Virgin adds fuel to new price mix

[Wirraway]

Thurs "The Australian"

Virgin adds fuel to new price mix
Steve Creedy, Aviation writer
October 21, 2004

VIRGIN Blue is reviewing all ticket prices in the run-up to Christmas and could increase some fares by as much as $5 a flight to cover spiralling fuel costs.

Virgin yesterday split from the ranks of other carriers by deciding to build its next round of increases into its fare structure rather than add another fuel surcharge, a method its competitors claim is more transparent.

The fare increases will be in addition to existing fuel surcharges of $10 a flight on Virgin Blue and $20 a flight on Pacific Blue but will not apply to all routes.

Virgin has already begun a fare review, which will continue over the next few weeks, and yesterday would not specify which fares it was increasing.

Virgin officials said the review would take into account factors such as customer price sensitivity, how many seats are filled on flights and fuel consumption.

This suggests fuel-hungry, long-haul routes from the east coast to destinations such as Perth and Darwin will be hardest hit.

Virgin spokesman David Huttner said some markets would not see any increases and prices could fall on "certain regional markets that are very price sensitive".

"Some markets are better able to absorb (increases) than others and some it really impacts upon demand," Mr Huttner said.

"You can't just raise the prices uniformly and expect it won't have any impact so we've chosen a much more selective approach."

Mr Huttner said the rises "on average will be a few dollars" but would not specify the size of the biggest increase.

"It's not going to be dramatically different. It's a question of how it's distributed," he said.

Virgin is the last of the big Australian carriers to respond to increases that have seen the price of jet fuel surge past $US60 ($82) a barrel.

Its announcement came as Air New Zealand revealed Australians travelling to London via the US would be slugged with a hefty $110 each-way surcharge on tickets not paid for by October 26.

Air NZ's surcharge on flights to the US will also rise, from $56 to $77 each way, and flights to the Pacific Islands increase from $56 to $70 each way.

Flights on busy Trans-Tasman routes will incur a $35-a-sector surcharge.

Qantas fuel surcharge rises announced last week came into effect yesterday.

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[Cottesloe]

I DO not work for either airline but am in the industry, and I think (IF ?) done properly this is a very sensible move.

If someone is already paying $400 for a ticket, than another $20 is not that big of a deal in the big picture. It is more on those short routes where who has the cheapest ticket matters as well as on the more regional routes that are harder to sustain and poeple from these areas will prefer the extra $20 in there hand, especially if say a family of 4 are travelling.

You can say whatever you like about Virgin, however since they started, flying has become more affordable for the average Joe.
Prior to Virgin, there was a lot of resentment from many of my clients towards both AN & QF with the fare extortion they were charging people here on the west coast to travel. That has continued with many of these poeple who now realise just how much they were ripped off when qantas brought there fares down to match. People remember these things. But I fear in some ways QF hasnt learnt there lesson. At the moment, the fares PER -DWN, PER - AS-CS, are horrendous, When Virgin start those routes I can see there will be a big market for them. From a travel agent point of view I can say this: (and it makes no difference to me I get payed whoever they travel with)

Regional wise, my bookings have increased around 350% for routes such as ROK - BNE since virgin started there. Plus I have had about 100 times more the inquiries from backpakers etc about flying Perth - BME rather than coaching it since virgin came in and qantas etc brought there fares down on this one also.

Buisness wise: I think 70% of my business clients would change camps immediately if virgin had some sort of business class. They Miss the AN service and hate the QF club service and are just looking for an excuse to go to another compareable product.

To qantas, as I have said at many many meetings to regional managers, the public have memories. They do remember the fares they payed in the past. One of the biggest reasons virgin has expanded 400 % percent or so in two years (yes ansett crash was one) but the other is the BIG BIG perception of the public that they have brought them the cheaper airfares. At the moment I still book around....... 6 of ever ten backpaker by coach from PER - DWN, I wonder how that will change when virgin start flying that route.
All food for though I guess......