Virgin flights under threat

[Pseudonymn]

Centralian Advocate
24 Feb 2004
Gavin King

Virgin flights under threat

More ticket sales needed

Virgin Blue could cancel it's Alice Springs service if ticket sales do not increase, it was revealed yesterday.
Industry sources said that Virgin had been close to cancelling its off-peak services to Alice Springs because of low ticket sales.
It is understood a recent bail-out marketing campaign by the NT Government, NT Tourism Commission and Virgin Blue has kept the service alive - for the moment.
But a Virgin Blue spokeswoman confirmed that the airline was taking a "wait and see" approach to the future of its Alice Springs route.
She said: "It's safe to say that it's not one of our strongest performing routes in the low season time."
The spokeswoman said Virgin Blue's load factor - the number of passengers compared to the aircraft's capacity - on Alice Springs flights was averaging around 70 percent.
According to Virgin Blue's website they have maintained an average across all flights of around 80 percent.
The spokeswoman said: "There's no plans to pull out of Alice Springs providing we get ongoing support and our flights are well used.
"We certainly hope the people get behind and support us. We're taking a wait-and-see approach."
The spokeswoman said travellers should consider what prices were like before Virgin Blue.
She said: "People forget to look back at what it was like with only one airline.
"It's not because of the goodness of the competition's heart that prices are much more reasonable than what they used to be."

Bail Out

Virgin Blue and the NT Tourist Commission recently spent $150,000 each to advertise cheap flight packages in Sydney newspapers.
The campaign attracted almost 1000 extra visitors to Central Australia in the traditionally slow summer period.
The industry, including smaller operators, recorded a direct impact from the marketing boost.
One small operator reported a 400 percent increase in bookings during the period.

[Buster Hyman]

There's no plans to pull out of Alice Springs providing we get ongoing support and our flights are well used

...or else!:suspect:

[Capt Claret]

Hardly surprising that loads are down over the summer period. Temps of 40 degrees C or greater are not overly conducive to tourism. QF have accepted the seasonal nature of the loads into and out of AS for years, as did AN, TN, and other past operators.

[scud_runner]

This only just shows what a bunch of wingers Virgin are. Everybody else has been operating year in year out and soon as things go quiet Virgin want special help!! What a joke!!! Are they providing an air service or just want to ride on the back of the tourist season then leave as soons as it gets a bit tough! Unbelievable!!!

[Howard Hughes]

Well I would be pretty happy with a load factor of 70% in the quiet time.

I am sure that this rises to the high nineties during the peak season. So why the problem? This would give them an average load factor of 80% year round.

That was quoted as the average for the fleet? Or are there other factors at play here? ie: unusually low yields?

Cheers, HH.

:ok:

[Next Generation]

Everybody else has been operating year in year out

Ahhhh......... The good old days of price fixing.

Now the Red Rat has a REAL opposition, they have been forced to lower their prices. If VB isn't supported, they will pull out, simple as that. Then watch the QANTAS prices triple!!!!

Just ask the folks in Mt Isa.

[404 Titan]

Next Generation
Now the Red Rat has a REAL opposition, they have been forced to lower their prices. If VB isn't supported, they will pull out, simple as that. Then watch the QANTAS prices triple!!!!
You must be kidding if you honestly believe that. Competition is a two way street and if it was Qantas that was pulling off the route, don’t tell me Virgin wouldn’t put up the prices. Oh and don’t try that “If VB isn’t supported bla bla” BS :yuk: . They are getting an average of 70% load factors on this route in the “off-season”. Maybe they should reassess their yield management, as they are obviously not charging enough for their fares to make an acceptable return on investment. This running to governments claiming unfair treatment or wanting more favorable treatment is wearing thin. Real competition is when there is a level playing field for all operators and the sooner VB learn this the better.
:mad:

[Next Generation]

This running to governments claiming unfair treatment or wanting more favorable treatment is wearing thin. Real competition is when there is a level playing field for all operators and the sooner VB learn this the better.

How much does it cost to fly from Cairns to Horn Island on this GOVERNMENT protected route? About $600.

You should know better than most that QANTAS don't care about fair prices.

