Jetstar Analysis

Only available on StudyMode
  • Download(s) : 429
  • Published : October 3, 2012
Open Document
Text Preview
Individual Section of the Situation Analysis

Prepared by: Lisa Girardello, Andre Lopez, Dale McGee & Alex Grimble

Tute: Thursday 5pm, Tutor: Boris Kolar

Table of Contents

Table of Contents2

1. Introduction3
1.1 Australian Domestic Airline Market Share by Capacity3 1.2 2011 Revenue and Earnings before Interest and Tax4

2. Industry Tree5

3. Macro Environment Analysis6
3.1 Table of Macro Environmental Factors6

4. Segmentation
4.1 Table8

5. Perceptual Map10
5.1 Aviation Perceptual Map10

6. SWOT Analysis12

7. References13

1. Introduction

Founded in 2004, Jetstar is now considered a key business unit of the Qantas Group’s portfolio strategy. Since its inception, the airline has established itself as a major player in the Australian leisure and value based markets, while also competing in New Zealand and the Asia-Pacific region. The business was established under the guidance of founding CEO Bruce Buchanon due to increased competition in the Australian Domestic low-fare market- resultant of the emergence of start-up carrier, Virgin Blue (now Virgin Australia). Since 2004, Jetstar Group and Virgin Australia have been competing for market share in the domestic market, which has created competition for all Australians. The competitive landscape is made up primarily of a duopoly between Jetstar and Virgin Australia, who is considered Jetstar’s primary competitor, along with other domestic airlines such as Tiger Airways, Rex, Sky West and the recently defunct Strategic Air.

1.1 Australian Domestic Airline Market Share by Capacity

[pic]
Figures: http://www.news.com.au/travel/news/airline

The Jetstar Group has expanded from 400 employees in 2004 to more than 7,000 staff across the Asia Pacific. Collectively the Jetstar Group offers up to 3,000 flights a week to 56 destinations in 17 countries and territories across the Asia Pacific region with a fleet of 79. In Australia, Jetstar flies their passengers to 17 domestic destinations (Jetstar, 2012).

2011 provided a challenging year for the airline industry due to uncertain economic conditions, higher jet fuel prices, natural disasters, fleet safety and industrial action.

Low cost carrier Tiger Airways reported a $7.1 million loss in the Australian market due to maintenance issues with their Australian fleet, which was temporarily grounded due to safety issues (Creedy, 2011).

In July 2011 uncertainty emerged regarding the future of the airline in the Australian domestic market due to the grounding of Tigers ten A320’s. Tiger Airway’s shares plummeted by 16 percent while Virgin Blue Holdings and Qantas gained significant ground. Analysts predicted a boost for Tiger Australia's competitors as they move to fill the void should the airline fold and its overall domestic market share of about 5 per cent will be available (Creedy, 2011).

Virgin Airways reported a $94.8 million loss. The bottom-line result included $36 million in unrealised foreign exchange losses attributed to a higher Australian dollar, a $50million dollar loss due the Queensland floods and cyclone, coupled with $75million loss from the New Zealand earthquakes (O’Sullivan, 2011).

In the 2011 financial year Jetstar successfully improved its competitive position reporting an increase in underlying profits from $131 million to $169 million, an increase of 29 per cent resultant from significant increases in revenue in 2010 (Qantas 2012). Jetstar also took delivery of ten A320-200’s and two A330-200’s, increasing capacity, allowing the airline to realise further revenue growth.

1.2 2011 Revenue and Earnings before Interest and Tax

| | |Airline |Revenue ($M) |EBIT ($M) | |Jetstar...
tracking img