Assignment Title: QANTAS, JETSTAR AND VIRGIN AUSTRALIA
A TALE OF CHANGING STRATEGIES

Topic code and name | BUSN 3055 | Word count | 2020 |

1. Differentiated pricing is among the widely practiced Revenue Management tactics in which a firm offers its products/services at differentiated prices to distinct markets. And this tactic has been noticed by airline industry for more than four decades. Revenue Management also known as Yield Management has been well recognized as an essential practice in many businesses, and it is defined as the set of strategies adopted by a business to improve its profitability (Philips, 2005). It is among the most important applications of management science and operation research (Bell, 1998).

Qantas, Australia’s foremost domestic and international carrier, established Jetstar in May 2004 as a budget airline. Its purpose is to cover the low-cost segment of the market, which began in around the year 2000 with the launch of a competitor, Virgin Blue. Until the time Jetstar began operations, Virgin Blue had been successfully eroding Qantas’s air market share, indeed with the collapsing of Ansett Airlines (Easdown, 2002), and capture around one-third of domestic airline market. In response, Jetstar was also designed to be a no-frills carrier, predominantly targeted at the leisure market. (Case Study)

Market segmentation is a strategy that involved dividing the target market into subsets of consumers who have common needs and priorities. As in airline industry, marketers will mostly focus on demographic segmentation, which is based on variables such as age, gender, occupation and education level (Kotler, 2006), (Reid, 2009). There are three main parts in airline market segmentation: business, leisure and budget. The evolution of Jetstar strategy is traced from its initial position through to its effort to attain price