Virgin threatens 40% price cut to NZ

[Wirraway]

Thurs "Sydney Morning Herald"

Virgin threatens 40% price cut to NZ
Scott Rochfort
August 7, 2003

The looming trans-Tasman airfare war could turn into a bloodbath, after Virgin Blue's chief executive, Brett Godfrey, yesterday threatened to slash fares by more than 40 per cent.

With Air New Zealand aiming to cut costs by more than 20 per cent through its no frills, yet-to-be launched Tasman Express, and Emirates recently cutting fares on some of its introductory flights to Auckland by 20 per cent, Mr Godfrey said Virgin could slash fares further and still turn a tidy profit.

"I don't believe [the Tasman] route needs to be unprofitable. It's one of Australia's largest routes and it's New Zealand's largest. Don't forget Tasman Express is dual class," he said.

"You won't get the same cost base for dual-class aircraft compared to a one-class aircraft."

With Virgin barred from using the Virgin Blue name outside Australia, it is understood it will be called Pacific Blue.

With Virgin Blue reapplying for landing slots in New Zealand last week, Mr Godfrey said he supported the proposed $550 million alliance between Qantas and Air New Zealand if Qantas "moved in Air New Zealand's terminals", freeing terminals for Pacific Blue.

At the opening of Virgin's Blue Room lounge in Sydney yesterday, Mr Godfrey took a swipe at Qantas's three-year $1 billion cost-cutting program.

"We've got Qantas going on about their cost base . . . [but] they give away food, they have business class, they are members of a very expensive global alliance," he said.

Virgin was upgrading its product offering by launching nine business class-sized "Blue Zone" seats on each of its Boeing 737s, at an extra cost of $30. Mr Godfrey said the airline would maintain its low-cost "mantra" by offering the extra services to passengers on a user-pays basis, with the Blue Room charging a $5 entry fee, and a "pub price" of $5 for a stubby of Victoria Bitter.

He said "registered corporate accounts" had increased from 2 per cent to 20 per cent of the airline's passengers in three years.

Meanwhile, the director general of the International Air Transport Association, Giovanni Bisignani, said the "attitude" of competition regulators and bilateral "open skies" agreements between countries and national ownership rules, were "the three pillars of stagnation" in global aviation. Mr Bisignani, who represents the interests of 277 member airlines, told a National Aviation Press Club lunch yesterday: "The proposed Qantas-Air New Zealand alliance is a clear example of what needs to happen throughout the industry."

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

[Johhny Utah]

Hmmm - more spin doctoring from DJ to get some more 'free' publicity?

I find it incredible that DJ can follow up their swipe at Qantas "We've got Qantas going on about their cost base . . . [but] they give away food, they have business class, they are members of a very expensive global alliance,"
with this:
Virgin was upgrading its product offering by launching nine business class-sized "Blue Zone" seats on each of its Boeing 737s
Obviously 'Blue Zone' is the business class you have when you're not having a business class!

[Rubber Chicken]

The 'Blue Zone' is the emergency exit row over the wing. The seats are the same but a lot lot lot more leg room. This is the area where paxing crew trained in the operation of the exits are forbidden to sit. We get to sit in row 27 where all the screaming kids are. Try that next time you have to pax Brisbane to Perth. Next time we have to demo our ability to open a wing exit on an EP's course I will ask them to show me how it is done from row 27. Sometimes I do wonder about safety before profit??? Why put a trained crew member in the seat when you can flog it for $30 and get a business man who has just had half a dozen VB's in the Blue room before the flight to sit there. Makes perfect sence. NOT!!!!!

[ER2nd.]

...and they clearly don't like QF to 'give away food' or be a member of a global alliance. Me thinks the competitive boot is suddenly on the other foot.

[MoFo]

How could QF survive without good old Brett handing out advise.
Great to hear from the expert. He'd been a bit quiet lately.

[Colonel Blink]

Selling some seats at a premium prices goes against the business model of all the low cost ops. Where this has been tried before (e.g. Debonair in the UK) it was the downfall of the company - perhaps the DJ managers need to read the Rigas Doganis book on running an airline (The airline business in the 21st century)

[reynoldsno1]

threatened to slash fares by more than 40 per cent
So when does the "threat" turn into a "promise"....?

[jupiter2]

"Nine business class-sized seats on B737's".

I've flown Virgin before and have sat at the overwing exit seats and noticed the difference in leg room.

Will the new upgraded seat be different to what I'm familiar with?
Is it actually going to be a "business-class" seat and how will they be configured?

[Wirraway]

from Sydney airport message board.

VH-VOK and VH-VOL are due before the weekend.These are the first of the new oeders of 10 (800's) which they are purchasing outright.

VH-VBW and VBX are currently in NZ and will be delivered within the next fortnight.

[Pete Conrad]

The so called spin doctoring by Virgin is no different to the spin doctoring done by Geoff Dixon when he rings up John Anderson and whinges everytime SQ or Emirates or some other airline looks at flying more in Australia.

Give them a break, the vast majority of people are hoping that Virgin get the breaks they need. It's only you QF people that look down your noses at anything resembling another airline competing with you. If you didn't have such a self esteem issue Johhny Utah you may actually realise that the Virgin devil you know is better than the AN/SQ/AirNZ devil you unfortunately didnt get to know.

