Qantas’ Low Cost Subsidiary: The History Of Jetstar Airways

In less than 20 years, Jetstar has gone from a concept to one of the world’s most successful low-cost airlines. In the process, its owner, Qantas, has given other full-service airlines a masterclass in successfully operating a low-cost subsidiary. The highly profitable airline usually flies to around 40 destinations in ten countries.

Jetstar 787
In 17 years, Jetstar has grown into a low-cost juggernaut. Photo: Boeing

Jetstar wasn’t Australia’s first low-cost airline – that prize goes to Virgin Blue. But Jetstar is Australia’s most successful low-cost airline. Since its first flight in 2004,  Jetstar has benefitted from having Qantas behind it, but the airline has always comfortably co-existed and charted its own course.

Jetstar lays out the low-cost airline template

Jetstar wasn’t Australia’s first low-cost airline – that prize goes to Virgin Blue. But Jetstar is Australia’s most successful low-cost airline. Since its first flight in 2004, the airline has become a dominant low-cost carrier not just in Australia but around much of Asia.

But when Jetstar was first suggested, many dismissed it. It wouldn’t fly, the critics said. But the airline did well from the outset. One of the secrets of Jetstar’s early success was its choice of first CEO – current Qantas Group CEO Alan Joyce.

Jetstar first used Boeing 717-200s picked up by Qantas when it bought Impulse Airlines in 2001. It started flying out of Melbourne’s Avalon Airport, a marginal airport Jetstar continues to fly to (albeit with incentives from local councils and other Avalon stakeholders).

With the Avalon flights up and running, the low-cost airline aggressively expanded. By 2005, Jetstar was operating in the key eastern cities of Melbourne, Sydney, Brisbane, and the Gold Coast, in addition to starting flights to New Zealand.

The Airbus A320-200 is now the backbone of the Jetstar fleet. Photo: Jetstar

Jetstar powers ahead

Qantas also took its low-cost airline into Asia, setting up Singapore-based Jetstar Asia. Over the following years, Qantas took the Jetstar brand to Vietnam, Japan, and Hong Kong. But Jetstar Hong Kong never got off the ground, and Qantas has since exited its Vietnamese investment.

After making a success of its international flights to New Zealand, Jetstar commenced domestic operations there in 2009. Jetstar has persisted with New Zealand ever since (although it axed its regional Bombardier Dash 8 services in late 2019). However, Jetstar has always struggled to get traction in New Zealand against homegrown favorite Air New Zealand.

Jetstar’s economic engine room and the backbone of its success are its Australian domestic operations. By 2007, the 717-200s had gone to QantasLink, to be replaced by Airbus A320-200s, which Jetstar has stuck with ever since.

Once Virgin Blue transformed into Virgin Australia and decided to go all uptown, Jetstar had the low-cost market to itself in Australia. While also flying many routes operated by parent airline Qantas, Jetstar chased a different customer base and priced its flights accordingly.

Qantas wholly owns Jetstar. Photo: Jetstar

Jetstar changed the way Australians fly

Jetstar helped introduce Australia to the concept of ancillary revenue, asking passengers to pay extra to check-in luggage, choose a seat, or have an inflight snack. At first, that was a bit of an affront to many, but most adapted quickly or fled back to all-inclusive Qantas.

In 2013, Jetstar began supplementing its A320-200s with Boeing 787-8 Dreamliners. These mid-size planes opened up new longer-range international destinations for Jetstar. The airline began flying to further afield destinations like Hawaii, South Korea, Thailand, and Japan.

Mostly, Jetstar’s 787s stayed off the Qantas routes. Their Japan-bound flights took off from Queensland tourist ports like Cairns or the Gold Coast instead of flying direct from Sydney or Melbourne.

The last 18 months have clipped Jetstar’s wings, particularly curbing its international operations. But Jetstar has never stopped flying inside Australia and is supremely confident about its ability to bounce back.