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Jetstar COVID-19 Survival Strategy: Q2 2020 Board Meeting Analysis
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BOARD BOARD MEETING MEETING Q2 Q2 2020 2020 How can Jetstar survive the Covid-19? Presented by Team 4 Introduction External Environment Competitive Environment Resources & Capabilities Current Strategy Strategic Issues Recommendations About Time Context EAST ASIA Founded: 2003 Q2 2020 Asia-Pacific Headquarters: Melbourne, Australia Parent Company : Qantas Group Model: Low-cost carrier (low base fares + lean cost structure) SOUTHEAST ASIA Jetstar Group Structure Qantas Group Jetstar Group Jetstar Airways Qantas Group (100%) Jetstar Asia Qantas (49%) Westbrook (51%) Jetstar Japan Qantas (33%) Japan Airlines (50%) Century Tokyo Leasing (17%) Jetstar Pacific OCEANIA Qantas (30%) Vietnam Airlines(70%) Value chain - Jetstar PRIMARY ACTIVITES Supplier Inbound receiving & storage Operational Inputs Sourcing In-stock for in-flight operations *Detailed value chain provided in the Appendix POST-FLIGHT IN-FLIGHT PRE-FLIGHT Flight opeartion Prepared operational resources Flight preparation Flight execution Flight monitoring Flight reporting Ensure safety & fuel efficiency Cabin service Carbin preparation Safety assurance Digital & IT Systems Website operation Monitor flight data Operations Control Flight Planning Engineering & Maintenance Crew & Aircraft scheduling Operations Monitoring Ground & Airport Services Baggage loading & ramp handling Booking confirmation Coordination Air cargo Booking & acceptance Cargo processing SUPPORT ACTIVITES PROCUREMENT SUPPLY CHAIN & LOGISTIC Cost-focused supplier contracting Supplier performance & contract management Procurement of airport & inflight supplies Outsourced service purchasing Aircraft parts & MRO logistics Inventory and customs control Parts distribution across bases Inflight supply replenishment Flight data analysis Technical log update Post-flight Inspection Unload luggage Confirmation Loading Transport Transport HUMAN RESOURCE (HR) Workforce planning & staffing Safety & service capability development Performance & productivity management Final Destination Mishandled Baggage Handling Flight Mornitor Schedule adjustments Maintenance records update Baggage Claim Delivery Gate / transit support Airport customer support Accomodation Feedback/ Data support Flight operations systems In-flight technical support Boarding & gate coordination Cabin wrap-up Air cater Aircraft support problem solving Technical clearance Passenger check-in & baggage acceptance Onboard service Arrival assistance Arrive Special cargo handling Transfer & Partner Handover Unloading & terminal handling Check-in support Inspection & clearance Delivery FINANCE TECHNOLOGY (IT) MARKETING & SALES Transaction & payment control Cost control & revenue tracking Budgeting & financial planning Pricing & ancillary revenue support Booking & payment system support Operational & flight data integration System reliability & digital infrastructure support Demand generation & customer targeting Brand & digital promotion Route sales & distribution support Pricing & ancillary sales management Business Model Canvas Key Partners Key Activities Qantas Group (Parent company) Joint Ventures & Codeshare Partners Airports & ground service providers Key Suppliers (Aircraft, engines, fuel, maintenance) Ancillary service & in-flight product providers Travel agents, OTAs, banks, insurance companies, freight forwarder Technology & digital platform providers Flight operations management Route network planning and capacity allocation Crew and aircraft scheduling Aircraft maintenance and safety management Digital booking platform and customer service Revenue management and ancillary sales Key Resources Value Proposition B2B: Wide route connectivity Cost-efficient cargo services B2C: Affordable flights service for price-sensitive travelers B2G: Reliable airline transport for official travel and emergency operations