Jetstar

With the collapse of Ansett Airlines in September of 2001, Qantas reacted with sound strategic initiatives, which saw its efforts pay dividends. Its share of the domestic market rose from 55% to 70% (Qantas 2004). However, this sound dominance over the domestic airways is quickly eroding, due to the emergence of Virgin Blue’s low cost pricing strategy, whose strategic savvy subsequently snatched a huge share of the domestic market.

In response to the growing popularity of discount air travel in recent years and to meet the competitive challenge from Virgin Blue at the ‘Low fare’ end of the market Qantas has incepted a low cost operating airline and named its new budget airlines; ‘Jetstar’. Qantas’s new in

Though the customers cannot affect the price of the product but their desire to have the colossal value for the every penny spent is the driving force for the entire industry. Leisure segment in which Jetstar intends to compete is a primarily associated to price sensitive travelers. Apparently both Jetstar and Virgin Blue catering to leisure segment with a low cost business model offer similar travel proposition and coverage intensifying the buyer bargaining power.

Options of Low Cost Air Travel between top travel destinations have allured and prompted people who would otherwise travel by other means to resort to air travel for leisure, incepting a new market segment “Leisure Segment”. Value proposition and needs of Leisure Segments is entirely different. People in this category display a tendency to try new products and brands, but base the adoption on sensible, price elastic decisions rather than benefits of value added services (Chmieleswki, 2004, 9). To create a niche in leisure segment Qantas would require Jetstar to have entirely different work culture as compared to existing work culture. Jetstar should adopt cost effective capability. For example, cross train work force to enable multi tasking ensuring lower labour cost, have long term beneficial strategic understanding with union to avoid unrest in long run.

Entry into the airline industry has always required a large capital investment, but with the collapse of number of airline in the past decade, the threat of potential competitors is minimized further. The text notes, “the best test of whether potential entry is a strong or weak competitive force in the marketplace is to ask if the industry’s growth and profit prospects are attractive enough to induce additional entry” (Thompson & Strickland, 2001, 121). Under the current circumstances, the answer is a resounding no.

Keller, K. (1999) “Managing brands for the long run: Brand reinforcement and revitalisation

Some topics in this essay:
Virgin Blue, Virgin Blue’s, Business Models, Models Fierce, Bargaining Power, Impulse Ansett, Moreover Jetstar, Leisure Segments, Kain Webb, Australia Successful, virgin blue, low cost, market share, air travel, domestic sector, retrieved 3rd 2004, operating cost, retrieved 3rd, 3rd 2004, leisure segment, bargaining power, 3rd 2004 jetstar, 2004 jetstar 2004, low cost air, cost air travel,