Monday, November 1, 2010

Jetstar ready for competition

INTERVIEW


Bruce Buchanan, CEO of Jetstar, admits that new |low-cost airlines would increase competition but Jetstar would thrive through fleet expansion and new marketing strategies.

Why have so many airlines that have subsidiaries, including THAI, Singaporean Airlines and Malaysian Airlines, adopted a multi-brand strategy?

The Qantas Group's two-brand strategy, utilising both Qantas and Jetstar brands, allows the group to design and grow products that suit the specific needs of a broad customer base. This strategy sees the Qantas brand focus on the premium and business traveller - with products and a route network catered for these groups whilst Jetstar focuses on serving the needs of the leisure and value-oriented traveller.

By having "two brands" the Qantas Group is able to assess different market opportunities and deploy the best product to suit the opportunity and specific market conditions.

In Europe, we know that Ryan Air is the biggest low-cost. Who is the biggest in Asia now? How does Jetstar position itself in this market?

In terms of revenue, Jetstar is the biggest. In terms of fleet size, we believe AirAsia to be the biggest. It is our intention to continue to grow our Pan-Asian strategy and to be a leading low-fares carrier in the Southeast Asian region.

What are Jetstar's plans to enhance competitiveness?

Jetstar's Pan-Asian strategy is providing the core platform for our competitiveness.

We are currently looking at regional growth opportunities and new services from our growing networks from bases in Singapore, Australia, New Zealand and Vietnam.

A key focus for us is looking for network opportunities that allow us to maximise existing networks and complement existing flying as well as looking at brand new opportunities in Asia.

The growth in the awareness of our brand really supports the growth of our networks throughout Asia and provides us a strong competitive advantage.

As Jetstar matures in the region, our ability to consistently offer the lowest fares on the routes we serve and our ability to focus our marketing and business |model around this core offering continues to provide us with an attractive and compelling customer offering.

Our strong association with Qantas and its industry-leading safety standards is also a powerful association as we grow in Asia.

What plan does Jetstar have to start new flights to both existing and new destinations? What plan does Jetstar have to expand its fleet?

For the remainder of the financial year 2010/2011, Jetstar will add a further eight A320 aircraft and two A330 aircraft into its groupwide fleet for opportunities in Australia, New Zealand, Singapore and Vietnam. This will involve introducing first time long-haul flying from Singapore when the carrier commences direct daily services between Singapore and Melbourne on December 16 and then direct daily services between Singapore and Auckland on March 16, 2011.

Jetstar Asia will welcome an additional two A320 aircraft this year for flying from Singapore and an additional A320 aircraft will be added to domestic New Zealand flying. Jetstar's China expansion will continue with flights to Guilin in southern China from Singapore to also soon commence - representing its sixth collective Chinese mainland or wider China destination.

In the medium to long term, Jetstar will be looking to grow its existing fleet of nearly 70 aircraft by an additional 50 aircraft over the next five years.

In mid-2012, the carrier will welcome its first Boeing 787 Dreamliner, Jetstar becoming the first carrier in the Jetstar group to operate these state-of-the-art aircraft. Jetstar is scheduled to receive 15.

What is Jetstar's marketing strategy for the rest of 2010? What new services does Jetstar plan to offer?

Jetstar will be expanding services in all markets over the course of the current financial year. In Australia, we will be adding up to 30 per cent additional domestic capacity for the financial year ending 2011.

In New Zealand, we have recently announced an additional two A320 aircraft to be based in New Zealand, representing an additional 717,000 seats annually. In Singapore, we will be adding an additional two A320 aircraft to its fleet of 10 based in Singapore by the end of 2010, which is in addition to the commencement of first time value-based long-haul flying from December, which will eventually see two A330 aircraft based in Singapore.

At Jetstar Pacific in Vietnam, we are planning the introduction of its second A320 aircraft to join its existing fleet of five B737s and one A320 this calendar year as part of a fleet renewal process towards a future all-A320 operation.

How has Jetstar performed financially, and what are your expectations looking ahead?

Jetstar Brands posted an EBIT of $131 million Australian dollar for the financial year ending June 2010.

How does Jetstar perceive the competition once Thai Tiger Airways gets off the ground and how will you cope with it given that several low-cost airlines are competing in the same areas. Will price-cutting be the answer?

The Thai market has always been a competitive one and we don't expect that to change as new entrants come onto the market. Of all the low-cost carriers, Jetstar is the only one to offer a low fares guarantee which stipulates that should a customer find a lower-fare online on the same date at a comparative time to a Jetstar service, Jetstar will be discount that fare by 10 per cent.

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