IDEAS home Printed from https://ideas.repec.org/a/eee/jaitra/v42y2015icp141-148.html
   My bibliography  Save this article

The carrier-within-a-carrier strategy: An analysis of Jetstar

Author

Listed:
  • Whyte, Randall
  • Lohmann, Gui

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.

Suggested Citation

  • Whyte, Randall & Lohmann, Gui, 2015. "The carrier-within-a-carrier strategy: An analysis of Jetstar," Journal of Air Transport Management, Elsevier, vol. 42(C), pages 141-148.
    • Handle: RePEc:eee:jaitra:v:42:y:2015:i:c:p:141-148
    DOI: 10.1016/j.jairtraman.2014.09.008
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0969699714001306
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.jairtraman.2014.09.008?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Hoogstra, Marjanke A. & Schanz, Heiner, 2008. "The future orientation of foresters: An exploratory research among Dutch foresters into the prerequisite for strategic planning in forestry," Forest Policy and Economics, Elsevier, vol. 10(4), pages 220-229, February.
    2. Hugh O. Nourse & Stephen E. Roulac & Stellan Lundstrom, 1993. "Linking Real Estate Decisions to Corporate Strategy," Journal of Real Estate Research, American Real Estate Society, vol. 8(4), pages 475-494.
    3. Daft, Jost & Albers, Sascha, 2013. "A conceptual framework for measuring airline business model convergence," Journal of Air Transport Management, Elsevier, vol. 28(C), pages 47-54.
    4. Pearson, James & Merkert, Rico, 2014. "Airlines-within-airlines: A business model moving East," Journal of Air Transport Management, Elsevier, vol. 38(C), pages 21-26.
    5. Lohmann, Gui & Koo, Tay T.R., 2013. "The airline business model spectrum," Journal of Air Transport Management, Elsevier, vol. 31(C), pages 7-9.
    6. Peter J. Danaher & John H. Roberts & Ken Roberts & Alan Simpson, 2011. "Practice Prize Paper --Applying a Dynamic Model of Consumer Choice to Guide Brand Development at Jetstar Airways," Marketing Science, INFORMS, vol. 30(4), pages 586-594, July.
    7. AfDB AfDB, . "Zambia Country Office Annual Report 2012," Annual Report, African Development Bank, number 975.
    8. Gillen, David & Gados, Alicja, 2008. "Airlines within airlines: Assessing the vulnerabilities of mixing business models," Research in Transportation Economics, Elsevier, vol. 24(1), pages 25-35.
    9. Homsombat, Winai & Lei, Zheng & Fu, Xiaowen, 2014. "Competitive effects of the airlines-within-airlines strategy – Pricing and route entry patterns," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 63(C), pages 1-16.
    10. AfDB AfDB, . "Annual Report 2012 (Arabic Version)," Annual Report, African Development Bank, number 462.
    11. AfDB AfDB, . "Annual Report 2012," Annual Report, African Development Bank, number 461.
    12. Peter McKiernan, 2006. "Exploring Environmental Context Within the History of Strategic Management," International Studies of Management & Organization, Taylor & Francis Journals, vol. 36(3), pages 7-21, January.
    13. Lindstädt, Hagen & Fauser, Bernd, 2004. "Separation or integration? Can network carriers create distinct business streams on one integrated production platform?," Journal of Air Transport Management, Elsevier, vol. 10(1), pages 23-31.
    14. AfDB AfDB, . "Annual Report 2012 (Portuguese Version)," Annual Report, African Development Bank, number 463.
    15. WorldFish, 2013. "Annual report 2012/13," Monographs, The WorldFish Center, number 40306, April.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Albers, Sascha & Daft, Jost & Stabenow, Sebastian & Rundshagen, Volker, 2020. "The long-haul low-cost airline business model: A disruptive innovation perspective," Journal of Air Transport Management, Elsevier, vol. 89(C).
