MERGED: Alan's still not happy......

[airsupport]

Some pax are forced onto JQ in the absence of QF service but most VFR pax purchase decisions are based purely on price.

Not true of all pax, I do not fly much now I am retired but my Wife does regularly.

As per the first part of your quote she has only ever flown JQ once when there was no QF flight, ALWAYS flies QF as long as there is a flight.

Most times she books well ahead and seeks the lowest price but ONLY on QF, a lot of that is as I believe she is safer on QF, have had her for nearly 45 years and don't want to lose her.

Anyway, got to go watch the Ashes Cricket now, bye..............

[happyfarm]

Originally Posted by Romulus

But here's the fundamental question - where did the Jetstar 67% come from? Jetstar hasn't been around that long, yet they're running 2/3 full based on lower service and lower fares. Those people have CLEARLY chosen to purchase on lower fares. Sure people PREFER to fly full service but out of your argument a very significant number of people have chosen exactly the opposite of what you have stated will happen.

And by keeping those 67% on QF group aircraft you prevent them going to other carriers and helping your competition cover costs. AND you also help keep QF mainline ticket prices at higher levels by making people choose the clearly differentiated lower service brand.

So having Jetstar available to suck up the budget traveller dollar is doing EXACTLY what you think is such a revolutionary idea - it is helping mainline keep the average price of a ticket higher. You can argue an extra $10 or so if you like, but what the JQ strategy delivers is a much more substantial premium than that.

Hopefully that answers your question and isn't too longwinded a reply.

Romulus,

You summarised the theory of having a dual brand (premium and low cost) very well. Unfortunately Joyce's execution has been very far from the mark. Joyce has gotten significantly distracted by using jetstar as an industrial sledge hammer or in an attempt to deal with the challenges of the QF sale act (bypassing it by transferring pax to jetstar, growing off shore jetstar companies, driving down QF int and finally creating a political crisis in an attempt have the act amended).

Both the industrial sledge hammer and the QF sale act strategies are not coincident with the dual brand (premium/low cost) strategy. As a result there are unions bleating, disengaged front line staff, confused middle managers, burnt out executives, investors asking questions, plummeting share price, poor returns, devaluing of credit ratings, agitated politicians, disgruntled loyal passengers, .... the list is getting longer.

If there is a concerted focus on the dual brand strategy then everything else will fall into line. Until then we will get more of the same confusion.

[Romulus]

Originally Posted by fedsec

Originally Posted by romulus

Fedsec - perhaps reread what I wrote regarding Hyundai/Mercedes then. You are talking about buying (permanently owning) a vehicle, not renting a seat and that vehicle is used repeatedly by the family unit (be that unit a single right up to whatever size family fits).

Romulus the Hyundai/Mercedes debate matters not if it is about buying a car or renting an airline seat. It begs the question - will a consumer pay extra for better quality? People still buy Mercedes and people still chose to fly on airlines that charge extra in fact I say that more Australians would be prepared to pay slightly more to fly Qantas than Jetstar. I've used one example where the airlines are in direct competition to demonstrate that.

If that's your level of analysis then there's not much point arguing. If you can't tell the difference between the conditions attached to buying a car vs renting an airline seat then you need a reality check.

Originally Posted by fedsec

Originally Posted by romulus

Those people still fly. Except instead of flying with you they fly with your competition. So your competitor picks up the people filling the cheap seats (unless they are also running at very high load factors) and that's the double whammy - you are spreading your essentially fixed costs across less people, whereas your competitor is now picking up more.

Really? Did you go to the same school as Aviation expert Geoffrey Thomas? A lot of things may sound good in theory but in practice they often work differently.

Awesome argument. Straight to the fallacy of ad hominem attacks. Clearly it must be hitting home.

I realise the point I made is a key element you don't want to deal with because, quite simply, you have too many people maintaining the number of aircraft Qantas have. It is that simple.

You may like to believe you can just keep adding $10 to a ticket and nothing will change but you're wrong. As I pointed out previously and you chose not to respond to why not add $50 or $100 if you believe price is so irrelevant?

But then, that doesn't fit with you "just put your prices up and all will be sweet" theory.

Originally Posted by fedsec

Originally Posted by romulus

And then we get to your load factor argument. And that argument actually runs COUNTER to your own theory. QF Sept loads to/from Japan for QF are 84% vs Jetstar at 67% which on the surface would say you are correct.

But here's the fundamental question - where did the Jetstar 67% come from? Jetstar hasn't been around that long, yet they're running 2/3 full based on lower service and lower fares. Those people have CLEARLY chosen to purchase on lower fares. Sure people PREFER to fly full service but out of your argument a very significant number of people have chosen exactly the opposite of what you have stated will happen.

Nothing runs counter to my theory. The 67% of people flying Jetstar didn't come out of thin air. They were taken from the pax who used to fly Qantas, not because they choose to purchase a lower fare, it's because Qantas stopped flying many of the routes and reduced frequency on Narita services leaving the travelers with no other choice (apart from JAL who benefited from the exercise).

Really?

What are the total numbers of people flying?

How many seats in total to and from Australia?