QANTAS subsidiary Sunstate achieves 16% of their total income from this single route!

Don't bull**** that QANTAS are there for the people.

They were ripping people off in Mt Isa after the ANSETT collapse, and then they dropped their prices and increased capacity on this route when VB started flying there, and now they are ripping the public off again.


Competition is a two way street and if it was Qantas that was pulling off the route, don’t tell me Virgin wouldn’t put up the prices.

No, they wouldn't.

Whenever VB has started flying a route which wasn't already flown by QANTAS, their pricing remained in proportion to all their other fares. This is what they are all about. Increasing the market size by making it affordable for all Australians to travel.

NG

[Capt Claret]

NG stated: Don't bull**** that QANTAS are there for the people

I'd suggest that VB isn't there for the people either. It's there to make money for it's shareholders, by providing a service that people will pay for.

Just like Qantas.

Just like most airlines that aren't government owned.

[404 Titan]

Next Generation
How much does it cost to fly from Cairns to Horn Island on this GOVERNMENT protected route? About $600.
That should be government tendered route, i.e. the cheapest tender. If VB want to bid for this tender let them but somehow I think they won’t because they don’t have the right equipment. If you have a problem with the fact that only Sunstate can operate this route, take it up with the Queensland Government, after all they’re in the business of helping out airlines, namely yours and in this case they make the rules.

[Next Generation]

That should be government tendered route, i.e. the cheapest tender.

This is totally WRONG !!!!!

The cheapest tenderer did not win this contract. Check your facts.

[404 Titan]

Next Generation

Really, you tell me sunshine. After all the government tender process is a confidential process, so you tell me because it would be interesting to know how you know.

[Next Generation]

I could tell you, but I won't. It would land me in hot water, but suffice to say that the lowest price did not win.

This however is getting off the topic. This is merely one example used to highlight the QANTAS rip-off mentality.

Poor old Geoff must be longing for the days when QANTAS prices went up on the same day, by the same amount, as ANSETT.

If QANTAS has any opportunity to inflate their prices they do.
VB on the other hand has proven that they will always offer the lowest price possible whilst remaining economically viable.

[bitter balance]

NG - VB have an extremely sharp backroom number-crunching team who are as bottom line focussed as QF. They are obviously bloody good. They also have an excellent marketing team who try to convince everyone that they don't have an extremely sharp backroom number-crunching team who are as bottom line focussed as QF. They seem to have convinced you.

Your Horn Island comparison is not a fair one. The closed routes have regulated air fares so your issue is with the Qld Govt and not QF. The Qld Govt when awarding the contracts stated that the lowest tenders did not necessarily win. On that particular route there wasn't exactly a lot of competition - unless of course you are referring to a regional that had just collapsed for the second time.

[404 Titan]

Next Generation
If QANTAS has any opportunity to inflate their prices they do. VB on the other hand has proven that they will always offer the lowest price possible whilst remaining economically viable.
Please also could you tell us a route that DJ doesn’t have competition on, directly or indirectly? I can’t think of any off hand. Competition is what keeps the prices under control, not because DJ or QF are good guys. When DJ came into this market they were a privately owned company that may have been motivated partly to deliver cheaper airfares to the general public. Now they are a publicly listed company, different forces are now at work. In every public listed company, maximum return to shareholders is of paramount concern. This is accomplished in a two fold way. Firstly by controlling costs and secondly by increasing profit margins. As DJ have already taken care of the first it really only leaves them the second. If they or QF have an opportunity to increase fares, they will and if you are truly so delusional to believe that DJ wouldn’t, then you aren’t living on the same planet as the rest of us.

[Ushuaia]

I always roll my eyes when I hear DJ on the one hand raving on about "keeping the air fare", making flying more affordable for Australians, bringing true competition into the market, and THEN whinging at the first second of such competition and running off looking for government assistance, "ongoing support", etc.

Yes girls, it's called COMPETITION. Get out there and earn your bums-on-seats and/or start charging an appropriate fare for such. If you can't handle that, go home to England. Pure and simple!

[The_Cutest_of_Borg]

404 you are wasting your time with Next Generation.

Independant audits have proven that he makes up his "facts" as he goes along.