[Waste Gate]

Gee you're a f@@rkwit Pete.:ok: :ok:

[Johhny Utah]

Pete - where's the threat of the impending SQ/REX/DJ merger that is undoubably going to sort out QF? I'll have to take your word for it re: Virgin being the better devil, as opposed to the AN/SQ/AirNZ devil - unless you're willing to fill us all in on what the plans were for domination of the Australian skies...?:confused:

As for DJ needing a break - give it a rest! How many more breaks do they need to 'keep the air fair' - payroll tax exemptions, state & federal government assistance, concessions from the various unions - ? :confused:

The average punter on the street doesn't care one bit about the airlines - as many here have previously suggested :{ The real people that are hoping that DJ get some more breaks are the management (&/ stockholders) - the more they can get now, the more money they stand to make when the airline is floated & they can cash in. All at the expanse of the various parties that have bent over backwards to give DJ whatever they requested...

As for self esteem issues - well, I guess you are entitled to your own opinion, albeit wide of the mark - so I won't even start. No bite there sorry...

p.s been to any top level meetings of late that you'd care to tell us about...?

[RIVER1]

Dont know about a 40% drop across the Tasman but I will be going Perth Cairns return over the next week and Virgin on the net is 50% dearer than Qantas.They must be full of crap.

[DJ737]

Dont know about a 40% drop across the Tasman but I will be going Perth Cairns return over the next week and Virgin on the net is 50% dearer than Qantas.They must be full of crap.

........probably full of passengers :p

Cheers
DJ737

PS...This forum must be one of the funniest places on the web:ok:

[Pete Conrad]

DJ737, you got that right, it's full of QF flogs thats the problem. They don't realise how funny they make the world, then again without them we wouldn't have any one to laugh at. Waste Gate, your just a d1ckhead, Utah, your a fine example of how arrogance abounds when you think your untouchable in your little QF world. Have you no idea of the so called "breaks" that QF have got over the years.Oh no thats right, QF don't need breaks like the ones DJ get, all Dixon has to do is go and have nother dinner at the lobby restaurent in Canberra with half of Parliament House and every little whinge the guy wants is written down and complied with.

I ask you group of smug F$%#wits, what has Virgin done to offend you so much? to offend you and get your little noses out of joint at the mere fact that they may be getting a little more market share each day? Ask anyone thats been around in the industry a while what where would QF be now if the scenario of AN, SQ and AirNZ had of got up.

Be smug utah, you may think your being comical with your jibe about SQ, DJ and REX forging an alliance, but I challenge you to find the reasons why it wouldn't happen, then again, that opens up a pandora's box for you, coz as your name suggests, Utah, isn't that a state full of wasted space? Beaver, Utah is nice though.

Did you ever stop to think that the people behind Virgin may actually want to make a go of and aren't in it for the money.That they just want some breaks to get a fare go and have reasonable competition here? That in the long run it may actually be good for QF to have other airlines biting at their heels forcing them to get more efficient and be better run?

[Snowballs]

Of course this would have nothing to do with the entry of VB into the Australian market.
--------------------------------------------------------------------------------
From the Herald Sun
Airfares hit 10-year low
By Steve Creedy
08aug03

DISCOUNT air fares across Australia dropped to their lowest level in more than a decade in June - surpassing the savage four-airline fare wars of 2001.

The Bureau of Transport and Regional Economics index of real airfares was almost 7 per cent lower than the previous low, which was recorded in the first half of 2001.
The index showed airfares measured across more than 100 domestic routes were more than 13 per cent lower than in June last year. The index includes taxes and charges.

Airlines last night attributed the lower fares to a combination of aggressive competition, increasing capacity and a fall in domestic demand due to the SARS crisis.

The bureau said a willingness by travel agents to match internet fares may also have played a part.

Qantas executive general manager, sales and marketing, John Borghetti expected the cheap fares to continue, with Qantas offering a $61 Melbourne-Sydney fare in September.

:p :p

[Bluebottle]

"Did you ever stop to think that the people behind Virgin may actually want to make a go of and aren't in it for the money."........ha....ha...bwhahahahhahh... Pete you really must stop smoking that stuff.

[bitter balance]

Ah Pete, I'm very disappointed. Despite the fact that your arguments have as much credibility as Jeffrey Archer's testimony, you have at least previously attempted to play the ball and not the man.

I think your arguments re: QF and Anderson fall down when scrutinised. Isn't that a bummer when theories fall over due to a basic once over? Why can't QF get the one concession from government they want more than any other; a lift in the foreign investment cap. Couldn't Dixon just ring Anderson and he'll pencil whip it? A cup of coffee and a chat would just about do it wouldn't it? I don't have to post links to the many statements of Geoff Dixon and the QF board stating their biggest strategic goal is to increase foreign investment in their company. You already know this.

I'll have to join the chorus of laughter at this one: "Did you ever stop to think that the people behind Virgin may actually want to make a go of and aren't in it for the money." :} You must keep all the delegates at the Star Alliance conferences amused with your supply of witty one liners!

[The_Cutest_of_Borg]

BAHAHHAAAHAHAHAAAHHAAAAAAAAAAAAAAAAAAAA

(Joining the chorus)

Good one Pete....(wipes tears from eyes)

mmmph..... mmmph

BAHAAAHHAAAAAAAAAAAAAAAAAA!!!!!!!

...not in it for the money!!... mmmph... good one...

[The Enema Bandit]

Hey Frank, oops sorry I mean Pete, what concessions did QF get out of the government?
By the way, I have nothing to do with Qantas. You really are full of it. Every post of yours slags of at Qantas. So what if they're arrogant, who gives a farck? Only you and the ocassional Virgin pilot. PS. What's your address so I can send you some vaseline? You need it.
The Bandit has spoken.