Virgin Trouble?

[Bluebaron]

Just a Rumour ...................

Heard from a realiable source that as Virgin lost quite a bit of money in June and that loads for Summer are well down (Virgin makes most money in Jul/Aug/Sep) that route cuts may be on the cards for next year.

Apparently NRT is well down following London bombings and also US pax are dropping off fast, not helped by the £110 per pax in taxes in fuel surcharges.

Yes i know they announced a big recruitment drive and have also just announced DBX for march 06. But if you are thinking of joining (i may be) then be for-warned.

BB :\

[Hand Solo]

NRT may be well down but I know BA can still charge a minimum of a grand for an economy seat - you don't get yield like that on many routes. I'd have thought that with only a finite number of aircraft and slots there'd inevitably have to be cuts in the underperforming routes to release capacity for the newer routes. It'll be interesting to see how the HKG-SYD route fares as I hear VS are getting slaughtered on that one.

[SLT]

Well chaps.........

Just checked the loads on NRT over the next couple of days - looks pretty full to me!! Today's flight is going with 30 spare seats out of 306. Next few days' loads are similar.......

US East Coast stuff looking pretty busy too - LHR-HKG chocka (as always)!! Admittedly the HKG-SYD legs are a bit emptier - a lot better than of late though as a result of the 2 for 1 offer that's been on in Oz. According to a lot of our Aussie crew the problem has been in the perception of Virgin Atlantic against Virgin Blue by the Australian people. Apparently a lot of people didn't realise that VAA are a full-service carrier and they thought it was a low-cost outfit like Blue. Not suprisingly the travelling public don't fancy going all the way to Europe in a low cost cabin, so were sticking to known quantities like BA, CX and QF. Hopefully as a result of this 2 for 1 offer and increased marketing in Oz, the loads will pick up. Do bear in mind that a) the competition on that route is always fierce, and b) that new routes always take time to bed in. Feedback from pax carried so far has been very positive.

Haven't heard anything about big losses for June - but then again we wouldn't! But that's one month out of 12! Shall we just wait and see what the facts are when the results come out rather than relying on rumours, which let's face it, usually turn out to be false?

Cheers all :)

[Kaptin M]

Get a knockback, BB :{
Learn to live with it in aviation - and then move forward....onward & UPward!

[WATABENCH]

With Charters now offering similar to better services than VS maybe they're starting to loose out, why book with Virgin to go to Florida when you could book First Choice with a better service and seating and IFE and save yourself loads!

[Globaliser]

SLT: According to a lot of our Aussie crew the problem has been in the perception of Virgin Atlantic against Virgin Blue by the Australian people. Apparently a lot of people didn't realise that VAA are a full-service carrier and they thought it was a low-cost outfit like Blue. Not suprisingly the travelling public don't fancy going all the way to Europe in a low cost cabin, so were sticking to known quantities like BA, CX and QF.That's an interesting insight - it rather catches VS on the horns of a marketing dilemma, doesn't it? They can't really say "You must try VS, it's miles better than DJ". :DSLT: Do bear in mind that a) the competition on that route is always fierceNo, this can't be true. Sir Richard Branson himself said that there's a BA/QF duopoly on the route to SYD, and that it was high time that there was some more competition! If he said it, it must be right ...

[SLT]

That's an interesting insight - it rather catches VS on the horns of a marketing dilemma, doesn't it? They can't really say "You must try VS, it's miles better than DJ".

True, but as two separate carriers serving two different markets - I can't imagine it's going to cause all that much of a conflict! It might just be that people who like travelling with Blue might fancy trying the full-service product - I don't know. I don't know how popular Blue is. Seems to be doing OK though.



No, this can't be true. Sir Richard Branson himself said that there's a BA/QF duopoly on the route to SYD, and that it was high time that there was some more competition! If he said it, it must be right ...

Agreed, however since that comment was made, the market has changed quite significantly. CX have introduced more services between HKG and SYD to compete, as have I believe QF. So the competition has hotted up a fair bit since then!! Time will tell I guess - but increased competition can only benefit the travelling public and I for one am hoping that it all turns out well!!

Cheers all :)

[averytdeaconharry]

I thought it odd that they should operate their SYD service via HKG. They had good loads on HKG at the time and in order to carry through traffic to SYD their market share on LON-HKG must have gone down markedly. Since then BA and CX have increased frequencies and QF have started service. BA, CX and QF are all acting together as part of oneworld. This puts VS in a very weak position on LON-HKG in terms of marketing and market share. They are probably meeting their own objectives on the route but it is inevitably going to be a weak performance against such competition. What they need to do IMHO is reroute the SYD service vis either KUL CMB, or SSN ( there are currently no British services to either) and increase frequency on LON-HKG to at least 3 fkights per day. To inject something new into the LON-HKG market they should operate westbound by daylight with departures ex CLK at 0800, 1200 and 1600. That would provide real competition.