[Lusimtingting]

Next Generation.

The cheapest fare on the Government regulated route Cairns - Horn Is is $199.07 . Thats a long way short of your claimed $600.

Try halving the % of Horn Is revenue versus Total and you will be closer to the mark.

Suggest you need to get your facts straight before going to print as this makes all your other claims suspect.

[Bugsmasha]

Aren't we over the "my airlines better than yours" argument. Just agree to disagree.:O

[Aussierotor]

Just remember---there are quite a few country routes that can only support one airline--------not 2.
going to-- SUNDAY and MONDAY flights full or thereabouts-----buisiness people and others returning to work or whatever after a week end in da big smoke
Leaving--------FRIDAY and SATURDAY.
The rest of the week--lucky to break even.

[TIMMEEEE]

Bugsmasha , I have to agree that Next Generation is somewhat flawed in his facts and arguments.

I'm not touting any airline difference thing but the fact is this.

Airlines are in business.That means they must make a profit.
There is a very fine line with yield management and in the case of a lower cost carrier even more so.

To boast about giving away tickets and $1 fares rather than loose market share is not only reckless but must give these back-room yield-management types a major migraine!!!
To then threaten to pull out of Alice sounds like folly to me.

The truth is this - some routes make more money than others.
Some routes lose money.
If you are serious about providing a service to the travelling public (especially a holiday destination like Alice) then take the good with the bad.
What you lose on Alice you may make up on other routes.

To threaten to pull out just sounds plain desperate and to me sounds like they arent really interested in the low end of the market.

as I've said before, so much for keeping the "air fare"

[Pseudonymn]

Now Ladies,
I didn't start this thread to promote an all-in DJ vs QF brawl.
I merely posted what was printed in the local paper here and was hoping for constructive replies. For what it is worth, I have flown both DJ and regional Qantas, ie a BAE with no inflight entertainment, and I couldn't find much to fault with either airline, Service or Price wise.

[Suffering Sucataash]

Just to throw fuel on the fire,

The word is Jetstar will take over a lot of the Qantas flights to Alice Springs. Ground personal had to tender for their jobs a few months back, I believe they were offered a Virgin type hourly pay - less than you would get at Maca's.

Such is the way things are going, down the drain that is.......:\

[Wirraway]

Thurs "Australian Financial Review"

Qantas in radical plan for Jetstar

"Jetstar is believed to be considering using the Richmond air force base in Sydney's outer west at a later date to avoid some of the charges at Sydney Airport."

Qantas will today intensify its assault on rival Virgin Blue with a radical plan to direct some flights of its new budget carrier, Jetstar, away from Melbourne's flagship Tullamarine airport, following the lead of low-cost carriers worldwide to shift away from major terminals to cut costs.

In a first for a major commercial airline in Australia, Jetstar plans to run some of its Victorian operations out of the Lindsay Fox -owned Avalon airport near Geelong, offering three return flights a day to Sydney and two to Brisbane with introductory fares of less than $50.

The launch of Jetstar comes as Qantas accelerates its cost-cutting strategy after chief executive Geoff Dixon vowed last week to find an extra $500 million of savings on top of the $1 billion that had previously been budgeted over two years.

Jetstar will operate under more flexible working arrangements than its parent and offer a no-frills service, as Mr Dixon draws what he calls a ``line in the sand'' against Virgin Blue and other regional carriers such as Regional Express to keep their share of the domestic aviation market below 35 per cent.

The listed Virgin Blue, jointly owned by Chris Corrigan's Patrick Corp and Richard Branson, has snared about 30 per cent of the domestic market in just three years.

Yesterday, it said its January passenger numbers were up nearly 45 per cent on last January.

Virgin Blue chief executive Brett Godfrey has said he will give away free seats to remain competitive with Jetstar, setting the scene for another round of severe discounting rivalling the bloodletting of early 2000 when four carriers Qantas, Virgin and the now defunct Ansett and Impulse battled for a share of the domestic market.

Mr Dixon will today outline key details of Jetstar's route structure and pricing, including taking over many of the regional routes operated by Qantas's Boeing 717 aircraft, including flights to Hobart, Launceston, Rockhampton, Gold Coast, Mackay, Cairns and Newcastle.


