Low-cost saturation This shift in strategic direction has occurred because the airline is aggressively chasing revenue opportunities. It has had to do this because it is increasingly difficult to stimulate leisure air travel by offering low fares on tier 2 routes. In short, the domestic low-cost market on these routes is close to saturation. The main reason for this revolves around the fact that the fare is just 16 per cent of total travel expenditure. What this means is that Jetstar can drop its fares by $30, $50 or even $100 but this will not stimulate travel because the passenger can't pay for the accommodation, food and beverages and land transport on arrival. The interesting question over the period ahead is whether Tiger Air will also be affected by this saturation phenomenon. Tony Webber was Qantas Group chief economist between 2007 and 2011. He is now managing director of Webber Quantitative Consulting and Associate Professor at the University of Sydney Business School.