Branson promises Oz fares war

[Wirraway]

Tues "London Evening Standard"

Branson promises Oz fares war
7 December 2004

VIRGIN Atlantic today promised a price war on services from London to Sydney which could send air fares on the 'Kangaroo route' tumbling by up to 30%.

Accusing British Airways and Qantas of historically colluding in fixing fares in the lucrative Australian market, Virgin boss Sir Richard Branson said: 'There will be a lot of competition in the market and prices will definitely come down dramatically.î

Branson, in Hong Kong on a stop-off on Virgin's inaugural Sydney flight, said: 'You can be assured we will be competing very hard with them. BA and Qantas and the third carrier on the route, Cathay Pacific, almost work as one airline as part of the one-world alliance. BA and Qantas collude and set fares via their joint services agreement.'

In a move reminiscent of previous battles with BA, Branson said: 'We have applied to the Australian authorities to break up this cosy arrangement. We have so far failed to stop them colluding, though we are appealing to the authorities.

'That they continue to allow them to collude is an utterly bizarre situation.î

BA and Qantas currently have 70% of the highly-profitable business market from Australia, the which Branson is desperate to break into.

But he added: 'Unlike some airlines, we do not ignore economy class. We have to make sure every seat is filled, even it means cutting prices right down.î

Branson also confirmed ambitious plans for further expansion of the Virgin airline brand.

In addition to launching a budget airline in the US, he also intends to break into the domestic African and Indian markets, and is looking to expand his Australian Virgin Blue carrier around the Pacific region.

He said Virgin Nigeria, which aims to become a pan-African low fares airline, will launch next year and he is looking at investmentopportunities to launch a Virgin-branded domestic carrier in India.

Outlining a growth strategy of 10%-to-15% a year for Virgin Atlantic, he also unveiled plans to launch services from European capital cities to America, as and when the US and European Union authorities agree an 'open skies' liberalisation accord.

• Branson's publicity stunt to announce the arrival of Virgin Atlantic in Sydney are under a cloud, with weather threatening to wash out his bungee jump over the city's famous Bondi Beach. Severe thunderstorms forecast all week could stop the jump and put a damper on his £1.2m promotion plans.

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[boofta]

Branson is starting a fare war, his price between Sydney and
Hong Kong is at least 30% higher than QF and CX.
If thats warfare, we all better keep our heads down.

[jakethemuss]

Righto all you journos out there,

Take this as written.

I believe, What a load of Bull****!!!!!

There are 30+ airlines competing over the "kangaroo route" and in my opinion this pommy ****** tries to make big statements about competition.

Ask the residents of Mt Isa what branson could do for them. No wonder it is called "Virgin". If you cherry (excuse the pun) pick the profitable routes then at least you reduce the risk.

Dick (branson not smith), take your anti-competition whinging pom attitude back to ol' blighty and bring on your (no govt relief subsidies, etc etc) product to market and see how she goes.

If you win, I'll wear the uniform and work one of your flights as a hostie.

[Sperm Bank]

Jake you are smoking something pretty good. WHAT IS IT? Cherry pick the routes...yeah right. There are more jet routes in oz than ever before and the prices are much lower than years gone by. Yep, Branson really has been a disaster hasn't he mate.

[AIRWAY]

Just booked my flight to Australia ( Sydney ) with Virgin for £615 pounds ( April ) taxes included, good deal i have to admit. Last year the same flight cost me around £800 pounds, more or less same dates but with BA/QF.

I believe BA is doing a promotion for £499 ( according to a friend ) for the next couple of months ( probably to try and push out Virgin ) to Sydney as well.

Anyway, the reason i choose Virgin was simply down to the aircraft, i always wanted to fly on the A340-600

the prices are much lower than years gone by

This is a very true statment, traveling to Australia nowadays i quite cheap, compared to what it use to be before.

[MoFo]

Anything that increases capacity on the Australia UK route is good.

Judging by comments on crikey.com, business people are having trouble being able to book a seat either way with qantas at full commercial rates. They are looking elsewhere. Obviously QF won't put enough capacity on the route, so let others do it for them.

As for Europe, why would you fly QF to London and then backtrack to European cities, when you can go straight to the city of choice with other airlines. Emirates are a great example of this. Imagine someone thinking innovatedly at QF and also hubbing at the middle east to Rome, Paris and Frankfurt. Or at least going TO the middle east and handing them off to someone else if numbers were too thin to sustain.

