FOXTROTS 

 

Fox – sly.  Trots – left-leaning (Trotsky) plus its more insalubrious meaning.  Foxtrots – leading the industry in a dance. 

 

2007 February 28

 

 

 


Singapore. Qantas and Jetstar.
 

 

 

It started first in 2004, in June. We said in our newsletter that a new Singapore-based airline, Valuair, would not last another year – based on what we saw as a misguided business plan. 

 

Most observers called Valuair a low-fare-airline – although the airline’s management were at pains to say that it was not, and indeed its fares were generally not low. In fact, considering the services it was offering (in comparison with other regular airlines), its fares were high. 

 

But we did not like its business plan because it was a small airline going against the big (and good; Singapore Airlines no less). Why choose Valuair when SQ was there with sometimes the same prices, sometimes a little higher? 

 

The Valuair MD – who was at one time MD for SQ, after all – should have known better. He should have gone the LFA route. 

 

Shortly after we commented about another Singapore-based airline, Jetstar Asia, disputing part-owner Qantas claims that it knew how to run a low-fare airline. After all, it had only just started one – Jetstar in
Australia. Starting is the easier part.
 

 

Then in February 2005 we said Jetstar Asia did not seem to be generating enough traffic for a LFA. There are no rules, and obviously there are different criteria – but if you have low fares (such as US$30 if booked three months in advance), you need low-operating costs, and seat load factors at least in the 80s. 

 

Observations of Jetstar Asia’s operations (including in Foxtrots) indicated that staff and management had not really grasped the low-cost aspect of a LFA. They obviously had not studied Ryanair close enough, or even Air Asia across the border. 

 

Then in July 2005 the two Singapore-based business failures merged. 

 

But the saga did not end there. In September 2006, after changes in expansions plans for the Australia-based Jetstar – including medium-haul flights to
Hawaii and
Asiawe saidWe presume Qantas will eventually, probably soon, buy at least majority-if-not-full control of Jetstar Asia”.
 

 

Well that is now happening, in effect – although this is presented as a merger between Qantas and Orangestar, the holding company that owns Jetstar Asia and Valuair. 

 

At the same time, we said that if this change-of-control happens, “we also presume that Jetstar Asia would be folded into Jetstar International.” That part has still to happen. Wait six months. 

 

 

end