The carrier-within-a-carrier strategy: An analysis of Jetstar |
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| Institution: | 1. Department of Planning and Transport, University of Westminster, 35 Marylebone Road, London NW1 5LS, UK;2. Delft University of Technology, Section Control and Operations, Kluyverweg 1, 2629 HS Delft, The Netherlands;3. Scuola Normale Superiore, Piazza dei Cavalieri 7, Pisa 56126, Italy;4. Dipartimento di Fisica e Chimica, Università degli Studi di Palermo, Viale delle Science Ed. 18, Palermo 90128, Italy;5. Central European University, Center for Network Science and Department of Economics, Nador u. 9, 1051 Budapest, Hungary;6. Department of Aerospace Engineering, Escuela Superior de Ingenieros, Camino de los Descubrimientos, Universidad de Sevilla, 41092 Sevilla, Spain;7. The Innaxis Foundation & Research Institute, José Ortega y Gasset 20, 28006 Madrid, Spain;8. Faculdade de Ciências e Tecnologia, Universidade Nova de Lisboa, 2829-516 Caparica, Portugal;1. Griffith Aviation, Griffith University, Australia;2. Flight Centre Group, Australia;1. School of Tourism, Sichuan University, No. 2 South Section, Yihuan Road, Chengdu City 610064, PR China;2. Graduate School of Environmental Studies, Nagoya University, C1-2(651), Furo-cho, Chikusa-ku, Nagoya City 464-8603, Japan;1. Singapore Management University, 50 Stamford Road, 5F, 178899, Singapore;2. ESSEC, Singapore;1. Department of Engineering, University of Bergamo, Via Pasubio 7b, 24044 Dalmine, BG, Italy;2. Department of Industrial and Mechanical Engineering, University of Brescia, Via Branze 38, 25123 Brescia, Italy |
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| Abstract: | The carrier-within-a-carrier (CWC)—or “airline-within-an-airline” (AWA)—approach has become an integral part of many airlines' marketing strategies in the Asia–Pacific region where several full-service national airlines operate low-cost/low-fare subsidiary airlines. The CWC approach is a response to competition from low-cost carriers based on product differentiation, i.e., a ‘two brands’ business strategy aimed at defending market share. Most CWCs were established after 2001 as a response to deregulation and liberalization and generally adhere to the principals of low-cost/low-fare carriers. Typically, CWCs enter markets through new, point-to-point services and operate short-haul routes (one-to 2-h flying times) that might have been abandoned by full-service airlines (FSAs), whereas at other times they simply compete directly with FSAs on price. This paper analyses Jetstar, a subsidiary of Qantas, which has transitioned from a domestic CWC to an international medium- and long-haul carrier. In addition to its domestic Australian operations, Jetstar operates between Australia and the Asia–Pacific region and has established partnership arrangements operating within Asia, including Jetstar Asia (based in Singapore), Jetstar Vietnam and Jetstar Japan. Jetstar also has operations in New Zealand. The theoretical framework applied in this paper is based on the strategic windows concept, in which opportunities arise and a window opens, and Tregoe and Zimmerman's (1980) ‘driving forces’ model, in which nine attributes are listed and certain of these are exemplified by Qantas' strategy. The methodology adopts a case study approach that draws upon content analysis and ‘events in the making’ and features interviews with key respondents. The findings show that Jetstar disproved earlier criticism of the CWC strategy and further demonstrate that by careful planning, strategy and execution, Jetstar has been able to grow its capacity, maintain high load factors, increase revenue and (more importantly) increase profitability at a time when many airlines are consolidating or withdrawing services because of losses. |
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| Keywords: | Jetstar Qantas Carrier-within-a-carrier Low cost carriers Strategic windows Driving forces model |
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