Tuesday, January 7, 2014

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

GIMENO Javier, FITZROY Stuart
©2013 INSEAD Case Study

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. 

Pedagogical 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.