When I do a check of Sydney-Narita I don't just find Jetstar and JAL, I find Scoot, Virgin, Singapore, Garuda, Korean, Asiana and China Eastern as well (and that's just on the first screen).

If everyone was paying more for a premium service then with all those options available why does ANYONE fly Jetstar?

Gven your analysis of the Japan routes, and given the fact that Qantas mainline still flies that route, why isn't, on the basis of your argument, mainline running at 100% of capacity? If your theory holds then people would not fly Jetstar unless there was no alternative, but given the numbers you posted not only is there an alternative but there is a Qantas mainline alternative. Which is not taken.

Furthermore with your numbers JQ are running 113 flts @67%, Qantas are running 30 @84%. Who is carrying more passengers?

30 747-400 @ 84% of approx 360 pax is 9,072 passengers (out of 10,800 available seats).

113 A330 @ 67% of 230 pax is 17,413 passengers.

And given there are daily mainline services are you really sure you want to try and claim that all people want the full service carrier at a premium? Why are there approx 1,700 empty mainline seats on the numbers you provided?

The answer is simple - people have more choice. They can now choose lower cost carriers. There is a plethora of airlines now running the route. Your figures for 05 and 06 show

191 flts @ 76% x 360 pax = 52,257 passengers.

Compared to a combined total of just under 26,500 per month now.

Do you think that tells us something about the competition (refer Webjet list previously provided).

And what were ticket prices like in 2005/6?

What were other costs like?

The market has been splintered by competition, and that competition has driven prices down for the end consumer. Prices have risen inexorably. You can deny it all you like and lobby for a return to closed skies but that is simply living in the past. For Qantas to be competitive they need to leverage their domestic brand and provide value driven services, and that means they have to drive efficiencies. I realise you don't like it but the simple fact is that the general public don't want to subsidise featherbedded industries like vehicle manufacture, fruit canners or airlines any longer. The rest of the population has had to adapt and get more efficient or be outsourced so they are asking why they should pay more just to keep industries profitable.

[Romulus]

Originally Posted by spellingnazi

Exactly...

Re:"But here's the fundamental question - where did the Jetstar 67% come from? Jetstar hasn't been around that long, yet they're running 2/3 full based on lower service and lower fares. Those people have CLEARLY chosen to purchase on lower fares. "

Utter crap. In many cases consumers were forced onto one star. Gifted routes from mainline.

Look at the total numbers. Market forces have smashed mainline, competition has given people choice and they have walked away to the competitors. Tickets are more affordable than they have ever been and people are choosing non QF alternatives.

NOBODY has been "forced" onto Jetstar. People have chosen to go there. QF loads acc to SPs numbers indicate approx 15% available capacity. Were people "forced" out of those seats as well?

[The Professor]

"Most times she books well ahead and seeks the lowest price but ONLY on QF, a lot of that is as I believe she is safer on QF, have had her for nearly 45 years and don't want to lose her."

An argument based on anecdotal evidence from an airline industry employee? Really?

Romulus, spot on.

[Romulus]

Originally Posted by TheProf

"Most times she books well ahead and seeks the lowest price but ONLY on QF, a lot of that is as I believe she is safer on QF, have had her for nearly 45 years and don't want to lose her."

An argument based on anecdotal evidence from an airline industry employee? Really?

Romulus, spot on.

Plus she's of the generation with a very strong attachment to QF from times long past.

[busdriver007]

You are right people have gone elsewhere. The problem for the Qantas Group is they have left altogether and some fares are more expensive on other carriers but once they have them they are hard to get back, almost impossible. Check out what has happened in Air New Zealand, they shut down Freedom and put everything under one banner and guess what, record profits. Qantas management have driven passengers away and yes they have forced people on to Jetstar and they don't like it. The choice is there and they have made it. The fact of the matter is Jetstar Australia has the same costs as Qantas Mainline(staff cost negligible)so it will only be a matter of time before it fails too unless the Australian Government realises that Australia is prohibitively expensive place to do business and does something. Maritime industry as classic example, 26 ships left and 0.5% of the shipping task into and out of Australia. Is that where we are heading to? The solution for the Shipping Industry was to reduce tax to zero and accelarate depreciation unless the Liberals reverse it.

[Stink Finger]

NOBODY has been "forced" onto Jetstar. People have chosen to go there.

Romulus, I call BS on that statement.

A bit over ten years ago, my family and I had yearly holidays at Nadi, Fiji, we all flew QF.

Enter the orange rash, and now we only have the choice of one star, VA or Fiji Airways ( previously Air Pacific ), i.e. no more QF.

This Nadi route is one of many that appeared to have been gifted, i.e. destinations that are no longer served by an aeroplane with a white rat on a red tail with an Australian accent on the PA.

VA seem happy to take our money and provide a good product in comparison.

[blueloo]

An argument based on anecdotal evidence from an airline industry employee? Really?

Sort of similar to QANTAS management response... whilst it may not be a great example, it is typical of the QANTAS response.

Ignore everyone's feedback because QANTAS management knows best.