Physical Resources (Fleet &network) Technology systems & digital resources Airport slots / access Human resources and expertise Intellectual & Brand Resources Operational resources Cost Structure Fleet costs: aircraft leasing and maintenance Fuel expenses: primary variable operating cost Airport & operational fees: landing charges, navigation, ground handling Labor costs: pilots, cabin crew and ground staff salaries JETSTAR Q2 2020 Customer Relationships Customer Segments Self-Service (Online/App) Transactional (Low-touch) Automated Comms (Email/SMS) Loyalty: Qantas FFP link & Club Jetstar B2B (small SMEs, Freight Forwarders & 3PLs, agency) B2C (Price-sensitive customers) B2G (Airline panellist) Channels Direct digital booking (website & mobile app) Travel agencies and aggregators Airport check in and service counters Cargo booking via freight forwarders Revenue Stream B2B: Cargo service, handling services, collaboration with agency B2C: seats, baggage allowance, seat upgrades, priority services, meals, beverages and retail items B2G: Government-backed travel support (emergency travel, repatriation passenger Introduction External Environment Competitive Environment Resources & Capabilities Current Strategy Strategic Issues Recommendations INDUSTRY MAP Transportation Road Transport Air Transport Rail Transport Maritime Transport Manufacturing Commercial Aircraft OEMs Services MRO and Maintenance Services Airframe Maintenance Engine Maintenance Component Maintenance Business Aircraft OEMs Business Aircraft Leasing Widebody Engines Passenger Services Aircraft Leasing Commercial Aircraft Leasing Narrowbody Engines Full-service carriers Low-cost carriers Charter passenger services Parts and Systems Suppliers Aerostructures Engine Manufacturing Aircraft OEMs Fuselage Systems Wing Systems Cargo Services Belly cargo Freight-Only Air Cargo Flight Avionics Control Surfaces Business Aviation Business aircraft charter Private Flying and Aircraft Ownership Landing Gear Cabin Systems Introduction External Environment Competitive Environment Resources & Capabilities Current Strategy Strategic Issues Recommendations INDUSTRY MAP Hospitality Accommodation Travel and Tourism Food and Beverage F&B Service Cafeterias Mobile Food Service Mobile Food Stands Canteens Rail Recreation & Entertainment Health and Wellness Food Production Special Food Services Restaurants Food Service Contractors Caterers Transportation Catering Event Catering Airline Mobile / Temporary Catering Ship Macro Environment Introduction Competitive Environment Resources & Capabilities Current Strategy Recommendations Strategic Issues MACRO ENVIRONMENT - Air Transportation THREATS & OPPORTUNITIES OCEANIA THREATS Increase Cost, Reduce Revenue SOUTHEAST ASIA EAST ASIA Border isolation (6%) Fragmented border regime (6%) Consumer income squeeze Household demand erosion (6%) Domestic rebound engine (6%) Transfer-dependence drag (5%) (4%) Safety-first hesitation(5%) Carbon-cost burden (5%) Frictionless travel tech (4%) Emission Trading System / Restriction-driven disruption Green-readiness edge (4%) Offset burden (6%) (5%) Leisure rebound momentum (3%) OPPORTUNITES Reduce Cost, Increase Revenue Hygiene-led trust (3%) Regulatory breathing room (3%) Frictionless flow (5%) Carrier rescue backing (4%) Hygiene engineering (4%) Payroll protection (4%) Protected service standards (4%) Introduction Macro Environment Competitive Environment Resources & Capabilities Current Strategy Strategic Issues Recommendations MACRO ENVIRONMENT - Air Catering THREATS & OPPORTUNITIES OCEANIA Border closure shock (6%) THREATS Volume slump (6%) Mix downgrade (5%) Biosecurity burden (5%) Air-border controls (6%) Carrier lifeline (3%) OPPORTUNITES Touchless meals (4%) Hygiene premium (3%) Reduce Cost, Increase Revenue Increase Cost, Reduce Revenue SOUTHEAST ASIA Transit cutoff (6%) Hub shutdown (6%) Directive constraints (5%) Menu curbs (6%) EAST ASIA Market entry locks (6%) Demand washout (6%) Cross-border anxiety (6%) Rescue funding (3%) Frictionless flow (5%) Bio-safe hubs (4%) Hygiene engineering (4%) Control systems (5%) Protected service standards Sanitation edge (3%) (4%) PORTER'S FIVE FORCES - Low cost carrier Medium-term Near-term Oceania Oceania East Asia Southeast Asia Southeast Asia Threat of new entrants 4 Threat of new entrants 5 4 3 3 Rivalry among competitors 2 2 Threat of substitutes Rivalry among competitors 1 1 Threat of substitutes 0 0 Bargaining power of buyers East Asia Bargaining power of suppliers Bargaining power of buyers Bargaining power of suppliers Oceania: entry is deterred by regulation, capital needs, & brand strength; transport infrastructure makes substitutes a key threat. Oceania: entry barriers soften slightly, substitutes ease, but supplier power and rivalry stay strongest. East Asia: regulation and capital needs deter entry, but many capable rivals keep competition intense. East Asia: entry barrier rises slightly; supplier power & rivalry remain the main threats as substitutes and buyer pressure ease somewhat Southeast Asia: strong regulation & high capital deter entry; strong competitors with similar capabilities keep rivalry intense. Southeast Asia: entry pressure rises, while supplier power and rivalry stay dominant as substitutes and buyer pressure ease. See entired analysis in Appendix PORTER'S FIVE FORCES - Cargo Near-term East Asia Medium-term Southeast Asia Oceania Oceania Southeast Asia Threat of new entrants 5 Threat of new entrants 4 4 3 3 Rivalry among competitors 2 2 Threat of substitutes Rivalry among competitors 1 0 Bargaining power of buyers East Asia 1 Threat of substitutes 0 Bargaining power of suppliers Bargaining power of buyers Bargaining power of suppliers Oceania: Long distances keep substitutes low, while Airbus– Boeing dominance keeps supplier pressure high. Oceania: Long distances still keep substitutes low, while Airbus–Boeing dominance remains a threat. East Asia: Time-sensitive cargo supports air freight, but many carriers and hubs keep rivalry high. East Asia: Expanding rail routes raise substitute pressure, while many carriers and hubs keep rivalry high. Southeast Asia: Limited rail logistics lowers substitute pressure, while Airbus–Boeing dominance keeps supplier pressure high. Southeast Asia: Limited rail logistics still lowers substitute pressure, while limited fuel suppliers raise supplier pressure. See entired analysis in Appendix PORTER'S FIVE FORCES - Air catering Near-term Oceania Medium-term East Asia Oceania Southeast Asia Southeast Asia Threat of new entrants 5 Threat of new entrants 4 4 3 3 Rivalry among competitors 2 2 Threat of substitutes Rivalry among competitors 1 0 Bargaining power of buyers East Asia 1 Threat of substitutes 0 Bargaining power of suppliers Bargaining power of buyers Bargaining power of suppliers Oceania & East Asia: Entry barriers deter entry, but weak demand, no onboard service, and buyer dependence remain major threats. Oceania & East Asia: Entry barriers still deter entry, while weak demand, no onboard service, and buyer dependence remain key threats. Southeast Asia: Entry barriers deter entry, but weak demand, no onboard service, supplier concentration, and dominant buyers remain major threats. Southeast Asia: Entry barriers still deter entry, while no onboard service, buyer dependence, and substitute pressure remain key threats. See entired analysis in Appendix Introduction External Environment Competitive Environment Resources & Capabilities Current Strategy Strategic Issues PORTER’S 5 FORCE Reduce Cost, Increase Revenue THREATS & OPPORTUNITIES OCEANIA Declining Buyer Demand (8%) Strong Competitors with Similar THREATS Capabilities (6%) Limited source of substitute input (5%) Limited aircraft manufacturers (4%) High capital requirement + OPPORTUNITES Regulatory barrier (4%) Strong customer brand preferences (3%) Limited rail transport (3%) Increase Cost, Reduce Revenue SOUTHEAST ASIA Strong Competitors with Similar Capabilities (8%) Low Product/ service Differentiation (4%) Aircraft manufacturers concentration (7%) High capital requirement + Regulatory barrier (3%) Limited rail transport availability (3%) Recommendations EAST ASIA Multiple Competitors with Similar Capabilities (8%) Declining Buyer Demand (6%) Dominated aircraft manufacturers (7%) Low Product/ service Differentiation (4%) High capital requirement + Regulatory barrier (4%) Strict government regulation (4%) Hub airport slot constraints (4%) Introduction Macro Environment Competitive Environment Resources & Capabilities Current Strategy Strategic Issues Recommendations VRIO STRENGTHS WEAKNESSES Low-cost Carrier Strong parent-group financial backing Strong parent-group synergies Heavy reliance on parentgroup support Air Cargo Strong parent airline’s infrastructure Solid financial strength Strong low-cost operating know-how Well-established forwarders & SMEs network Limited access to fleet capacity Weak investment capacity Low-skilled logistics workforce Air Catering Strong catering cost control capability Strong food safety & quality control Strong supplier relationships. Weak R&D capability Low customer satisfaction Introduction Macro Environment Competitive Environment Resources & Capabilities Current Strategy Strategic Issues Recommendations Jetstar’s Strengths & Weaknesses STRENGTHS WEAKNESSES Strong financial backing Efficient low-cost catering capability Strong parent-group leverage Cargo’s infrastructure access Limited expansion capability in cargo Limited access to cargo fleet capacity Weak R&D capability in catering Low customer satisfaction COMPETITIVE ADVANTAGES - EU TOWS ANALYSIS STRENGTHS TOWS OPPORTUNITIES 1. High entry barriers 2. Limited substitute transport 3. Regulatory / slot protection 4. Incumbent customer familiarity THREATS 1. Intense rivalry and low differentiation 2. Weakening demand in some markets 3. Concentrated aircraft and input suppliers 4. Strong buyer bargaining power WEAKNESSES 1. Strong financial backing 2. Efficient low-cost catering capability 3. Strong parent-group leverage 4. Cargo’s infrastructure access 1. Limited expansion capability in cargo 2. Limited access to cargo fleet capacity 3. Weak R&D capability in catering 4. Low customer satisfaction S1/S3 + O1/O3: Expand selectively in protected markets. S2 + O4: Monetize familiar demand through low-cost catering. S4 + O2/O3: Grow cargo where substitutes are weak. S1/S4 + O1/O2: Scale ancillary and cargo in highbarrier markets. S O S T S1/S3 + T1/T4: Defend margins through scale and group backing. S4 + T3: Use cargo access to ease supplier dependence. S2 + T1/T2: Use low-cost catering to protect yields. S1/S3 + T2: Hold core routes under softer demand. W1/W2 + O1/O3: Use partnerships to overcome cargo limits. W3 + O4: Upgrade catering in stable incumbent markets. W4 + O4: Rebuild satisfaction in familiar markets. W2/W3 + O2: Focus capacity where air is harder to replace WO W T W1/W2 + T3: Avoid cargo overexpansion under fleet constraints. W3/W4 + T1/T4: Fix service gaps before harder competition. W2 + T3: Use leasing and alliances to reduce supplier risk. W1/W4 + T2: Exit weak-demand, hard-to-defend routes. Introduction Macro Environment Competitive Environment Resources & Capabilities Current Strategy Strategic Issues Recommendations Generic Competitive Strategy A Board Cross - Section of Buyes Broad Low-cost Strategy A Board Narrow- Section of Buyes Lower cost Focused Low-cost Strategy Differentiation Broad Differentiation Strategy Best-cost Strategy Focused Differentiation Strategy Jetstar is not a single low-cost airline, but a broad low-cost portfolio with different execution models across subsidiaries. Group-level strategy Jetstar’s mission is to offer low fares to a broad mass market across Asia-Pacific. The model is built on no-frills service, ancillary revenue, and digital/self-service efficiency rather than premium differentiation. Subsidiary-Level Execution Jetstar Airway: low-cost model with stronger Qantas backing and core Australia/New Zealand role. Jestar