INSEAD the business school for the world

Selected Case

published: 20 Dec 2013

  • Topic: Strategy
  • Industry: Airline Transportation, Scheduled
  • Region: Other Regions

Abstract:
Case describes the entry of low-cost competitors in the deregulated Australian airline industry, and the decision by the Qantas Group to launch a low-cost carrier subsidiary (Jetstar) in the domestic market. Many such airlines-within-airlines had failed in the US and Europe. The case also describes potential opportunities for international expansion of Jetstar into medium and long-haul low-cost service.

Pedagogical Objectives:
The case allows broad discussion about sources of competitive advantage for low-cost and differentiated competitors, and how differentiated firms can respond to low-cost new entrants. Also, it highlights the strategic and organizational complexities of managing two different business models within the same organization, and the risks of eroding competitive advantage through market expansion.

Keywords:
Airline Industry, Entry Deterrence, Cannibalization, Rivalry, Business Model Competition, Low Cost, Disruptive Models, Corporate Entrepreneurship


Share