Jetstar Airways Essay

Jetstar Airways is an Australia low-cost carrier airline based in Melbourne, Australia. It is a wholly owned subsidiary of the Qantas Group. Qantas established Jetstar in 2003 as a response to main competitor airline Virgin Australia (formerly known as Virgin Blue). Despite its low cost, Jetstar operates an extensive domestic network and is the world’s largest long-haul low cost carrier. Jetstar operates to destinations in Asia the Pacific Ocean, with future plans of expanding their services throughout Europe. Jetstar currently offers a limited number of connecting services without through baggage checking, and it became the first Australia airline to allow customers to select their seat upon booking. The airline, which participates in the Qantas Frequent Flyer Programme, operates a fleet of Airbus A320-family and A330 aircraft. Mission Statement Jetstar’s mission is to offer all day, every day low fares to enable more people to fly to more places, more often (Jetstar, 2012). Company Objectives  Jetstar is part of the Qantas Group’s two-brand growth strategy, where Qantas competes at the premium and business market and Jetstar focuses on leisure markets. The Jetstar Group is a value based, low fares network of airlines operating in the leisure and value based markets. Jetstar aims to have Australia’s lowest fares on all the routes it operates on. Jetstar has backed its airfares with a Price Beat Guarantee. If any customers find a lower fare elsewhere online, provided it is on the same day, the same route and at a within the same time frame, Jetstar will beat the quoted fare by 10 per cent. Slogan – Low fares, all day, everyday Market Overview Definition of the market Jetstar operates in the low-cost carrier market within Australia. Their target market is the general public, who seeks cheap and accessible airfares and flight availability to travel within Australia. Major competitors include Virgin Australia and Tiger Airways Australia. Market Size Jetstar is currently the third largest domestic Australian airline (by market share) and fifth largest international airline (by capacity share) serving international routes to-and-from Australia (Jetstar, 2011). Jetstar shares its parent’s strong competition with Australia’s biggest low-cost carrier Virgin Australia. Domestic travel accounts for 75% of the airline industry revenue in Australia (Taylor Woodings, 2011) Market Potential The market is currently in the decline stage. From 2007, Australian domestic air travel started with buoyant demand for air travel and high fuel prices boosted ticket prices. However, domestic airlines faced major hurdles when the global economic downturn hit. Higher unemployment and a decline in discretionary income slowed demand for air travel in Australia. In particular, business travellers abandon air travel in favour of teleconferences and e-mail. Demand also weakened as Australians have started to plan travelling internationally. Market Structure The domestic flights market can be considered as an oligopoly. The 3 main companies that have the most market share are Virgin Australia, Jetstar and Tiger Airways Australia. Trends Demographic: Australia is an underpopulated country and is also an ageing. However, over the years the numbers of migrants have been increasing. With the rising number of migrants, there will most likely be an increase in the number of domestic flights demanded since they may want to visit other cities Economic:  Australia currently has the strongest economy in the developed world and it is expected to outperform all comers for at least the next two years, according to the International Monetary Fund (2012). The IMF also forecasts Australia’s unemployment rate to remain low at 5. 2 per cent in both 2012 and 2013. With the Australia having an unemployment rate of only 5. 2%, it can be assumed that people are more likely to have surplus cash and may have plans of flying domestic, whether it be for a holiday or business. Natural: Australia’s changing natural environment has had an impact on the customers, nvestors and Jetstar. Jetstar is committed to minimising its impact on the environment and has introduced various initiatives to address this important issue. On 19 September 2007, Jetstar introduced a passenger Carbon Offset scheme facilitated through the Australian Government’s Greenhouse Friendlyâ„ ¢ initiative. Through the Carbon Offset scheme, Jetstar’s passengers can choose to make their journey carbon neutral by purchasing carbon offsets on all domestic and international services via a seamless single step process at the time of booking at Jetstar. com. Jetstar’s Carbon Offset program is now one of the most successful programs in the Australian airline industry and has raised almost $600,000. About 12 per cent of all passengers booking at Jetstar. com currently choose to offset their share of flight emissions. Jetstar’s Carbon Offset program has proven to be particularly successful on a number of domestic routes, including Sydney-Ballina Byron, which in 2008 has averaged 24 per cent of passengers booking via the web opting to carbon-offset their flight, Melbourne-Ballina Byron (20%), Adelaide-Melbourne Avalon (16%), Melbourne- Hobart (15%) and Sydney-Melbourne Avalon (14%). Our carbon offsets are purchased through Climate Friendly, who has been ranked as the number one carbon offset provider in Australia by the Carbon Offset Watch and is a founding member of the International Carbon Reduction and Offset Alliance (ICROA). Technological: Technology plays a vital role in both the airline industry. In order to have a competitive advantage, it is required that the technology used is up to date. Jetstar is equipping its fleet of A320 and A321 aircraft with the latest satellite-linked navigation system to improve safety and on-time performance. Aircraft fitted with the system known as Required Navigation Performance (RNP) can safely navigate around cloud-shrouded mountains, through valleys and over high terrain when low visibility would increase the chance of flight disruptions. Air Services Australia reported those 4,200 minutes of flying time and 17,300 nautical miles was saved during 1,612 RNP assisted approaches. As a result more than 200,000 kg of jet fuel was saved and carbon emissions were reduced by 650,000 kg. The new navigation aid reduces the time spent circling due to bad weather, which helps passengers arrive on time and cuts our fuel use. Political/Legal: Over the years the rising carbon tax in Australia has affected future plans of Jetstar. Maintaining and running an aircraft is bound to produce a lot of carbon dioxide. As a result Jetstar has started to reduce the amount their carbon footprint by introducing new technology.