[Globaliser]

SLT: Agreed, however since that comment was made, the market has changed quite significantly. CX have introduced more services between HKG and SYD to compete, as have I believe QF. So the competition has hotted up a fair bit since then!!No, I'm afraid not. The comment (which was about UK-Aus, not HK-Aus) was rubbish when he first said it, and it was rubbish every subsequent time he said it, too. And you didn't even have to be an industry expert to see that: anyone who travels regularly to Australia knows just how competitive that market has always been. Branson's thin justification for the comment was merely that only BA and QF could operate single flight number services from LON to SYD. (It wasn't even a question of single aircraft services, as airlines like SQ have operated them in the past with a change of flight number at SIN.)

But at least the real-life services have to operate in the real-life competitive environment, not that depicted by a typical example of Branson spin. :)averytdeaconharry: BA, CX and QF are all acting together as part of oneworld. This puts VS in a very weak position on LON-HKG in terms of marketing and market share. What they need to do IMHO is ... increase frequency on LON-HKG to at least 3 fkights per day. To inject something new into the LON-HKG market they should operate westbound by daylight with departures ex CLK at 0800, 1200 and 1600. That would provide real competition. Unfortunately, I think that would be commercial suicide for VS. Even before the SYD extension came on stream, VS remained stuck on one a day as (I think) it had always been. IIRC, at the time BA was about twice daily and CX was about 2½ daily. If VS was unable to generate more traffic and gain more market share at that time, what hope could there be for it to do so when there are now 3 BAs, 3 CXs (soon to go to 4) and ½ a QF a day?

BTW, I think that the oneworld connection can be overstated. The airlines do very little to "act together" on the LHR-HKG route.

[Bluebaron]

Kaptin M,

No knockback for me....yet (!)

I worked there for 10 years (1990-2001) am was looking at getting back in now i pilot experience. As such i know a lot of people in commercial etc so as i was told in the pub thought i would pass on.

Like i said at the beginning of my post ....Just a rumour....



BB

[Standard Jet Dep]

Very interesting to read about this on here. Yes i believe forward bookings are not too strong. NRT has been well down of late in fact i can only recall 1 time since feb when it has been full. I follow this routes loads a lot as i have a lot of interests that way. Someone told me it would never be dropped due to amount of Cargo etc.
Waterbench I feel a little bristolian bias my friend in rgds too FCA.lol. Am i right they charge for IFE and drinks. If im wrong please correct me. However Florida is just one route out of many more that are more lucarative.
LHR-HKG is exceptionally busy nearly everyday its full or heavily overbooked.
NRT looks like a case of nerves regarding London tourist attacks. From my experience of living in Japan i dont think this reaction was unexpected. I would like to know how the loads on BA JAL ANA are on this route. Can anyone help me on that??
Anyhow keep the faith dudes.

Brgds

SJD

[Digitalis]

A little knowledge (and 'a reliable source') are dangerous things... :hmm:

Virgin's loads, like everyone else's, fluctuate with variations in the overall market. That said, Virgin's loads are higher than they have been for some years. More importantly, the margin (particularly in the economy cabin) is rising healthily. The Japanese market is particularly sensitive to security and health issues around the world, and loads always drop significantly whenever the Japanese feel that the risk level has increased. Why the Japanese should be so much more sensitive than the rest of the world, who knows, but they are. Fortunately, Virgin make much more money from freight, which doesn't give a damn about risk! In any case, the effect of the London bombings on loads will be temporary and will rebound quickly, even on NRT.

The Sydney route is a different animal to any other on the Virgin network, as the only '5th freedom' destination. That means that passengers can be picked up in HKG for passage to SYD and vice versa. Through traffic is minimal - and unwanted. The yield on a through ticket is tiny compared to the yield for a single sector. That's why LHR-SYD is not promoted in Britain, and SYD-LHR is ignored in Oz. In fact, the marketing budgets in Australia and Hong Kong are, at the moment, very small in any case; for the budget expended, the route is doing OK - it often takes a long time to bring a route into profit. There is a minor problem with the perception of Blue and Atlantic being the same outfit, but that is being tackled.

Forward bookings are changing in nature. Leisure passengers are booking later and later, so forward loads are less easy to predict than they were. However, Virgin is quite happy with the bookings situation as it stands. On many routes, extra capacity is desperately needed - though slots and aircraft aren't available to satisfy the demand.

Virgin is suffering, like all airlines outside the Middle East, with high fuel prices. That's meant that fuel surcharges have now risen to £24 a sector. That seems to have had little effect on demand - as BA's 35% increase in quarterly profits announced today shows quite nicely.

The longhaul market is very healthy, and Virgin's share of it is healthier than most. Profits for 2005/6 will not hit the levels of 04/05, thanks to the lack of exceptional items, but they are anticipated to be very acceptable.