    2. Lohmann, Gui & Vianna, Camila, 2016. "Air route suspension: The role of stakeholder engagement and aviation and non-aviation factors," Journal of Air Transport Management, Elsevier, vol. 53(C), pages 199-210.
    3. Soliman, Amr & O’Connell, John Frankie & Tamaddoni-Nezhad, Alireza, 2022. "A data-driven approach for characterising revenues of South-Asian long-haul low-cost carriers per equivalent flight capacity per block hour," Journal of Air Transport Management, Elsevier, vol. 103(C).
    4. L. Caballero Galeote & J. García Mestanza, 2020. "Qualitative Impact Analysis of International Tourists and Residents’ Perceptions of Málaga-Costa Del Sol Airport," Sustainability, MDPI, vol. 12(11), pages 1-26, June.
    5. Renan P. de Oliveira & Alessandro V. M. Oliveira & Gui Lohmann, 2021. "A Network-Design Analysis of Airline Business Model Adaptation in the Face of Competition and Consolidation," Transportation Science, INFORMS, vol. 55(2), pages 532-548, March.
    6. Ko, Young Dae, 2019. "The airfare pricing and seat allocation problem in full-service carriers and subsidiary low-cost carriers," Journal of Air Transport Management, Elsevier, vol. 75(C), pages 92-102.
    7. Soyk, Christian & Ringbeck, Jürgen & Spinler, Stefan, 2018. "Revenue characteristics of long-haul low cost carriers (LCCs) and differences to full-service network carriers (FSNCs)," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 112(C), pages 47-65.
    8. Nokhaiz Tariq Khan & Javed Aslam & Ateeq Abdul Rauf & Yun Bae Kim, 2022. "The Case of South Korean Airlines-Within-Airlines Model: Helping Full-Service Carriers Challenge Low-Cost Carriers," Sustainability, MDPI, vol. 14(6), pages 1-19, March.
    9. Moir, Loren & Lohmann, Gui, 2018. "A quantitative means of comparing competitive advantage among airlines with heterogeneous business models: Analysis of U.S. airlines," Journal of Air Transport Management, Elsevier, vol. 69(C), pages 72-82.
    10. Wang, Kun & Tsui, Wai Hong Kan & Li, Lan-Bing & Lei, Zheng & Fu, Xiaowen, 2020. "Entry pattern of low-cost carriers in New Zealand - The impact of domestic and trans-Tasman market factors," Transport Policy, Elsevier, vol. 93(C), pages 36-45.
    11. Mohammadian, Iman & Abareshi, Ahmad & Abbasi, Babak & Goh, Mark, 2019. "Airline capacity decisions under supply-demand equilibrium of Australia’s domestic aviation market," Transportation Research Part A: Policy and Practice, Elsevier, vol. 119(C), pages 108-121.
    12. Ng, Kam To & Fu, Xiaowen & Hanaoka, Shinya & Oum, Tae Hoon, 2022. "Japanese aviation market performance during the COVID-19 pandemic - Analyzing airline yield and competition in the domestic market," Transport Policy, Elsevier, vol. 116(C), pages 237-247.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Corbo, Leonardo, 2017. "In search of business model configurations that work: Lessons from the hybridization of Air Berlin and JetBlue," Journal of Air Transport Management, Elsevier, vol. 64(PB), pages 139-150.
    2. Tarek Roshdy Gebba & Mohamed Gamal Aboelmaged, 2016. "Corporate Governance of UAE Financial Institutions: A Comparative Study between Conventional and Islamic Banks," Journal of Applied Finance & Banking, SCIENPRESS Ltd, vol. 6(5), pages 1-7.
    3. Diana Hancock & Wayne Passmore, 2015. "How Does the Federal Reserve's Large-Scale Asset Purchases (LSAPs) Influence Mortgage-Backed Securities (MBS) Yields and U.S. Mortgage Rates?," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 43(4), pages 855-890, November.
    4. Ebert, Laura & La Menza, Tania, 2015. "Chile, copper and resource revenue: A holistic approach to assessing commodity dependence," Resources Policy, Elsevier, vol. 43(C), pages 101-111.
