Virgin Does What Qantas Can't
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Virgin Does What Qantas Can't
The biggest personal investor in the world aviation industry, Sir Richard Branson, says the sky is a safer place today thanks to the death of Osama bin Laden.
It is a positive for the world and a long-term positive for everyone in it, according to the man who was in Australia yesterday lending his weight to revamp Virgin's Australian aviation business.
Safer it may be but it is the wider threat of the sluggish economic landscape and the rising fuel price rather than terrorism that is presenting Virgin and its competitors with their present challenge.
Only an entrepeneur would have the tenacity to launch a new product or business direction in a hostile industry environment. Richard Branson's Virgin Australia perhaps needs to be taking this punt in its David and Goliath-like fight with Qantas for the business traveller.
Virgin Australia undertook the biggest step in its brand renewal yesterday - a new name (Virgin Australia replaces Virgin Blue and V Australia) and a new livery, assisted by plenty of Branson himself hanging out of the cockpit of the new aircraft to appeal to the cameras.
Make no mistake, the product the new Virgin Australia unveiled yesterday is impressive. The aircraft looks fresh and comfortable on the inside, both in business and economy, and is spacious enough to satisfy the corporate traveller.
For the Virgin shareholders, the numbers should stack up. Virgin Australia's boss, John Borghetti, has spent the $35 million capital expenditure wisely to pull his product out of the middle-ground dead zone - with a cost base that could not compete with the no-frills market and a product that could not capture the more discerning business traveller - and into the full service market.
Once the fleet is introduced, the business traveller will have an alternative in quality - but perhaps not in frequency.
Over time all new Virgin aircraft will be equipped with the same quality interiors seen on display yesterday. The airline will also beef up its frequent flyer program and overhaul its business class lounges.
If Qantas and Virgin were starting out fresh tomorrow as competitors on an equal footing in the Australian domestic market, they would probably split the market 50/50.
But Qantas, as the airline with a near monopoly on the business market, has the advantage of inertia and, more importantly, a well-established frequent flyer customer base. It also has the huge advantage of more flights.
Virgin does not aspire for a moment to catch half of the business share - it just wants to take an additional 10 per cent, which on its numbers is $150 million in revenue. And it doesn't expect to get this overnight. It will take a few years.
The trouble for both Qantas and Virgin is that the commercial environment for airlines is hostile right now. For the most part this can be attributed to the soaring cost of fuel and to a lesser degree sluggish Australian consumer sentiment.
The leisure market is being squeezed, regardless of the comfort of the aircraft and the attractiveness of its livery.
Not even Branson can debate this. Virgin warned a month ago that its losses would blow out to as much as $150 million in the second half of the financial year, most of which can be attributed to subdued consumer spending and the rising oil price.
Virgin Australia's Borghetti says the business has enough capital to sustain it through these lean times and that this modest investment in repositioning Virgin is well worth the cost given the potential gain. Over the past few years, its push to gain traction in the commercial market has met with little success. It has been more about marketing and less about product to back it up.
The challenges for Qantas are every bit as great. It is a larger company with potentially more to lose. It has been propped up by its lucrative frequent flyer business both as a generator of earnings and a means to keep its customers loyal..
Having Virgin redouble its efforts to steal business passengers is a threat Qantas does not need now.
For Virgin, the additional capital expenditure and operational expenditure needed to embark on building a full service airline is probably a worthwhile punt.
Virgin under Borghetti is on a roll.New alliances,streamlined branding and fresher more vibrant presentation.Word is Borghetti has given staff a number to contact him if they see ways to improve the business.
Now....whats the telephone country code for Ireland ?
It is a positive for the world and a long-term positive for everyone in it, according to the man who was in Australia yesterday lending his weight to revamp Virgin's Australian aviation business.
Safer it may be but it is the wider threat of the sluggish economic landscape and the rising fuel price rather than terrorism that is presenting Virgin and its competitors with their present challenge.
Only an entrepeneur would have the tenacity to launch a new product or business direction in a hostile industry environment. Richard Branson's Virgin Australia perhaps needs to be taking this punt in its David and Goliath-like fight with Qantas for the business traveller.
Virgin Australia undertook the biggest step in its brand renewal yesterday - a new name (Virgin Australia replaces Virgin Blue and V Australia) and a new livery, assisted by plenty of Branson himself hanging out of the cockpit of the new aircraft to appeal to the cameras.