Those running the strategy at QF seem to be in a time warp, when Australia was a colony hanging off the apron strings of mother England. We only go to mother England but only if the load factors are 100%

Branson is happy to tack up the slack. So be it.

[The_Cutest_of_Borg]

MoFo, I think you will find that any restrictions on QF's capacity to LHR is caused solely by lack of additional slots.

[MoFo]

Borg, Gidday.

They bought additional slots earlier this year for millions, but are not using them, by increasing capacity from Oz. Maybe they plan to, but why drag the chain.

[Don Esson]

UNUSED SLOTS?

Not bloody likely, MoFo. Two reasons. Where did the slots come from for their new service via Hong Kong and from Perth? Fresh air? I think not.

There is also a rule that stipulates that unless you use 80% of your allocated slots, you lose them. Why would Qantas outlay millions to buy slots to see them evaporate and allocated to another airline for want of use? Do you really think that the people at Qantas are so dense?

[apacau]

Don - that's why Qantas operated a BAe146 wet-lease from London to Manchester and return daily. To keep the slots! What a waste, though I think the new services mean these are no longer needed.

[DirectAnywhere]

Try a lack of additional aeroplanes not lack of slots.....

[DutchRoll]

DirectAnywhere is absolutely correct.

It's all about how many aeroplanes QF has. There are any number of routes which QF would love to get into as well as increasing capacity on some of its existing ones (such as LHR). Unfortunately it doesn't currently have the hardware to do it, and big efficient long-range aeroplanes don't grow on trees.

[Howard Hughes]

Branson, in Hong Kong on a stop-off on Virgin's inaugural Sydney flight, said: 'You can be assured we will be competing very hard with them. BA and Qantas and the third carrier on the route, Cathay Pacific, almost work as one airline as part of the one-world alliance. BA and Qantas collude and set fares via their joint services agreement.'

A move reminiscent of previous battles with BA, Branson said: 'We have applied to the Australian authorities to break up this cosy arrangement. We have so far failed to stop them colluding, though we are appealing to the authorities.

'That they continue to allow them to collude is an utterly bizarre situation'.

Oh yes punter's can get a ticket for a tad under $1600au in off peak times, now let me see, roughly the same price they were paying in 1975!!

Yeh that's collusion, I can see it now....

Cheers, HH.

[Cactus Jack]

Couple of things that are very strange about Branson's statement. Firstly, QF have only just started flying to LHR via HKG. So how in the hell have they colluded with BA to keep fares up?

Now before you start telling me that this small point doesn't matter, because QF simply code shared and themselves flew via BKK and SIN; understand this. There are probably a dozen airlines who can get you from Oz to Europe, many of them much cheaper than QF. Once again, it is patently obvious that "collusion" is simply not possible.

So apart from Bransons embarrasing grandstanding, where was his logic? Answer: there was NO LOGIC to his statement.

I've just watched his performance on the news, and I've gotta ask you professional VB drivers. Aren't you even slightly embarrassed to have this fool at the top of your organisation?

[Ron & Edna Johns]

Hmmmm..... just did a random "booking" on both QF and VS, travellling SYD-LHR-SYD in Jan. Qantas: A$2685. Virgin Atlantic A$3144. Includes all taxes.

Branson is right - fares will fall. His fares, that is.

I'm a little unsure how he is going to effect 30% reductions overall by adding just one flight per day between Australia and the UK, when competing against the likes of Cathay, SQ, Malaysian, Thai, JAL, ANZ, United, Gulf Air, Emirates, not to mention QF and BA.

The way this guy goes on, it's as if QF and BA have the route to themselves. Well, unlike the domestic scene downunder at the end of 2001, that just aint the case.......

Is going to be interesting longer term.

[grrowler]

Just saw the big man with his cheap grandstanding on the news.

The thing is the media love him, and therefore write favourable stories which the public gobble up.

If QF PR were smart they'd initiate some sort of RB crap spinning public awareness campaign. Before he gets a foothold.

[Chimbu chuckles]

Wouldn't be surprised to hear pilot numbers are another limiting factor for QF expansion plans...in fact I have heard it.

[Eastwest Loco]

Virgin and its localised spawn are traditionally not always the cheapest. This is a very well milked and effective publicity ploy and in the local market has engendered the perception that they are automaically the best cost option.