Japan: low-cost model adapted to Japan through a JV structure with local partners. Jestar Asia: Singapore-based regional low-cost operator, more exposed to intra-Asia international traffic. Introduction Macro Environment Competitive Environment Resources & Capabilities Current Strategy EXISTING MARKETS Growth Strategy Strategic Issues Recommendations JETSTAR AIRWAYS - MARKET PENETRATION EXISTING PRODUCT MODIFIED PRODUCTS NEW PRODUCTS Market penetration Product extension Product development Strengthened its low-cost operations in core Australia–New Zealand markets ⟶ Defend market share by optimizing existing routes, maintaining low fares, and leveraging Qantas-backed scale EXPANDED MARKETS Market expansion Limited diversification Partial diversification NEW MARKETS JETSTAR JAPAN - MARKET PENETRATION Market development Partial diversification Diversification Increasing risk Prioritized stabilization of its existing low-cost position in Japan ⟶ Improve competitiveness through stronger performance in current markets rather than new-market expansion JETSTAR ASIA - MARKET DEVELOPMENT Extended its low-cost model across a broader Singapore-based regional network ⟶ Extended its low-cost model across a broader Singapore-based regional network Introduction Macro Environment Competitive Environment Resources & Capabilities Current Strategy Strategic Issues Recommendations INTERNATIONALIZATION Strategic goal: Market-seeking expansion across Asia-Pacific STRATEGIES Choice of entry modes Equity (FDI) modes Qantas (49%) Westbrook (51%) Qantas (33%) Japan Airlines (50%) Century Tokyo Leasing (17%) Joint ventures Wholly owned subsidiaries Jetstar Asia Jetstar Airways Jetstar Japan Majority-owned regional platform Qantas Group (100%) Introduction Macro Environment Competitive Environment Resources & Capabilities Current Strategy Strategic Issues Recommendations Evaluation of Current Strategy in Q2/2020 Jetstar Group EBIT: A$400m → -A$26m Jetstar domestic flying: A$112m EBIT Jetstar Asia: cut fleet from 18 to 13 aircraft Jetstar Japan: Entered restructuring Airlines burned around US$61bn cash in Q2/2020 Passenger demand collapsed, while airline costs remained partly fixed. INSIGHT Jetstar Group’s current model was too dependent on passenger volume, with insufficient revenue buffers across its Asian subsidiaries. Introduction Macro Environment Competitive Environment Jetstar Airways was slightly below the industry average in arrival punctuality. STRATEGIC ISSUE Resources & Capabilities Current Strategy Jetstar Airways had a clearer operational gap in departures than in arrivals. Strategic Issues Recommendations Jetstar Airways had the highest cancellation percent among the major carriers. Jetstar Airways was financially resilient, but operationally weaker than the industry average, especially in departure reliability and cancellation performance. Introduction Macro Environment Competitive Environment Resources & Capabilities Current Strategy Strategic Issues Problem Jetstar experienced high cancellation rates and weak departure reliability in domestic operations during Q2 2020. WHY ? Because many domestic flights were cancelled or rescheduled close to departure time.This reduced departure reliability and increased the overall cancellation rate. WHY ? Because Jetstar consolidated flights and reduced route frequencies. Flights with low passenger demand were merged to improve seat occupancy. WHY ? Because passenger demand collapsed during the COVID-19 pandemic, making many scheduled flights financially unviable. Operating flights with very low load factors would significantly increase cost per passenger. WHY ? Because Jetstar operates under a low-cost carrier model, which relies heavily on high load factors and cost efficiency to maintain profitability. When demand falls sharply, this model becomes difficult to sustain without reducing capacity. WHY ? Because Jetstar had to rapidly adjust its capacity and flight schedules to maintain cost efficiency under its low-cost business