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Qantas' Jetstar: Launching and Growing a Low-Cost Airline Subsidiary

By Javier Gimeno,  Stuart FitzRoy
Published 20 Dec 2013
Reference 5739
Topic Strategy
Industry Airlines/Aviation,  Transportation/Trucking/Railroad
Region Other Regions
Length 30 page(s)
Language English
Inspection copy
6.00
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Summary

Case describes the entry of low-cost competitors in the deregulated Australian airline industry, and the decision by the Qantas Group to launch a low-cost carrier subsidiary (Jetstar) in the domestic market. Many such airlines-within-airlines had failed in the US and Europe. The case also describes potential opportunities for international expansion of Jetstar into medium and long-haul low-cost service.

Teaching objectives

The case allows broad discussion about sources of competitive advantage for low-cost and differentiated competitors, and how differentiated firms can respond to low-cost new entrants. Also, it highlights the strategic and organizational complexities of managing two different business models within the same organization, and the risks of eroding competitive advantage through market expansion.

Keywords
  • airline industry
  • entry deterrence
  • cannibalization
  • rivalry
  • business model competition
  • low cost
  • disruptive models
  • corporate entrepreneurship
  • Q21314
About the authors
Gimeno

Javier Gimeno

Professor of Strategy

Stuart FitzRoy


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