Jetstar will also serve the Brisbane, Sydney, Melbourne routes along with Qantas's mainline carrier and is targeting a turn-around time between flight arrivals and departures of only 25 minutes compared with Virgin's 30 minutes and the industry average of 35 minutes.

The unveiling of Jetstar's plans come as a new report from the Australian Competition and Consumer Commission released yesterday showed airports had increased aeronautical service charges by at least 40 per cent since the federal government removed price caps two years ago.

The decision to operate some flights out of Avalon is understood to have come after heated discussions between Qantas and Melbourne Airport Corporation , the owner of Tullamarine airport, over landing and terminal charges.

Mr Dixon told analysts last week he believed Melbourne Airport had been ``price gouging''.

It is understood Jetstar will still operate flights out of Melbourne's Tullamarine airport in addition to Avalon but will use Qantas's own terminal rather than the old Ansett terminal.

Jetstar is believed to be considering using the Richmond air force base in Sydney's outer west at a later date to avoid some of the charges at Sydney Airport.

But for the moment Jetstar will operate at Sydney's Kingsford Smith airport out of the old Ansett T2 terminal, which is also used by Virgin Blue.

The loss of some of Jetstar's operations from the old Ansett terminal at Tullamarine is a blow for its owner, Australia Pacific Airports Corp, which is 9 per cent owned by Hastings Funds Management . The company's owners are considering a public float over the next four years.

Mr Fox's Linfox is expected to work with Jetstar to redevelop terminal facilities at Avalon airport, which is used by Qantas as an engineering and heavy maintenance facility, with the capability to handle aircraft as large as Boeing 747s.

It is understood Geelong council has agreed to commit funds to the redevelopment, while Jetstar is not believed to be putting any significant funds into the project.

But the move to Avalon is expected to raise safety concerns about how well equipped Avalon is to handle a major influx of planes. The airport has only one runway, limiting usage, and its air-traffic control facilities need an upgrade.

===========================================

[Keg]

Geez NG, you disappear for a while after being shown to be a goose only to put your head above the parapet and prove the point again. You'd reckon you'd learn- or at least make yourself a harder target!

Borg, laughed myself silly! :D :ok:

So much for 'competition'! ;) :p

[Beagles]

Perhaps Virgin will "cherry pick" this route by pulling out during the summer and making a triumphant return for the peak season each year.

How to put the "spin" on this will be the trick though. (Maybe they want to be fair to all the the punters that couldn't go for a holiday to NT if Virgin didn't support the top end during its busiest time.?)

[DutchRoll]

I don't think there is so much as a snowflake's chance in hell that Jetstar will be able to use Richmond. Too many political hurdles, and the Defence brass would probably lie down across the runway before letting Jetstar share an already busy military transport base.

NG, Richard Branson's management philosophy has always been 'if I'm not going to rake in the money, screw ya'. And while QF would dearly like to dump some of its less profitable country routes, there has always been a huge amount of political pressure not to (this is no big secret). DJ does not have this pressure. On the contrary, they will just say to the applicable government 'give us more free stuff or we're outta here'. They always have and always will scrape the cream off the top of the industry and couldn't care less about the rest.

[OffBlocks]

The word is Jetstar will take over a lot of the Qantas flights to Alice Springs. Ground personal had to tender for their jobs a few months back, I believe they were offered a Virgin type hourly pay - less than you would get at Maca's.

Suffering Sucataash

Not entirely correct. More than likely Jetstar will do what DJ have and only send one flight a day to the Alice. All others will remain QF services. Ground handling will probably be done by QF staff like other ports that are to commence 25May. The only ports so far to be staffed by new JQ staff are MEL, SYD and BNE. Finally Alice ground staff have definitely not at this stage tendered for their jobs. :ok:

[bush mechanics]

Maybe if VB flew direct Adelaide from Alice there loads would be a bit better.For a extra 30 dollars you can fly QF to adelaide from Alice direct.The people from VB should understand that most Alice locals are from South Oz.
Maybe as AN operated,melb-Adl-Asp-Dwn and then back down.
Hey just my flaggons worth.