Point to point travel using secondary uncontested hubs and avoid free food and drinks to reduce turnaround time thereby to have greater flight utilisation. Moreover Jetstar deal with former defunct impulse airline pilots to fly A320s for the same pay as Boeing 717-200 aircrafts thereby reducing the cost by .50c per passenger kilometre. With replacement of beoing 717s jetstar operating cost in the future would drop 11 percent below Virgin Blue's disclosed cost base. (kohler 2004). In addition, Jetstar do not provide loyalty programmes to attract frequent flyers, thereby avoiding the setting up and maintenance cost. To reduce the distribution cost All of Jetstar's services are transmitted via their user-friendly online catalogue and through call centres. .
INDUSTRY ENVIRONMENT AND COMPETITOR ANALYSIS .
A helpful, widely used framework for classifying different factors of the industry and the competitors is Porter's five forces of competition framework presented by Michael E. Porter. A diagnosis of the domestic airline competitive environment is illustrated and explained in the form of Michael Porter's Five Force Model. .
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Source: Grant 2002 .
Industry competition .
An important goal of deregulation, increased competition, appears to take a demanding profile. The competitive rivalry within domestic segment has forced Qantas to yet operate with a low cost business models along with its mainline operations. Qantas has dominance in the domestic sector with around 65 percent of the market share and the other major player Virgin Blue has a market share of around 30 percent (Bartholomeusz, 2004). An intensive price cut was initiated with the launch of Virgin Blue in August 2000. Offering single class, no frills, low cost air travel on the busiest portion of the domestic network, Virgin Blue dropped the travel rates by up to 40 percent as compared to Qantas which offers "full service" scheduled air service with a wide coverage of the domestic sector.
