JQ, Tiger, VB survival prospects

[Led Zeppelin]

It's pretty clear that there must be a point where high fuel prices will override and effectively negate cost cutting by these carriers.

Branson had no hesitation in 2001 with VB by bringing in the administrators only to be saved by Ansett going under. So I wonder what the current plan is in this climate. Considering the fuel price, the purchase of the Embraer's, the projected start up costs of VA, they must be hurting. What long term funding apart from cash flow do they have ?

Tiger is at the mercy of their masters in Singapore - at what point do they say enough is enough, or is their a contingency fund to ride all this out ?

What is QF's position regarding JQ - is Dixon going to continue to expand it or is it too a loss maker that the board could wind up at the drop of a hat ?

Something has to give - I wonder who'll blink first.

[wirgin blew]

I think the Embraer can only be a positive thing for VB. They will still be able to provide the level of service on this jet between all destinations throughout Oz and with less seats to fill the break even would have to be better than a 737.

Also as the pilots have just signed there EBA there wont be any trouble from them for the next couple of years. CC and Eng may be a different story though.

[Van Gough]

My prediction is that if an affordable alternative energy source if not developed within a suitable time frame, budget air travel will be a thing of the past and the aviation industry will shrink back where it was in the 60's - an indulgence of the wealthy and business travellers.

[sprucegoose]

Branson had no hesitation in 2001 with VB by bringing in the administrators only to be saved by Ansett going under.

Thats crap.

[Arctaurus]

WB

The Embraer might be a good thing, but I wonder what the yield is compared to their 737's ?

I aslo seem to recall that VB's seat costs are now above the QF group, which must be a real concern.

Tiger is so small in OZ (relatively speaking) that I can't imagine they have reached the critical mass required to be cash flow positive - and it may not be possible at all given the cost of jet fuel today.

[flyer_18-737]

TT: On the Tiger Front, I do doubt them sometimes when you see $40 fares to local markets and only $50 to QLD, how do they do it?. How on earth does this company expect to make some decent $$$$$$. They should at least put their prices up $10, cause they still would be very cheap, and cheaper than JQ still. Tiger are getting some A319's in January 2009 so this might help out with filling up planes, less crew.... I can say that loads are gaining very high lately on Tiger, I remember in December/January we were pushing an averaging of 120 per A320, now its around 150 per A320. I countlessly see full flights to Darwin, Perth and sometimes even Canberra and the odd Gold Coast flight!

DJ: I think we might see some Virgin "Axes" next week, or mabye a bit of a reduction in flights (esp SYD-MEL, OOL-SYD). I see there is a DJ board meeting next week so I guess we will start to see the ball rolling.

We might see something on the lines of Ryanair with some airlines, with regard to charging for everything from Check-In to Carry on etc...

Tough Times ahead, I wonder who is next:confused:

[tasdevil.f27]

One would think that J* would be more likely to expand and qantas domestic reduce in scale as J* costs are far lower than QF domestic.

VB, well they seem to be in no mans land, not a lcc & not a business airline. No big money backer owner, Toll is just waiting to off load to someone like they are doing with alot of there business. VB need a big cashed up owner - Sir R Branson??? or the likes to take them forward and not in circles.

Tiger? who knows.. Tiger Blue or Tirgin, Viagra! :bored:

[Jabawocky]

Wild guess...not quite.... but I have a feeling the oil price will fall, maybe not tomorrow, but it has before.

Oil has seen some rather high highs, and adjusted for inflation has been about as high as now.

I think, and its a gut feeling only that it may well settle around USD$70-80/barrell depending on the strength of the USD.

I wonder if Chimbu Chuckles has any thoughts on this.......?

J:ok:

[amos2]

Well, silly old Led has stuffed this thread right up from the word go with his stupid assertion that silly old Dick called in the administrators to stop silly old Virgin from going belly up!

Good try Led, but hey!...we're not all stupid like you. We all read the papers and 2001 wasn't all that long ago you know!

What a goose! :=:=

[The Hill]

The oil price is unsustainable at these levels. While it may go up in the short term, its true value is US$80-90 barrel. Trouble is you also have higher food costs and higher interest rates to boot. All contribute to less expendible income. I think VB have done a smart thing by getting Embraers and targeting the business traveller.

[Statorblade]

Goose

Maybe it's not crap. I seem to recall stories that Branson had indeed approached a well known company in 2001 to take VB into administration. I also believe they were on cash for fuel at the time.

