LONG-TERM PROFITABILITY Long-term profitability results from providing a sustainable value proposition, partnered with cost efficiency and productivity. Sustainable value proposition The Group’s brand portfolio and segment strategies are designed to deliver a sustainable value proposition to our customers. The Group seeks to be ‘always the first choice for customers in the markets we serve’. Domestically, the Group maintains its leading distribution, scale, network and frequency advantage through a 65% domestic market share. This is the profit maximising domestic market share and is achieved through the Group’s dual brand strategy with Qantas Domestic and Jetstar. Qantas Domestic is positioned to be best for business and premium leisure customers and to provide a superior customer proposition through investment in product and service. High customer satisfaction sees Qantas Domestic hold a dominant position in the corporate market (currently 84% share of corporate market revenue) helping to provide a margin advantage over the competition. Jetstar is positioned to be best for leisure and price sensitive customers with a vision to be the world’s best low fares airline. Jetstar’s mission is to offer every day low fares to enable more people to fly more places, more often. To achieve this, Jetstar invests in growth and product innovation, seeks to drive scale advantages and build brand strength. Jetstar’s strategy is to build a strong brand across Asia Pacific. By linking with strong local partners and leveraging the low cost model, Jetstar seeks to realise the potential in the growing Asia market. The Qantas International business continues to open gateways to the world by developing new partnerships and strengthening existing ones, allowing the business to deliver outstanding customer product and an enhanced global network. The Qantas and Emirates partnership was launched during the year and the joint network is expected to expand further. The transformation of the Asian network, enabled by the transfer of Qantas’ hub to Dubai, codeshare agreement with China Eastern, and Jetstar’s expansion in Asia, allows the Group to benefit from growth in opportunities in the Asian region. Through investment in product and service, Qantas International seeks to be best for global travellers. The Group’s dual brand strategy is further supported by Qantas Frequent Flyer, Australia’s leading Loyalty business. With 9.4 million members, Qantas Frequency Flyer continues to grow through providing more rewards, new partners, building communities (such as the food and wine community ‘Qantas EpiQure’) and a new wave of growth with the launch of new products such as Qantas Cash. Cost efficiency and productivity Through operational excellence and efficiency, as well as ongoing cost reduction, Qantas Domestic looks to maintain its margin advantage over the competition, Jetstar looks to retain its position as low fares leader, and Qantas International looks to build a strong, viable business. Qantas is going through its biggest transformation since privatisation in 1995. This transformation is taking place in all areas of the business. It is integral to meeting our strategic goals and ensuring that we are competitive in a rapidly changing aviation industry. The transformation program has already delivered significant benefits and unit cost improvement during the year. Strategic initiatives included: reconfiguration of A380-800 and B747- 400 aircraft which has improved fleet economics; the consolidation of engineering and catering facilities; and the exit of loss making routes. Qantas is committed to the transformation of its legacy cost base, enabling greater efficiency and competitiveness.