Where do I get my info? Well, believe me, it doesn't get any more credible than my source...;)

[Nakata77]

i havent seen any discounting going on so i dont think the source is reliable. i dont doubt that loads have dwindled after the attacks but with respect to the victims it was a small attack in the grand scheme of things and shouldnt affect the airline industry too much (unless of course there are further attacks)

[Captain Rat]

Have to agree with earlier post that VS should have really gone to SYD via somewhere other than HKG . Believe it was such a long term golal of RB to get to SYD he would go whatever the route. Maybe routes via say China Or KL were not available, or maybe the LHR-HKG sector makes enough mney to cover start up losses on the HKG-SYD sector. Maybe with starting DXB they may change the SYD route to go via DXB?
Or a secound HKG service?

[Standard Jet Dep]

Digit..... Thanks for your imput echoing my thoughts exactly. Im glad to hear about the cargo situation as i would hate to see NRT go as its my favourite flight and one i will use greatly on my concessions. I think someone has picked up on the verb comments from on the ridge section. I take this to be regarding forward bookings and not a lot else as you have said. Anyhow if you know anything please feel free to pm me.
Brgds

SJD

[Globaliser]

Digitalis: The Sydney route is a different animal to any other on the Virgin network, as the only '5th freedom' destination. That means that passengers can be picked up in HKG for passage to SYD and vice versa. Through traffic is minimal - and unwanted. The yield on a through ticket is tiny compared to the yield for a single sector. That's why LHR-SYD is not promoted in Britain, and SYD-LHR is ignored in Oz. I well understand that VS the airline, and the Bearded Wonder who often speaks for it, are not the same creature.

But here we have yet another illustration of how much tosh he was throwing out at the time about VS wanting to fly to SYD to break the BA/QF duopoly on the LHR-SYD route ...

:yuk:

[Digitalis]

SRB is a marketing and deals man, and he's bloody good at it. He is not an airline manager, and is a bit hazy on the details sometimes! Nevertheless, his commercial instincts are pretty sound. Australia was certainly a long term aim of both him and the company, and there was no way that it was going to be achievable via any other station. It took Virgin long enough to get 5th freedom rights through HKG; it would have been impossible through any of the other ports mentioned earlier.

Virgin did operate a second service to HKG before 9/11, and it's highly likely that that second service will be revived (VS203/4). It won't get a night slot into LHR, so there may have to be some juggling of seats, but one service will remain A346, the other(through) service is likely to be A343.

The DXB service is very unlikely to be extended to Oz at this stage, but there is some talk of a service via PVG to either SYD or Melbourne. How serious this is, I can't say as yet. There are other destinations the airline wants to service before expanding the Australia operation - more Africa routes to mesh with the nascent Virgin Nigeria network are a high priority (think Accra, Nairobi etc.). The airline is also looking at revisiting Toronto and Chicago - the former possibly on a summer-only basis, using the CPT aircraft and slots when they're not being used in the southern summer.

[FormerFlyer]

You do pay for drinkies in FCA standard Star Class cabin but not for IFE - unless you want to activate the "on demand" functionality. Then it's only a fiver.

However, if you're in fab Star Class Premier then it's all free, free, free!!!!!

cheers ;)
FF

[Globaliser]

Digitalis: SRB is a marketing and deals man, and he's bloody good at it. He is not an airline manager, and is a bit hazy on the details sometimes! Nevertheless, his commercial instincts are pretty sound. Australia was certainly a long term aim of both him and the company, and there was no way that it was going to be achievable via any other station. It took Virgin long enough to get 5th freedom rights through HKG; it would have been impossible through any of the other ports mentioned earlier. ... The DXB service is very unlikely to be extended to Oz at this stage, but there is some talk of a service via PVG to either SYD or Melbourne. How serious this is, I can't say as yet.There's an interesting article in the Sydney Morning Herald (http://www.smh.com.au/news/business/virgin-struggles-on-air-route/2005/08/14/1123957949573.html):-Virgin struggles on air route
By Andrew Clark
August 15, 2005

Virgin Atlantic's high-profile effort to crack the Australian market is proving a struggle for the British airline, which has admitted it is carrying poor loads and running up bigger losses than it expected.

Sir Richard Branson's carrier began flying the so-called kangaroo route from London to Sydney, via Hong Kong, in December. The airline pledged to shatter what it described as the "duopoly" held by Qantas and British Airways.

However, senior Virgin executives are increasingly concerned at the route's poor performance. ...The article goes on to talk about a possible code-share deal with SQ via SIN (later denied - see news.com.au (http://www.news.com.au/story/0,10117,16264992-462,00.html)) and gives load factor figures of 33% inbound to SYD and 36% outbound in April, rising to 70% inbound and 50% outbound "over the winter" aided by a 2-for-1 offer.

So I suspect we haven't heard the last of this story yet, by a long shot.