Can anyone one else confirm this or put it to bed as yet another bullsh!t rumour?

[amos2]

You're just as big a goose as Led, blade! :=:=

[sprucegoose]

I seem to recall stories that Branson had indeed approached a well known company in 2001 to take VB into administration. I also believe they were on cash for fuel at the time.


Terribly sorry but thats all crap. I was there. VB made a $500,000 profit in its first year of operations which was a very significant event considering it had been planned to not break even for four to five years. And this was all before the events of September 11. Nothing about its first year of operations was remotely related to any sort of administration or possibility thereof.

[maryparlalis]

Tiger not considering reducing SEATING CAPACITY.
Today announced additional flights MEL -ADL-MEL
MEL-CBR-MELas of 11 Aug 2008.

and more to come?

Interesting to see VB and QFand J* response?

[Metro man]

Low cost carriers will survive, just a question of which ones. In the good times they get people who normally wouldn't fly, in the bad times they get people trading down from full service airlines.

Flying is now a way of life like mobile phones and the internet, people won't just give it up en mass.

If you have to get from A to B and are price sensitive, you'll go low cost. The travel equivalent of McDonalds.

[8888]

Amusing to see people quoting oil's real value at $80.00 to $90.00 a barrel. It's value varies in accordance with demand, supply and public sentiment. A combination of those factors currently dictate its value to be way above $90.00 a barrel and indicate that it may head further north. Just because you say it's wrong don't make it so.

[Keg]

One would think that J* would be more likely to expand and qantas domestic reduce in scale as J* costs are far lower than QF domestic.

Far lower? Let's use tech crew costs as an example.

Crunch the numbers yourself. The difference in cost between a J* A320 tech crew and a QF 767 tech crew is less than 0.05 cents per ASK. That means that over a MEL-SYD sector (about 1000km) you're looking at a net increase in cost on the 767 flight of less $0.50 per punter compared to the wages paid to a J* crew. $175 for the flight. The cost is roughly .299 cents per ASK for the QF crew and .250 cents per ASK for the J* crew (working on 250K and 150K for the QF crew, 180 and 120 for the J* crew. Changes to those numbers would bring it even closer and personally I think the 767 costs are over done but I don't know what they earn these days).

Sure, a billion here and a billion there and pretty soon you're talking about real money.

[illusion]

So Keg,
what is your point- Are QF pilots becoming the bottom feeders in the industry?????

[Keg]

Lol. Some would say that QF drivers have always been bottom feeders but they wouldn't have been talking about pay and conditions though! :eek: ;)

In all seriousness, I just wanted to point out the nett cost to each passenger of the difference between having pilots on decent pay as opposed to crappy pay is about 50 cents each. Most punters would tip their cab driver more than that!

[Poto]

GOD alluded to it last night that you need premium cabins to "subsidise" the back end in times like these.
Increasing J star and reducing QF services would not support that strategy:confused:

[toolish]

Keg, it all adds up though, Multiply that saving across how many sectors are flown in a year and we are talking some big $. (having said that I agree the diference for tech crew as a % of total cost is very small) but a saving is a saving. Still I believe there is a place in the market for both brands, its just that the size of the market changes in tough times.

[Keg]

Sure toolish, as I said, a billion here and a billion there..... :ok:

If you crunch the numbers a different way, J* tech crew costs are still 25% less than QF. I guess the point I was trying to highlight was that the 25% number is quite a 'bogey man' like number.like a lot whereas when you put it as a cost per passenger it's chicken feed.

[Swift6]

I agree with you Metro man; I remember reading a similar quote in a book on LCC's a few years back.

Swift6

[flyer_18-737]

Guys, I have been hearing on other forums about the scrapping of Tiger's MEL-ROK, MEL-NTL and MEL-DRW.

Can anyone confirm this, mabye they are just still finalising schedules??

MEL-DRW is there connection to Singapore, so this would be weird.

(also, new hub wise I have been hearing rumours about ADL)

[Bula]

Keg, you numbers are a little out. You should compare cabin crew costs because I know Team Jetstar are some of the lowest of the low when it comes to renumeration.

Your 25% is a bit of a boogey man. I think it might be more to tell you the truth.

[Keg]

Bulla, I have no idea as to the cabin crew costs and so I didn't bother with them at all. My point was to highlight the tech crew costs and that the net cost to the punters was about 50c a ticket.

Incidentally, information arriving this morning indicates that my pay figure for a 767 captain may have been as much as $25K over done and my figure for F/Os was probably $10-15K over done.