Battle of the nimble

Virgin Blue started as a pure low-cost airline and has morphed more times than a chameleon and now bears no resemblance to that two-aircraft upstart run by that charismatic can-do-no-wrong chap with a beard.

British Airways former chairman Lord King once famously said of Sir Richard Branson “if he cut his hair and shaved I would take him seriously. ” But airline executives, including those at Jetstar celebrating its 10th year and its struggling parent Qantas, know that you ignore Sir Richard Branson, Virgin Australia and the Virgin Group at their peril… The Virgin Group has shown that it is more than nimble when it comes to manoeuvering to meet the shifts in the market.

And today’s shifting market dynamics are fascinating.

Tigerair now claims to be Australia’s lowest cost carrier and now has significant financial clout, with the Virgin Group majority shareholders. Virgin Australia is now offering what many would say is the perfect market offering from a low-cost base.

If Tigerair’s cost claims are true, where does that leave Jetstar in an environment where the travelling public is used to what is the world’s best domestic airlines service on Qantas mainline, and, increasingly, Virgin Australia? It raises the question of what is Jetstar’s long-term role in the Qantas Group? Will it be re-structured slightly to combat Virgin Australia with a domestic premium cabin class? Will Qantas then cede domestic routes to Jetstar as it fails to win concessions from unions? Could we see Jetstar A330s that are due to be given to Qantas instead staying in Jetstar colours and flying domestic long-haul routes across the country?

Qantas faces enormous structural upheavals if it is to survive and it is increasingly likely that management will look to Jetstar for solutions.

But if Jetstar is the long-term solution then its product and customer interface has to be changed just as Virgin Blue has lost its spots that used to give passengers “the blues. ” The Virgin Australia transformation has been so dramatic that some passengers on entering the refreshed new-look cabins greeted by the new-look flight attendants turned around thinking they were on the wrong airline. Qantas faces enormous structural upheavals if it is to survive and it is increasingly likely that management will look to Jetstar for solutions. So the question is, does Qantas have Jetstar on the right flightpath? More value-add products would help as could a domestic business class – or perhaps a dedicated premium economy, not the miss-match that Virgin Blue tried.

It has to be a dedicated cabin and with Qantas moving to a flatbed business offering on its A330s later this year to match Virgin Australia, the opportunity exists to offer a more modest ‘Star Class’ premium economy/de facto business product.

Other value adds would help take the airline out of the take-it-or-leave-it perception that took hold in the marketplace.

The basic low-cost model is clearly a winner around the globe but what is also clear is that in different cultures tweaks must be introduced to soften what can be too often abrasive edges.

Jetstar well knows that Australians have been conditioned to expect the best domestic airline service in the world because of its parent Qantas and of course Ansett.

But here is the opportunity! Why not move up-market slightly and adjust to the expectations and demands of domestic passengers?