Make no mistake, the product the new Virgin Australia unveiled yesterday is impressive. The aircraft looks fresh and comfortable on the inside, both in business and economy, and is spacious enough to satisfy the corporate traveller.
For the Virgin shareholders, the numbers should stack up. Virgin Australia's boss, John Borghetti, has spent the $35 million capital expenditure wisely to pull his product out of the middle-ground dead zone - with a cost base that could not compete with the no-frills market and a product that could not capture the more discerning business traveller - and into the full service market.
Once the fleet is introduced, the business traveller will have an alternative in quality - but perhaps not in frequency.
Over time all new Virgin aircraft will be equipped with the same quality interiors seen on display yesterday. The airline will also beef up its frequent flyer program and overhaul its business class lounges.
If Qantas and Virgin were starting out fresh tomorrow as competitors on an equal footing in the Australian domestic market, they would probably split the market 50/50.
But Qantas, as the airline with a near monopoly on the business market, has the advantage of inertia and, more importantly, a well-established frequent flyer customer base. It also has the huge advantage of more flights.
Virgin does not aspire for a moment to catch half of the business share - it just wants to take an additional 10 per cent, which on its numbers is $150 million in revenue. And it doesn't expect to get this overnight. It will take a few years.
The trouble for both Qantas and Virgin is that the commercial environment for airlines is hostile right now. For the most part this can be attributed to the soaring cost of fuel and to a lesser degree sluggish Australian consumer sentiment.
The leisure market is being squeezed, regardless of the comfort of the aircraft and the attractiveness of its livery.
Not even Branson can debate this. Virgin warned a month ago that its losses would blow out to as much as $150 million in the second half of the financial year, most of which can be attributed to subdued consumer spending and the rising oil price.
Virgin Australia's Borghetti says the business has enough capital to sustain it through these lean times and that this modest investment in repositioning Virgin is well worth the cost given the potential gain. Over the past few years, its push to gain traction in the commercial market has met with little success. It has been more about marketing and less about product to back it up.
The challenges for Qantas are every bit as great. It is a larger company with potentially more to lose. It has been propped up by its lucrative frequent flyer business both as a generator of earnings and a means to keep its customers loyal..
Having Virgin redouble its efforts to steal business passengers is a threat Qantas does not need now.
For Virgin, the additional capital expenditure and operational expenditure needed to embark on building a full service airline is probably a worthwhile punt.
Virgin under Borghetti is on a roll.New alliances,streamlined branding and fresher more vibrant presentation.Word is Borghetti has given staff a number to contact him if they see ways to improve the business.
Now....whats the telephone country code for Ireland ?
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A Note to QF Shareholders
Sell Qantas Buy Virgin.
Only if you want exposure to the roller coaster of Aviation of course.
Virgin is going to provide a better ride over the long term.
You may even get a dividend
Only if you want exposure to the roller coaster of Aviation of course.
Virgin is going to provide a better ride over the long term.
You may even get a dividend
I find it amusing that JB was a long term (since he was 16) member of the QF team that is so hated on these pages. He was an executive under the hateful Geoff Dixon and was at the birth of Jet*. He guided it through its inception and growth as a QF executive. He is every bit as responsible for QF as AJ is and if he had beaten him to the CEO gig would be just as vilified here.
Perhaps others will be along later to explain why.
I can't be bothered.
Virgin has just bled a lot of cash, regardless of the reasons the industry is dynamic.
Tiger and QF have similar issues to deal with, now VB is throwing a lot of money into a venture that is tightly held and will continue to be tightly held by QF. Analysts are predicting this to be a watershed that could cripple a 'New World' airline.
Borghetti is no 'Messiah', he is a CEO with little left to do other than rebrand in the hope of capturing some of the high yield market.
Tiger and QF have similar issues to deal with, now VB is throwing a lot of money into a venture that is tightly held and will continue to be tightly held by QF. Analysts are predicting this to be a watershed that could cripple a 'New World' airline.
Borghetti is no 'Messiah', he is a CEO with little left to do other than rebrand in the hope of capturing some of the high yield market.
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Lester, ask anyone at Qantas and theyll tell you borghetti was one of the most respected men. Not just since he's been at virgin. Read some old posts please. That will tell you all you need to know.
KABOY are you able to supply at least one link or reference to support your claim...
Face it. JB was forced into this move by QF.
