While the Jetstar group is attracting headlines for its rapid growth across Asia, the low-cost carrier also is expanding its core Australian domestic operations.

Jetstar Airways is targeting a domestic capacity increase in the high single digits for the current fiscal year ending June 30, says David Hall, who heads the carrier’s operations within Australia and New Zealand. “We see sustainable growth [potential] in the domestic market,” he tells Aviation Week.

Rival airlines are adding lots of seats in the Australian market, and Hall says Jetstar “will respond to the capacity our competitors are bringing in.” He notes that the Qantas group strategy is to maintain a 65% domestic market share, and Jetstar will contribute to that goal. “We’ll defend [the 65%],” says Hall. Even if boosting capacity might cause short-term pain, “it is important for long-term positioning.”

Jetstar is receiving new aircraft to support its growth, with the group due to take delivery of its 100th aircraft this week. Jetstar Airways’ fleet comprises 11 A330s and 58 Airbus A320-family aircraft, including nine that are based in New Zealand. The rest of the group’s aircraft are A320s operated by its Asian joint-venture airlines.

The Jetstar group also has a very healthy order book, thanks mainly to an order for 110 Airbus A320s that was placed by parent Qantas in 2011. Of this total, 32 aircraft will be current-generation A320s and 78 will be A320NEOs, which are scheduled for delivery from fiscal 2016. Hall says these orders will be used for expansion in the Asian joint ventures, fleet replacement and some network growth in the Australia-New Zealand operation. The NEOs will give the carrier more opportunities through their greater efficiency and range, Hall says.

Dual Brands

The Qantas group also has 14 Boeing 787-8s on order that are due to begin arriving this year. These are all earmarked for Jetstar and will replace the A330s, which will be transferred to the Qantas mainline operation.

Qantas’s dual-brand strategy allows it to assess whether the low-cost or premium product is best suited to each domestic market, says Hall. For example, starting June 4, Jetstar will replace Qantas on its route from Sydney to the tourist destination of Ayers Rock. Hall says the switch was made because Qantas was losing money on the route. But Jetstar, with its lower cost and fare base, is expected to stimulate demand in this market, he adds. Ayers Rock will be Jetstar’s 19th domestic destination.

Some of Jetstar’s Australian markets have been more challenging than others. For example, Hall says the carrier’s operation in the Northern Territory city of Darwin has not developed as expected. This is the “most marginal” part of Jetstar’s network, he says. However, a lot of development and investment is expected to occur in Darwin, and Hall predicts that demand in this market will pick up soon.

Qantas’s main domestic rival, Virgin Australia, has stated that it is targeting Jetstar with its plan to buy low-cost carrier Tiger Airways Australia, which operates domestic routes. However, Hall says he is not losing any sleep over the deal.

Jetstar remains focused on its own operation despite Virgin’s move into the low-cost market, Hall says. However, he notes that Jetstar has a “scale advantage” over Tiger. While Jetstar has more than 60 aircraft in its Australia and New Zealand operation, Tiger has 11. This enables Jetstar to keep its cost base lower, says Hall.