Virgin vows to give away free seats

[AIRWAY]

Virgin vows to give away free seats :rolleyes:

"The Australian"
Aviation writerFebruary 24, 2004

VIRGIN Blue vowed yesterday to give seats away rather than be undercut by the new low-cost carrier Jetstar - the Qantas offshoot that will unveil its fares this week.

In what could prove to be a bloody price war, Virgin Blue chief executive Brett Godfrey promised to maintain the airline's position offering cheap fares.

"I'll tell you right now, we will not be beaten by price by any carrier - be it Jetstar or Qantas or anyone else," Mr Godfrey said. "I make that statement now. We will be as competitive as it takes to maintain our position in this market, while at the same time we'll offer things - such as lounges - Jetstar can't offer."

Jetstar, expected to unveil its long-awaited fare structure and route network in Melbourne tomorrow or Thursday, also has promised to lead the way with low fares.

Qantas and Virgin have already been involved in fare-cutting skirmishes, with prices so far this year dipping as low as $33 for a one-way fare between Sydney and Melbourne and $295 return between Sydney and Perth.

Mr Godfrey said he had no doubt the competition would lead to fares as cheap as $1.

"If we get into a price war, we believe we're in a fairly strong position and we'll react," he said. "And if we have to give seats away for free, we'll give seats away for free."

However, the Virgin Blue chief said he believed fares at the current level were "pretty good", with a good supply of discounted fares.

"Over 85 per cent of fares are discounted fares and I think fares today are pretty low," he said.

"But if Jetstar are going to try and come in to try and undercut us, we will respond within the minute, or as soon after as possible.

"So make no mistake that we will very vigorously defend our ground, and not just defend (it), we will be looking to take additional passengers from the market."

Jetstar is due to launch in late May using Boeing 717s, and will focus first on east coast routes, including major city trunk routes, before heading west.

Passengers will have to buy food on its flights and will do without full-service trimmings such as lounges and frequent-flyer points.

The airline will gradually replace the 717s with a fleet of 23 177-seat Airbus A320s and is hoping to significantly improve aircraft turnaround times.

Qantas chief executive Geoff Dixon said last week he expected the airline to enter the market with a lower cost base than Virgin, although Mr Godfrey remained sceptical.

There has also been speculation Jetstar will fly from a secondary airport in Melbourne - possibly Avalon, near Geelong.

[slamer]

Hmmm...Who's sounding nervous now!!

If the seats are unoccupied, may as well give them away

Word on the Street is PB's forward bookings are under-whelming

[MoFo]

Brett's sounding a little twitchy.

Giving away seats for free sounds like a business practice that won't last long. Good luck.

[longjohn]

Now the free ride is over, no more Ansett collapses, no more Qld govt handouts, DJ may have to really EARN a living.

Love it!

[TIMMEEEE]

Its all piss and wind as far as Godfrey's concerned.

He's done well out of Virgin so far and if he is going to get into a price war and attempt to give away free seats (or even $1) then I think he will get his arse severly kicked by Chris Corrigan.

Corrigan (love him or hate him) will not sit by and watch the likes of Godfrey take the airline down that path.

When giving away free or $1 seats imagine what the shareholders will think!!!
If it actually eventuates then I'd be buying put options on Virgin and raking in the cash as their share price collapses.
Bet your life Corrigan would be doing the same.

Brave and meaningless words from a little man about to get a size 12 up his ar$e, compliments of Uncle Chris as well as some other competition.

[Bugsmasha]

TIMMEEE, Do you actually think that Godfrey would just go ahead and dump $1 fares without (uncle) Chris knowing? You obviously have little knowlege of the goings on in a Large company. Im sure they BOTH have a plan of attack to tackle Jetstar. As with most things VB they will probably have half a dozen seats at $1 per plane to fill the empty seats and work the media at the same time.
Dont go buying your puts just yet, Id hate for you to lose all your money:ok:

[HotDog]

Why can't Virgin Blue's success be accepted in the Australian aviation scene? I guess every sooth sayer is still clinging to their informed opinions of the six months life span they predicted for VB at their entry into the market. Get a life guys.:rolleyes:

[Buster Hyman]

One aspect of DJ's success was the demise of an incumbant airline. Another was it's fresh approach to air travel in this country. You cannot disassociate any aspect of their success in order to remain objective about it, therefore, there will always be some detractors to their success & their style. Honestly though, I doubt if they care.

[GalleyHag]

18:42 AEDT Tue 24 Feb 2004


Qantas to launch Jetstar


Qantas Airways Ltd will launch its new domestic low cost carrier Jetstar on Wednesday, tackling rival Virgin Blue Holdings Ltd head on.

The launch of JetStar's route network and fare structure comes as Virgin Blue announced passenger numbers increased by 45 per cent in January over the previous corresponding period.

Both airlines are battling to create the lowest cost airline in the Australian market, with Qantas taking first round points last week after unveiling commercially sensitive cost projections showing Jetstar could be run much cheaper than Virgin Blue.

Qantas announced last December it would spend close to $1.6 billion on new aircraft for the low cost carrier, which is set to take off in May.

Jetstar emerged from the former Impulse Airlines - acquired by Qantas in 2001 - and will use its fleet of Boeing 717s before taking delivery in June of the first of 23 new Airbus A320s.





In announcing a record half year profit for Qantas last week, chief executive Geoff Dixon unveiled numbers on how Jetstar would undercut Virgin Blue's cost base.

Its 8.25 cent cost per available seat kilometre (ASK) for Jetstar compares with Virgin Blue's 8.72 cents that was disclosed in its prospectus late last year.