This in many cases is true, and we happily sell their services. It is not always the case as as many times QF mainline comes in cheaper on many routes, particularly lower volume.

VS is coming in with the same broo ha-ha, and it is indeed a good public relations and will generate revenue.

Fares at 30% below the alleged QF/BA stranglehold on the Kangaroo route are freely available with Austrian, Emirates, Gulf, Singapore and may other carirers, complete with subsidised (heavily) flexible connecting fares from regional Australian ports.

VS on the other hand has been impossible to contact on the Sales side. I rang VS to get a quote on a fare originating in the UK and was curtly advised by the alleged res operator that she was a temp and nobody was available to quote fares. Last time I checked no fares were available through our consolidators. I prefer to hold an airline's plate, so I can issue the ticket and don't have to rely on the middleman, and cant get to talk to anyone if something goes pear shaped.

It would seem VS needs the Uk based fares for revenue, and wants us in the game to deal with consolidators to try and ticket our passengers who wish to try their services.

Wont work guys. Get the Greek Consolidator mafia out of the loop and go straight to he coal face otherwise you will be ignored by any Agent with a brain. You cant live on Fright Centre alone.

VS has a chance to make a difference right now. As of thisvery moment, they are blowing it badly.

Best all

EWL

[Wirraway]

Thurs "Sydney Morning Herald"


They said it ... a passenger wears a whinging Poms T-shirt.
Photo: Peter Rae

Shares blue as Virgin flies in on a whinge
By Scott Rochfort
December 9, 2004

The touchdown of Virgin Atlantic's first flight into Sydney yesterday failed to fire up Virgin Blue shares, with billionaire Richard Branson's listed Aussie airline well below its issue price.

Investors who paid $2.25 a share exactly one year earlier saw the stock fall 7c to $2.01, as Sir Richard's latest aviation venture left investors underwhelmed.

"The share price is off from the listing price but actually not by that much," Sir Richard said. "And obviously if fuel prices continue to come down, that will make a big difference."

Blaming the recent surge in oil prices for Virgin Blue's poor showing on the stockmarket, he said: "I think if you compare Virgin Blue's performance with all the other low-cost carriers in the world, it's actually done very well."

This year Virgin shares have fallen 15.55 per cent, while low-cost airlines such as Ireland's RyanAir and the US's JetBlue have seen their share prices fall 17.3 per cent and 8.37 per cent respectively. Qantas shares have risen 8.5 per cent in the same period.

Sir Richard also commended his 25 per cent-owned airline for bouncing back from its August profit warning.

At the time, it said earnings had fallen 20 per cent in the first four months. But last month it bounced back to report only a 2 per cent dip in first-half profits.

When asked if he intended to sell his remaining 25 per cent stake in Virgin Blue, Sir Richard said: "Certainly not. I love these articles. Sometimes one reads that there's rumours ... and I start thinking it's very often the journalists themselves that create the rumours, but anyway."

With Sir Richard eventually diverting questions about Virgin Blue to the airline's head of communication, David Huttner, the Virgin boss said he expected to launch his low-cost Virgin USA airline next year.

As for talk about Virgin launching flights on the lucrative Sydney to Los Angeles Qantas route, Sir Richard said: "I would suspect that in some form or another a Virgin company may well end up on the Pacific route at some stage in the future. It could well be a combination of Virgin Atlantic helping Virgin Blue."

Sir Richard also took time to lambaste the ACCC-approved Joint Services Agreement which allows Qantas and British Airways to fix prices on flights to London.

"They are allowed to collude on fares," he said. "They are allowed to sit in dark rooms and look at how they can take the passenger for a ride. And it's absolutely incredible that the Australian competition authorities allow them to collude on fares."

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[Cactus Jack]

Sorry, but there comes a point in time where this fool must be held accountable for the cr@p that he spins. Like this:

"They are allowed to collude on fares," he said. "They are allowed to sit in dark rooms and look at how they can take the passenger for a ride. And it's absolutely incredible that the Australian competition authorities allow them to collude on fares."

Firstly, they do not collude. Secondly, GD is still afraid of dark rooms ever since his better half walked out and he sleeps with a night light. Thirdly, the ACCC is patently aware that there are a dozen carriers competing on this route! How the bloody hell does this rocket surgeon named Branson, come up with collusion?

To the Press: Do not listen to the idiot, thats what he feeds off.

To QF and BA: Sue the fool.