Jetstar’s CEO has denied speculation a downsizing of Jetstar Japan means its future is in doubt. Jetstar’s boss says that, except for the 2020 travel downturn period, Jetstar Japan has proved profitable for the past several years and has returned its capital cost. In addition, Jetstar is one of the most recognized brands in Japan. Why would you walk away from that?
Both the Qantas Group & Japan Airlines remain supportive of Jetstar Japan
Speaking at a CAPA Live event on Wednesday, Jetstar CEO Gareth Evans rebutted suggestions Jetstar Japan’s future was up in the air and that there was any conflict with Jetstar Japan’s co-owners, Japan Airlines.
“Both ourselves (the Qantas Group) and Japan Airlines are very much supportive of Jetstar Japan,” Mr Evans said. But the CEO said the operating environment was also pretty tough right now and described the Qantas Group’s joint ownership of Jetstar Japan with Japan Airlines as “a journey.”
The Qantas Group, owners of Jetstar, and Japan Airlines both have a 33.3% stake in Jetstar Japan. The low-cost carrier has operated 25 narrow-bodied Airbus aircraft around Japan since 2012. But as Gareth Evans pointed out, it’s a tough game flying in Japan these days. Nearly 60% of Jetstar Japan’s frequencies are suspended over March 2021.
Jetstar is about to bring six of those 25 leased Jetstar Japan planes back to Australia to put them to work elsewhere in the Qantas Group.
“You’re looking at quite a consideration contraction in Jetstar Japan,” said CAPA’s Peter Harbinson today.
“We’re not about downsizing Jetstar Japan,” said Gareth Evans. “What we’re about is rightsizing and then recovering in line with demand.”
Why wasn’t Jetstar Japan included in the joint venture deal between Qantas and Japan Airlines?
Gareth Evan was also quizzed why Jetstar wasn’t included in the recent joint venture deal between Qantas and Japan Airlines. He was asked whether the exclusion indicated Jetstar Japan’s owners had gone cool on the airline.
“Jetstar Japan isn’t included in the joint venture with Japan Airlines and Qantas because it is very complicated and difficult to incorporate a low-cost carrier into a premium carrier joint business.” Mr Evans said both parent airlines, as well as Jetstar and Jetstar Japan, all shared that view.
There was also a suggestion Japan Airlines was against previous plans for Jetstar Japan to expand internationally. Until the travel downturn, roughly 20% of Jetstar Japan’s services were international flights to neighboring countries. Mr Evans says the airline plans to resume short-haul international services when demand bounces back.
“But it (Jetstar Japan) will always be primarily a domestic airline,” he said.
At the same time, the Jetstar CEO flagged the Tokyo Olympics as a golden opportunity for short-haul international flying. But he acknowledged there is was no guarantee the event will go ahead or even allow visitors.
According to Gareth Evans, Jetstar Japan has a secure place in the Qantas Group stable. He says the beauty of airlines like Jetstar Japan is that they can be easily scaled up or down as demand warrants. That’s pretty much what’s happening now. But Mr Evans also argues a temporary downsizing of operations should not be confused with a downsizing of commitment to Jetstar Japan’s future.