in 2013 the Jetstar/Qantas relationship won’t escape intense scrutiny.

It will be 10 years since internally named Project Savior produced the announcement of a second brand venture in August 2003 and its christening, if that is the right term, in December of that year.

As the Centre for Aviation points out in a very detailed analysis, this is likely to be the year Jetstar overtakes Qantas in some key metrics, although this will be drastically assisted by the transfer of significant business activity to Emirates for free, and dubious activities such as flights in which loyal Qantas customers are supposed to change gauge to Jetstar part way to their destination.

The question as to how much the growth of Jetstar has been driven by the retardation of Qantas isn’t going to go away easily.

Save up to 50% on a year of Crikey

Choose what you pay, from $99.

Sign up now

Nor are the doubts as to how much the poor Qantas figures for long haul and some issues with Qantas domestic are a consequence of  making the Qantas accounts pay for costs that would have been borne by Jetstar if it was on its own, spun off to new owners that way the dissident shareholders including former CEO Geoff Dixon  would wish.

Ten years on it is apparent that Jetstar has been used and deployed in ways never originally intended.  But the original plan proved not to have been engraved in unchangium. Things changed, other things were changed by Jetstar, and Jetstar changed.

It can be argued that the original claims, that Jetstar was essential for the survival of Qantas against the onslaught of Virgin Blue have been uncritically accepted.

Had Qantas not launched a second brand it would not have been wiped out by Virgin Blue. It would have been forced to make different, and probably very painful and very deep structural changes to achieve similar operating costs as Virgin Blue, but most likely it would have able to deter that carrier from migrating into its turf when it came to higher yield business travel accounts.

Virgin Blue would have instead had to rely on changing the behavior of business travellers the way easyJet and Ryanair have in Europe and  Southwest and JetBlue have in the US.

The matrix of possible consequences is extensive. Virgin Blue had a preliminary plan for a Virgin Ultra soon after Jetstar was launched.  A restructured Qantas may have forced Virgin Blue to make an  ‘Ultra’ second brand a reality. The restructured Virgin Australia, which feeds off the dissatisfaction with Qantas, now has its second brand in a sense in its soon to be sanctified controlling interest in Tiger Airways Australia.

However Tiger isn’t being run as a second brand the way Qantas runs Jetstar. It is being run the way Jetstar was originally intended to be run, which should make for some fascinating market contests between the Jetstar we see today versus Tiger, run like the Jetstar we saw yesterday.

Tiger certainly won’t be doing any code shares with Virgin Australia, nor otherwise appearing on the Virgin Australian booking site. Virgin Australia CEO John Borghetti knows as much as anybody about Jetstar from his Qantas days and he is adamant, Tiger isn’t going to go the way of Jetstar.

In 2013 Tiger doesn’t have anything like the fleet size to volumetrically challenge Jetstar.  That won’t stop it having a profound impact on the market, which might despite heroic efforts turn out to include Virgin Australia, since what it offers is a much harder nosed, price predicated, to hell with comfort product.

Just what some major corporations are looking for, as they slash millions if not tens of millions off their travel and entertainment spends.

If we take the view that Jetstar won’t be spun off out of Qantas  then it will instead continue to do what it has been so good at, which is helping Qantas shrink while driving many customers across to Virgin Australia if not to Tiger.

But then again, there are so many other people, and things, that might change after the New Year,  as in  everyone and everything, and not just Qantas or Jetstar.

Buckle up for a hell of a ride.

As a Crikey subscriber and someone who began working as a journalist in 1957, I am passionate about the importance of independent media like Crikey. I met a lot of Australians from many walks of life during my career and did my best to share their stories honestly and fairly with their fellow citizens.

And I never forgot how important it is to hold politicians to account. Crikey does that – something that is more important now than ever before in Australia.

Liz
North Stradbroke Island, QLD

Join us and save up to 50%

Subscribe before June 30 and choose what you pay for a year of Crikey. Save up to 50% or, chip in extra and get one of our limited edition Crikey merch packs.

Join Now