    5. Flood, Mark D. & Lemieux, Victoria L. & Varga, Margaret & William Wong, B.L., 2016. "The application of visual analytics to financial stability monitoring," Journal of Financial Stability, Elsevier, vol. 27(C), pages 180-197.
    6. Khraiwish Dalabeeh, Ali S., 2017. "Techno-economic analysis of wind power generation for selected locations in Jordan," Renewable Energy, Elsevier, vol. 101(C), pages 1369-1378.
    7. Molyneaux, Lynette & Wagner, Liam & Foster, John, 2016. "Rural electrification in India: Galilee Basin coal versus decentralised renewable energy micro grids," Renewable Energy, Elsevier, vol. 89(C), pages 422-436.
    8. Williams, Christopher & Lukoianova (Vashchilko), Tatiana & Martinez, Candace A., 2017. "The moderating effect of bilateral investment treaty stringency on the relationship between political instability and subsidiary ownership choice," International Business Review, Elsevier, vol. 26(1), pages 1-11.
    9. Abbott, Malcolm & Cohen, Bruce, 2016. "The privatization and de-privatization of rail industry assets in Australia and New Zealand," Utilities Policy, Elsevier, vol. 41(C), pages 48-56.
    10. World Bank Group, 2015. "FYR Macedonia Public Expenditure Review," World Bank Publications - Reports 23808, The World Bank Group.
    11. Mahanta, Ratul & Chowdhury, Jayashree & Nath, Hiranya K., 2016. "Health costs of arsenic contamination of drinking water in Assam, India," Economic Analysis and Policy, Elsevier, vol. 49(C), pages 30-42.
    12. García-Posada, Miguel & Marchetti, Marcos, 2016. "The bank lending channel of unconventional monetary policy: The impact of the VLTROs on credit supply in Spain," Economic Modelling, Elsevier, vol. 58(C), pages 427-441.
    13. Filogamo, Luana & Peri, Giorgia & Rizzo, Gianfranco & Giaccone, Antonino, 2014. "On the classification of large residential buildings stocks by sample typologies for energy planning purposes," Applied Energy, Elsevier, vol. 135(C), pages 825-835.
    14. Yang, Daojian & Qi, Ershi & Li, Yajiao, 2015. "Quick response and supply chain structure with strategic consumers," Omega, Elsevier, vol. 52(C), pages 1-14.
    15. Vázquez-Rowe, Ian & Reyna, Janet L. & García-Torres, Samy & Kahhat, Ramzy, 2015. "Is climate change-centrism an optimal policy making strategy to set national electricity mixes?," Applied Energy, Elsevier, vol. 159(C), pages 108-116.
    16. Jaber, J.O. & Elkarmi, Fawwaz & Alasis, Emil & Kostas, Anagnostopoulos, 2015. "Employment of renewable energy in Jordan: Current status, SWOT and problem analysis," Renewable and Sustainable Energy Reviews, Elsevier, vol. 49(C), pages 490-499.
    17. Marshall, Jonathan Paul, 2016. "Disordering fantasies of coal and technology: Carbon capture and storage in Australia," Energy Policy, Elsevier, vol. 99(C), pages 288-298.
    18. Korhonen, Jouni & Snäkin, Juha-Pekka, 2015. "Quantifying the relationship of resilience and eco-efficiency in complex adaptive energy systems," Ecological Economics, Elsevier, vol. 120(C), pages 83-92.
    19. Lechman, Ewa & Marszk, Adam, 2015. "ICT technologies and financial innovations: The case of exchange traded funds in Brazil, Japan, Mexico, South Korea and the United States," Technological Forecasting and Social Change, Elsevier, vol. 99(C), pages 355-376.
    20. Mathew Doidge, 2017. "The Changing Place of Development in EU–Asia Relations," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 29(4), pages 926-941, August.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:jaitra:v:42:y:2015:i:c:p:141-148. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.journals.elsevier.com/journal-of-air-transport-management/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.