QF deliver a superior product and are a company making healthy returns. They were squeezing VB with Onestar at the leisure end.
So JB had absolutely no choice to make this change. It was forced on him by the market place, essentially QF.
The VB share price closed at 28.5 cents today. It is still trending down after the rebranding, so the market is not too impressed.
I am looking forward to trying out the new product.
Analysts are predicting this to be a watershed that could cripple a 'New World' airline.
QF deliver a superior product and are a company making healthy returns. They were squeezing VB with Onestar at the leisure end.
So JB had absolutely no choice to make this change. It was forced on him by the market place, essentially QF.
The VB share price closed at 28.5 cents today. It is still trending down after the rebranding, so the market is not too impressed.
I am looking forward to trying out the new product.
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Who Ran Qantas?
A team of execs headed by Dixon ran Qantas.
Borghetti was part of that team.He did not always agree with the direction Qantas was being taken.To insinuate that he was responsible for the mess that is now Qantas casts aspersions on the intellect of the individual making these assertions.
Qantas does not offer a superior product.According to Dixon and now Joyce it does not return its cost of capital.It is a cash cow that many would like to get their hands on.Run it down and destroy shareholder value then flog it off cheap.Reap $60 mil for doing so.Joyce is merely taking up where Dixon left off.
Qantas would be a much healthier beast had Borghetti got the the big gig
Borghetti was part of that team.He did not always agree with the direction Qantas was being taken.To insinuate that he was responsible for the mess that is now Qantas casts aspersions on the intellect of the individual making these assertions.
Qantas does not offer a superior product.According to Dixon and now Joyce it does not return its cost of capital.It is a cash cow that many would like to get their hands on.Run it down and destroy shareholder value then flog it off cheap.Reap $60 mil for doing so.Joyce is merely taking up where Dixon left off.
Qantas would be a much healthier beast had Borghetti got the the big gig
Last edited by Ka.Boom; 5th May 2011 at 10:14.
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I think it's wrong to say QF don't deliver a superior product. I flew Jet*, Tiger, VB and Qantas when I visited Aus - I was most delighted by Qantas. Putting the old birds manning the cabin and the older aircraft aside, it was a quality product. Sitting on VB, I felt crammed and up close the aircraft looked poorly maintained. There's just something about being on a Qantas flight which 'feels' better. It feels that bit more spacious and like you're being cared for much better.
The only 'superior' aspect of VB is the cabin crew ladies. Jet* was 'okay' and I sat on a Tiger flight just waiting to grab my life jacket.
Not holding much knowledge on either Airline and their backgrounds but in terms of customer experience, Qantas wins it in my eyes.
The only 'superior' aspect of VB is the cabin crew ladies. Jet* was 'okay' and I sat on a Tiger flight just waiting to grab my life jacket.
Not holding much knowledge on either Airline and their backgrounds but in terms of customer experience, Qantas wins it in my eyes.
so sitting on an 25yr old qantas b767 compared to a 5 yr old virgin 737 you felt safer on an old qantas piece of poo than a "cramped" 737... 
The new Virgin fleet will look like 
while the qantas "poo" will look like 
QANTAS is done, dead over good bye...
J* will take its place
And that will be ****...
The new Virgin fleet will look like while the qantas "poo" will look like QANTAS is done, dead over good bye...
J* will take its place
And that will be ****...
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Or sitting on a 2 month old QF 737 with IFE in every economy seat compared to a 5 year old VB 737? (which I did today) Its easy to make generalisations. How about the fact that all QF 737's have HUDS and RNP approaches while a lot of VB 737-8's still circle to land at a lot of smaller airports? Aircraft age is not the only factor in safety, there are various other factors. Just like circle to land and non RNP approaches are not necessarily more dangerous either as a lot of pilots would agree, so lets stick with the facts not generalise. The fact is QF are making profits and VB are bleeding, these are the facts seriously.
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it is an interesting situation.
jetstar and QF have virgin surrounded.Cant really compete at either end.
JB ( who actually was respected by many at floor level unlike some) must move decisively to stem the damage.
Make no mistake, it is a gamble that must be taken. He has to try something different and is giving it his best.
He knows QF inside out and realises the fact that QF failed to really look after the top end relying on inertia, the freq flyer , lounges etc to keep the biz sector wrapped up despite a deteriorating product.
The full wrap front page adverts in todays newspapers would have been read by masses of QF's best bizoids.Good tactic , bloody expensive I am sure, but spells he means business.
