Will Qantas go the way of the dodo?

This is a fair question to ask, given Qantas may become a flightless bird as subsidiary discounter, Jetstar, grabs an increasing share of the tourist market. Like the dodo was shot out of existence due to its inability to take to the air when Europeans brought gunpowder to Mauritius, Qantas may ultimately be shot from the sky by Jetstar and other discounters and, with it, arguably Australia's most revered brand.

In the good old days, Australian skies were shared by Qantas and Ansett Airlines. In the late 80s, the first of the serious challengers to this duopoly, Compass, came along. The compass strategy was based on three pillars - price, price and price - a strategy that I believe spells doom for brands. In the Compass instance, I was correct (I did actually put the prediction in writing in a post-Grad marketing project and was howled out of the room by the rising business elite when I presented it!). Qantas and Ansett had deeper pockets and Compass died the death of a thousand undercuts.

In the early noughties, Ansett went the way of Compass, for entirely different reasons - onerous labour agreements, appallingly complex fleet structure and under-utilisation etc. etc. And there to fill the gap was the perenniel opportunist, Richard Branson, with Virgin, named Virgin Blue downunder, who quickly seized vacant infrastructure after Ansett collapsed. Virgin Blue's 'keep the bastards honest' approach to pricing was one of the reasons Qantas gave birth to Jetstar. It was also a sleight of hand by Qantas management, enabling the company to set up new labour agreements under the Jetstar banner, diluting the impact of one of the overheads that had triggered Ansett's demise.

Jetstar was initially restricted to domestic carriage, leaving Qantas to rule the international air routes and wave the Aussie flag in foreign parts. But price pressure continued as Virgin Blue morphed its international ambitions into Pacific Blue and, along with other competitors pressing for market share, forced Qantas to extend Jetstar to its lower yield, tourist-laden, international routes like New Zealand and Southeast Asia.

From a brand management perspective, the Qantas approach to protecting the margins of its flag carrier has theoretically been excellent. Put the discount brand on the discount routes and retain the full-service brand (and higher fares/yield) for Qantas. Whether this is sustainable long term is the question. Qantas' more lucrative North Asia, European and American routes are mouth wateringly attractive - even to discounters.

Qantas' Chief Executive, Alan Joyce, has confirmed that Jetstar and the Qantas Frequent Flyer program have sustained the entire group in recent times and last month announced moves to cut the number of Business and First Class seats on Qantas flights - more room for travellers who have not been quite as well-heeled since the GFC.

If the Qantas brand does survive, what will it look like? How will it differ from stablemate Jetstar? There are many, including Centre for Asia-Pacific Aviation Director, Peter Harbison, who believe Qantas will ultimately be 'gutted and reconstructed around the more profitable Jetstar model'. If this is the case, another great Australian brand and all those who admire may also be 'gutted'.