model during the COVID-19 demand shock. Recommendations ROOT CAUSE RECOMMENDATION - JETSTAR AIRWAYS Resilience-Led Hybrid Low-Cost Leadership Strengthen: Defensive cost leadership with asset utilisation focus Best-cost Strategy Focused Differentiation Strategy Consolidate low-demand routes to maintain viable load factors Redeploy aircraft to essential domestic routes with stable demand Increase belly cargo utilisation on operating flights Align operations with Qantas Group network to maximise fleet efficiency. Stabilise revenue per flight Improve aircraft utilisation Sustain operations during demand volatility → → → INTERNATIONALIZATION STRATEGY → → → FOCUS ON NETWORK STABILITY IN OCEANIA RATHER THAN EXPANSION. MODIFIED PRODUCTS NEW PRODUCTS EXISTING MARKETS Broad Differentiation Strategy EXISTING PRODUCT Market penetration Product extension Product development EXPANDED MARKETS Focused Low-cost Strategy Differentiation MARKET DEVELOPMENT Market expansion Limited diversification Partial diversification NEW MARKETS A Board Cross - Section of Buyes Broad Low-cost Strategy A Board Narrow- Section of Buyes Lower cost Shift to Market development Partial diversification Diversification Workforce transport (FIFO market): contract charter flights for resource industries in Western Australia, Northern Territory. Cargo capacity utilisation via intergrating with Qantas Freight network Government-supported aviation services: operate essential regional routes Diversify revenue streams Reduce reliance on leisure demand Maintain operational cash flow Support regional cargo and logistics flows Preserve route rights for post-pandemic recover Introduction External Environment Comeptitive Environment Current Strategy Resources & Capabilities Peach (Peach Aviation Limited, 2019) Strategic Issues Performance for the fiscal year ended March 31, 2019 Item Recommendations (Unit: million yen ¥) Current Fiscal Year Previous Fiscal Year Year-on-Year Operating revenue 60,409 5,474 110.40% Operating profit 4,136 5,793 71.40% Ordinary profit 3,641 5,677 64.10% Net profit (loss) -193 3,728 — Summary of Financial Results for the Fiscal Year Ending June 2019 Jestar Japan(Jetstar Japan Co., Ltd., 2019) PEACH OUTPERFORMS JETSTAR JAPAN ON OPERATING PROFITABILITY. (Unit: million yen ¥) Increase / Decrease Current Fiscal Year Previous Fiscal Year Operating revenue 60,523 57,014 3,509 6.2% (+) Operating profit 1,064 1,134 -70 6.2% (-) Ordinary profit 945 1,091 -146 13.4% (-) Net profit 914 953 -39 4.1% (-) 4 TIMES *Comparison is directionally useful, but fiscal year-end dates are not perfectly aligned.* Year-on-Year Introduction Macro Environment Competitive Environment Resources & Capabilities Current Strategy Recommendations Strategic Issues JETSTAR JAPAN’S PROFIT IS UNDERPERFORMING COMPARED TO PEACH Problem Operating profit of Jetstar Japan (1,064) is much lower than Peach Aviation (4,136). WHY ? Because its operational efficiency and load factors are weaker, leading to lower profitability per flight Load factors: Peach: ~80% | Jetstar Japan: ~70% WHY ? Its cost base is too heavy for a true LCC model. WHY ? The company kept pushing network growth, fleet expansion, and convenience upgrades. WHY ? So the business was run more for market growth than for lean cost execution. WHY ? Leadership placed expansion and customer offer ahead of rigorous low-cost discipline. ROOT CAUSE RECOMMENDATION - JETSTAR JAPAN Disciplined Domestic Low-Cost Penetration Remain the BROAD LOW-COST STRATEGY LEVERAGE THE JV FOR LOCAL SPEED Best-cost Strategy Focused Differentiation Strategy Reinstate a strict cost gate for every new route, service, and investment Remove non-core convenience costs and standardize lean operating SOPs → Lower unit cost and rebuild margin → Return to disciplined low-cost execution INTERNATIONALIZATION STRATEGY JV LEVERAGING MODIFIED PRODUCTS NEW PRODUCTS EXISTING MARKETS Focused Low-cost Strategy Broad Differentiation Strategy EXISTING PRODUCT Market penetration Product extension Product