For those QF wage slaves it is great.QF domestic makes good money and will need to kiss a lot of backsides and likely spice up the product.
In the end it means higher fares and a move up market to shore up the biz sector.
Nice to see a race to the top for a change. QF have a huge head start but with some luck JB just might force them to change.
jetstar and QF have virgin surrounded.Cant really compete at either end.
JB ( who actually was respected by many at floor level unlike some) must move decisively to stem the damage.
Make no mistake, it is a gamble that must be taken. He has to try something different and is giving it his best.
He knows QF inside out and realises the fact that QF failed to really look after the top end relying on inertia, the freq flyer , lounges etc to keep the biz sector wrapped up despite a deteriorating product.
The full wrap front page adverts in todays newspapers would have been read by masses of QF's best bizoids.Good tactic , bloody expensive I am sure, but spells he means business.
For those QF wage slaves it is great.QF domestic makes good money and will need to kiss a lot of backsides and likely spice up the product.
In the end it means higher fares and a move up market to shore up the biz sector.
Nice to see a race to the top for a change. QF have a huge head start but with some luck JB just might force them to change.
Yes QF are "making profits" But apparently it has nothing to do with their flying operations...
VB are going to post a loss, but new terminals, new uniforms etc don't come free
V australia if the figures are posted will post a profit
Smashing Qantas on the Pacific. Joyce even said it was a loosing money(the pacific). Right equipment on the right route, not the A380 burning fuel carrying no frieght and lower loads over the same distance as a twin...
Qantas's biggest and worst mistake ever is not ordering the B777
And not listening to their staff and etc...
VB are going to post a loss, but new terminals, new uniforms etc don't come free
V australia if the figures are posted will post a profit
Smashing Qantas on the Pacific. Joyce even said it was a loosing money(the pacific). Right equipment on the right route, not the A380 burning fuel carrying no frieght and lower loads over the same distance as a twin...Qantas's biggest and worst mistake ever is not ordering the B777
And not listening to their staff and etc...
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let's have a look,
Godfrey took what was essentially already a successful, growing and profitable business, and expanded internationally with V Australia at the worst possible time around the GFC. Essentially V Australia bled cash thus drove the whole company's performance down.
Now Borghetti is reinvigorating the company by splashing money left right and centre. It has already been confirmed they will lose money this year somewhere between 30 to 80m a year which is essentially the worst ever result in VBA's history.
Recent years of expansion have been extremely costly.
All the money spent need to be recovered somewhere. Until that time they will remain financially and capitally weak. This is not all bad news in the Flying Kangaroo. Even better news for the travelling public as this new competition will drive better product offering and Qantas will be forced to respond with something better than the crappy millenium seat and tired cabin.
Funny how people are singing praises for John. Make no mistake. He was every bit a bully in Dixon's gang of invinsible men. He will introduce the Qantas culture to Virgin Blue so better look out!
Godfrey took what was essentially already a successful, growing and profitable business, and expanded internationally with V Australia at the worst possible time around the GFC. Essentially V Australia bled cash thus drove the whole company's performance down.
Now Borghetti is reinvigorating the company by splashing money left right and centre. It has already been confirmed they will lose money this year somewhere between 30 to 80m a year which is essentially the worst ever result in VBA's history.
Recent years of expansion have been extremely costly.
All the money spent need to be recovered somewhere. Until that time they will remain financially and capitally weak. This is not all bad news in the Flying Kangaroo. Even better news for the travelling public as this new competition will drive better product offering and Qantas will be forced to respond with something better than the crappy millenium seat and tired cabin.
Funny how people are singing praises for John. Make no mistake. He was every bit a bully in Dixon's gang of invinsible men. He will introduce the Qantas culture to Virgin Blue so better look out!
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Qantas's biggest and worst mistake ever is not ordering the B777
Its pretty sad too that we all know the A380 is a commercial disaster but hey what do we know? Managers know best!!
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Some of you QF blokes are seriously deluded about your company - Have you looked in the cabin ? Have you received some of the service given by your CC ? Have you looked at any other carriers around the world ?
"Doc Doc come in Doc,the Delorean got a flat and we're stuck in 1985"
Superior product - geeezzzzuz, are you kidding ,......................
"Doc Doc come in Doc,the Delorean got a flat and we're stuck in 1985"
Superior product - geeezzzzuz, are you kidding ,......................