Well guess what - the good ship QANTAS is midway through its capsize as a result of QANTAS management decisions and nobody is trying to save it (except frontline staff).

You can debate figures all you like - but the unhealthy QANTAS situation rests squarely with the decisions QANTAS management has made. They are after all the "Captain of the ship".

The strategies they have implemented are not working. The market is showing this.

The only strategy QANTAS management have left is to blame everyone else. Even this isn't working.

[CaptCloudbuster]

NOBODY has been "forced" onto Jetstar. People have chosen to go there.

Wrong.... Who could forget the Hamilton Is furore...

Or

Qantas has resumed Sydney-Gold Coast flights today, four years after the airline handed over the route to low-cost sibling Jetstar.

[bankrunner]

Originally Posted by Romulus

NOBODY has been "forced" onto Jetstar.

So what about those customers who want OOL to ADL, CHC, MEL (and any number of other routes previously operated by QF mainline), or an early morning flight DRW to BNE (QF673), or any morning flight DRW to ADL (QF669), or any flight at all DRW to SIN (QF355)?

The choice for those customers is JQ or the competition. QF isn't an option.

[Blitzkrieger]

Curious Romulus. As the only one here who appears to think QF management is doing a good job in a challenging environment, I have a few questions:

If management is doing such a great job, why is QF failing?

How do you explain the travelling public voting with their feet?

Explain VA.

[moa999]

Explain VA.

Explain an airline that has made such large losses that its three major shareholders had to provide a loan of $100m, then worked out that wasn't enough and had to provide equity of $300m, an offer where only 25% (ie 1 in 4) retail shareholders decided it was worth supporting.

It's not any sunnier on the other side of the fence.

[happyfarm]

Originally Posted by Blitzkrieger

Curious Romulus. As the only one here who appears to think QF management is doing a good job in a challenging environment, I have a few questions:

If management is doing such a great job, why is QF failing?

I don't think Romulus is blindly supportive of QF management. I think Romulus is arguing the merits of a dual brand strategy. Romulus, and others, are getting distracted by arguing about the tactical execution of the dual brand strategy. Sometimes it's very poor and devious resulting in the cannibalisation of mainline. Other times it is executed well resulting in growth of the market and holds premium yields.

The trend of the groups financial results over the past decade speaks volumes about how well the dual brand strategy has been executed.

[airsupport]

Quote:
Originally Posted by TheProf
"Most times she books well ahead and seeks the lowest price but ONLY on QF, a lot of that is as I believe she is safer on QF, have had her for nearly 45 years and don't want to lose her."

An argument based on anecdotal evidence from an airline industry employee? Really?

Romulus, spot on.
Plus she's of the generation with a very strong attachment to QF from times long past.

Neither are true really.

I worked in the Industry for some 50 years, in Australia and in many other parts of the World, but never with Qantas and we have no attachment to Qantas as such, I have probably spent many more hours in the air than many Pilots here, including on the flight deck prior to 911.

When I retired and had no desire to fly much any longer I asked her IF she flies domestically to please use Qantas where at all possible, NOT Jetstar or Virgin.

Why, well at the time it was because Qantas were iIMHO much safer as they were the ONLY ones to have LAMEs preflighting and handling all their flights.

However now QF Management have removed this it is no wonder everyone is abadoning Qantas in droves, now all are reduced to the lowest level I guess people just go for the cheapest option and hope for the best.

[Ollie Onion]

In all fairness though, I don't think that 99% of the public would know what a LAME is let alone give a stuff if they do the walk arounds on every departure. Where Alan is totally wrong is I don't think the public would give a sh*t if Qantas disappeared next week, as long as there is another alternative. The would care if TIGER, VIRGIN and JETSTAR disappeared over night and domestic fares doubled.

[airsupport]

In all fairness though, I don't think that 99% of the public would know what a LAME is let alone give a stuff if they do the walk arounds on every departure. Where Alan is totally wrong is I don't think the public would give a sh*t if Qantas disappeared next week

True sadly the first part, I was just clarifying MY position.

Second part NOT true, my Wife would lose her FF points.

Sorry if there are faults in this, very hard to type while watching our boys win the 4th Test............

4-0 to us in few minutes, sorry POMEs.

[Mstr Caution]

The general public don't really differentiate.

They see JQ as QF.

The general perception is Qantas own JQ. So via expectation they believe operationally its the same standard as mainline.

The line is further blurred when they book a JQ flight and board a non Australian franchise. The expectation is, it's the same as JQ domestic which is the same as QF.

[airsupport]

The general public don't really differentiate.

They see JQ as QF.

The general perception is Qantas own JQ. So via expectation they believe operationally its the same standard as mainline.

Sadly they are now right, Qantas is fast sinking to the lowest common denominator.

Makes me so sad to see a once great Industry that I spent my whole working Life in sink to such low levels.

Luckily we just went to 4-0 so that cheers me up................

[The Professor]

"So via expectation they believe operationally its the same standard as mainline."

And thus far, the evidence supports this expectation.

"NOBODY has been "forced" onto Jetstar."

The argument could be made that pax have been forced onto QF for all of these years where premium ticket prices no longer match the declining service.