development EXPANDED MARKETS Broad Low-cost Strategy Differentiation → MARKET PENETRATION Market expansion Limited diversification Partial diversification NEW MARKETS A Board Cross - Section of Buyes PRIORITIZE COREROUTE PROFITABILITY Lower cost A Board Narrow- Section of Buyes RESTORE STRICT LOW-COST DISCIPLINE Maintain Market development Partial diversification Diversification Market penetration strategy Reallocate capacity to profitable domestic routes and exit weak ones Raise load factor, utilization, and frequency with the existing fleet first Clarify JAL / Qantas / Tokyo Century roles and decision rights Use the JV for local execution and know-how, not added complexity → Speed up local decisions and execution → Turn the JV into an advantage, not a constraint Introduction Macro Environment Competitive Environment Resources & Capabilities Current Strategy Strategic Issues Recommendations JETSTAR ASIA FACES RESOURCE UNDERUTILIZATION COMPARED TO AIRASIA few flights operated per week Network Only 3 routes resumed (Manila, Bangkok, Kuala Lumpur), ~5 weekly return flights (cna, 2020) ⟶ Highly limited network recovery Opened 32 new routes in 2020 (AIRASIA GROUP BERHAD, 2020) ⟶ Greater network flexibility Operational focus Cargo & repatriation flights via Qantas Freight (BAXTER, 2022) Operations mainly for continuity, not commercial growth. → Domestic passenger flights + cargo logistics (AIRASIA GROUP BERHAD, 2020) ⟶ Shifted operations to sustain demand. Resource utilisation Aircraft grounded due to suspended operations (Chelvan, 2025) 5 aircraft retired ~26% workforce reduction to reduce cost burden ⟶ Operational contraction Resource redeployment into logistics & digital services (AirAsia Food or Super App ecosystem) (Airasia, 2020) ⟶ Maintained resource productivity JETSTAR ASIA’S OPERATIONS CONTRACTED SIGNIFICANTLY Macro Environment Introduction Competitive Environment Resources & Capabilities Current Strategy Strategic Issues Recommendations JETSTAR ASIA FACES RESOURCE UNDERUTILIZATION COMPARED TO AIRASIA Problem Jetstar Asia faces significant resource underutilization - not fully deployed to generate revenue WHY ? Operations were drastically reduced WHY ? Only 3 routes resumed with around 5 weekly flights WHY ? Most commercial passenger services were suspended, leaving only cargo and repatriation flights WHY ? Passenger demand for international routes declined sharply due to travel restrictions WHY ? Jetstar Asia lacked alternative markets or network flexibility to redeploy its aircraft. ROOT CAUSE RECOMMENDATION - JETSTAR ASIA Network-Led Selective Market Development Strengthen BROAD LOW-COST STRATEGY LEVERAGE QANTAS NETWORK Focused Low-cost Strategy Broad Differentiation Strategy Best-cost Strategy Focused Differentiation Strategy Maintain low-cost model while improving value perception (e.g., convenient regional travel) Enhance ancillary bundles (e.g., seat + baggage + meal) ⟶ Improve revenue per flight ⟶ Sustain routes during demand volatility INTERNATIONALIZATION STRATEGY NETWORK LEVERAGING EXPANDED EXISTING MARKETS MARKETS Broad Low-cost Strategy Differentiation NEW MARKETS OPTIMIZE ROUTE PORTFOLIO A Board Cross - Section of Buyes STRENGTHEN BROAD LOW-COST STRATEGY A Board Narrow- Section of Buyes Lower cost Maintain MARKET DEVELOPMENT EXISTING PRODUCT MODIFIED PRODUCTS NEW PRODUCTS Market penetration Product extension Product development Market expansion Limited diversification Partial diversification Market development Partial diversification Diversification Reduce exposure to highly competitive trunk routes (e.g., Singapore–Kuala Lumpur) Reallocate aircraft within the regional network (e.g., Southeast Asian short-haul markets) Focus on routes with more resilient demand (e.g., business or VFR travel) Strengthen coordination with Qantas Group routes (e.g., regional feeder through Singapore) Expand cargo cooperation via Qantas Freight (e.g., belly cargo on regional routes) Team 4 Thank You
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