Virgin Blue has rejected the assertions made by Mr Dixon, suggesting big question marks remain over how the figures were derived.

The discount carrier today released figures showing that passenger numbers for January increased 44.7 per cent over the same month last year, taking passenger numbers for the year to date to 8.24 million compared to 5.29 million previously.

Also, the load factor, which indicates how full a plane is, increased by 4.3 points to 84.8 per cent.

Virgin Blue shares jumped six cents to $2.61 today - its highest ever close since listing in December.

Qantas shares closed on par with its highest close for the year at $3.77, moving four cents higher today.

Qantas, which was today named Airline of the Year by international industry magazine Air Transport World, has said it hopes Jetstar will capture one third of the Australian airline market, compared with Virgin Blue's around 30 per cent market share.

Qantas was tight lipped on the details of Wednesday's launch but analysts expect the airline to announce a competitive fare structure for Jetstar.

"Given it's kicking off the new airline, I would have thought it would be pretty competitive," ABN Amro analyst Jason Mabee said.

Commonwealth Securities industrial analyst Matt Crowe said while Qantas was likely to offer some "eye-catching bargains" for Jetstar, the prices would very much be in line with Virgin Blue.

"We expect that initially they will be concentrated on the leisure route and will probably stay away from high value peak time routes," he said.

Meanwhile, Qantas today announced it had ordered an additional Bombardier Aerospace 50-seat Dash 8 aircraft.

The aircraft, to be delivered in November, is part of QantasLink's 33-strong fleet which services 35 regional destinations through NSW, the ACT, Queensland, Victoria and Tasmania.



©AAP 2004

[Capt Claret]

I know it's only rhetoric but how can one vow to give seats away rather than lose market share in one breath, and then threaten to pull out of a port because of allegedly poor loads (of 70%) in the next?

[TIMMEEEE]

Bugsmasha , this is not the first time Brett Godfrey has had his head pulled in from above after shooting off his gob.

Remember last year when he wrongfully "sacked" a Captain for refusing to have to passengers board an aircraft without the legal requisite number of F/A's???
Serious stuff Bugsmasha and very embarrassing.

Very embarrassing for the Chief Pilot also who had to tell this Captain, after doing not only the legal, professional and right thing by the way, that Godfrey was in the wrong and had no right doing what he did anyhow.

I cant begin to think what excuse the chief poobah made for Godfrey.

Says alot about a person when under pressure and they shoot their mouths off.

Capt Claret , very simple yet accurate summation.

By the way Bugsmasha, I suppose before Godfrey opens his mouth in a news conference that he vetts every possible question thrown at him from journo's with Chris Corrigan???
Get real pal!!
We see how wound up he gets and just keeps talking faster, especially while whingeing/whining.
He's not stupid by any means but very frustrating.

By the way, we know its all piss and wind about $1 fares, but also the Fair Trading Tribuneral is investigating VB's advertising and is concerned at the distinct lack of cheap fares actually available as opposed to their advertising.
ie: $69 fares but in reality maybe one or two per flight available only.

So much for keeping the "air fair".

[Bugsmasha]

Firstly TIMMEE the reason the Captain and Godfrey came to blows wasn't because there wasn't enough flight attendants on board the aircraft, but that aside Godfrey had no grounds to dissmiss him either way. I totally agree with what you say about Godfrey, he does get excited and shoot his mouth off during interviews, that was not my point. But he certainly wouldnt walk into a media interview and get all hyped up and spontaneously offer $1 flights without first getting approval. Thats my point.

[Aussierotor]

Exactly TIMMEEEE---------thats advertising and we are all suckers.
Remember ,theres one born everyday but only 2 die a week.

[redsnail]

They'll give them away just like Ryanair does. That is, you pay for the taxes. Also, the availability will be severely limited. It works for Ryanair. People get the idea that a weekend away is a good thing, try to book the free seats, settle for a discounted one. Or people book well in advance for the few seats that are available. Since you buy the food etc then it's not really that much of a loss for them.

[Traffic]

Well ... just as expected.

As soon as someone throws a few stones on the roof of the shed all the turkeys think Thanksgiving is getting close and all hell breaks loose:}

It will all settle down in a day or two as the turkeys realise it just the neighbourhood larrikins having a bit of fun on the way home from school.

Whilst Master Godfrey has had a rush of blood and raced for a microphone, I would think the yield gurus at QF domestic and the Masters of the QF loyalty program would be equally pensive, albeit in a padded cell.

These initial promo fares will not last long as everyone already realises they will not buy loyalty.

Economics should decree a return to sanity in short order. Every day that does not happen is one day less in the survival of QF domestic in its current shape.

Turkey sandwich anyone??

[TIMMEEEE]

As the Mother Superior said to the Cardinal....."Gobble Gobble ??!!"

[HotDog]

Virgin Blue has just put 200,000 seats on the line for $29. Have been trying to get a cheapy for my mother in law but the website is swamped.

[Yawn]

I think Brettyboy and Joyce should check with his Lawyer and have a detailed look at the ACCC guidelines for Preditory Pricing. A ticket price of $29 is ticket revenue of less than $1. There my be a precident (Boral concrete) that may make it legal for VB but I cannot see a legal angle for JetStar.

[Eastwest Loco]

Major problem with ultra cheap seat sales is that you canot get past a clogged server unless you win the lottery.

This may be a good ploy from the QF point of view, as more and more people are forced back to mainline, but overall it dilutes revenue on flights the SLF would be willing to pay a regular dollar fare to join.

For the life of me I cannot see the logic of this unless you have web servers with bandwidth that can handle the anticipated peak.

Amateur hour at the moment.

Best regards

Ron

EWL