Qantas-Jetstar and SIA-Scoot dual-brand strategies challenged by SE Asia-Australia over-capacity

A rapid 17% increase of capacity in the Southeast Asia-Australia market has created over-capacity, pressuring down fares. This poses a unique challenge to market leaders Qantas and Singapore Airlines, which must contend with their mainline operation and their low-cost subsidiaries, Jetstar and Scoot.

Full-service carriers with lower fares narrow the gap with LCCs, eroding the value of differentiating factors in such dual-brand strategies. Lower full-service fares can also force down LCC fares. Load factors are weakening at SIA and Qantas especially, while Scoot is carrying fewer Australian passengers than in its first year and has reduced its schedules. Qantas' re-timing of Asian flights sees it overlap more with Jetstar, which has also reduced flights.

There is almost always an element of overlap in dual-brand strategies, but more recently at SIA-Scoot and Qantas-Jetstar it seems gains at one brand are coming at the sharp expense of the other. Adjustment is needed. Qantas, facing an unprofitable domestic market, is most pressured to make changes.