WA Airline price War Tipped
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WA Airline price War Tipped
Mon "The West Australian"
Airline price war tipped
By Geoffrey Thomas
WA TRAVELLERS could benefit from a new fare war on Qantas, Virgin Blue and Skywest Airlines intra-state routes.
Virgin Blue is considering options for its 737s, which will be in Perth overnight from September, with Kalgoorlie and Broome on the radar.
Skywest also plans to use its Fokker 100 on tourist routes once the plane's operating certificate is transferred from its owner - Alliance Airlines in Brisbane. The plane is used for Skywest's Argyle contract three days a week and the airline wants to double its use.
On Friday, Skywest chief executive Scott Henderson said Broome and Kununurra were being considered.
Virgin Blue commercial director David Huttner confirmed the airline was looking at Kalgoorlie, Broome and Bali. "We are evaluating a range of options for WA as our new batch of Boeings arrive," he said.
The 10 new 737-800s begin to arrive in August and it has options for 40 more.
The first intra-state or Bali services would start from September 15 when Virgin bases one 737 in Perth overnight and a second from October 27 to operate 6.15am flights to Melbourne and Sydney.
Virgin chief Richard Branson announced the new interstate service and a doubling of Perth-Adelaide flights last month in Perth.
The separate Broome and Bali services would probably be evening flights with early morning returns.
Last week, Virgin Blue announced year-round Adelaide-Broome flights so its infrastructure is in place in Broome and better than expected passenger numbers have encouraged the airline.
The best one-way fare from Perth to Broome with Qantas is $263 while Virgin Blue charges $275 for Adelaide-Broome.
The lowest Perth-Kalgoorlie fare is $135 with Qantas while Skywest is $175, according to websites. Both offer airfare/hotel packages which are better value.
But a Sydney based analyst warned there was not enough traffic for three operators going to Broome and Kalgoorlie and barely enough to support two airlines.
"Skywest will have to be very careful how it approaches any service that overlaps on Qantas' turf or they may jeopardise the new alliance with Qantas," he said.
This year Qantas agreed to feed traffic to Skywest's turbo-prop routes to Albany, Geraldton and Esperance.
Mr Huttner said Virgin Blue was more likely to operate in daylight to Kalgoorlie with a dedicated aircraft.
But he said many regional WA airports had Australia's highest landing fees and other centres lacked the accommodation to support a 189-seat 737 service.
Skywest has renegotiated leases for its five 46-seat Fokker 50 turbo-props on better terms but it must raise $2.67 million by July 31.
© 2003 West Australian Newspapers Limited
All Rights Reserved.
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Pic: Alliance Airlines Fokker F-100
Pic: Wirraway
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Airline price war tipped
By Geoffrey Thomas
WA TRAVELLERS could benefit from a new fare war on Qantas, Virgin Blue and Skywest Airlines intra-state routes.
Virgin Blue is considering options for its 737s, which will be in Perth overnight from September, with Kalgoorlie and Broome on the radar.
Skywest also plans to use its Fokker 100 on tourist routes once the plane's operating certificate is transferred from its owner - Alliance Airlines in Brisbane. The plane is used for Skywest's Argyle contract three days a week and the airline wants to double its use.
On Friday, Skywest chief executive Scott Henderson said Broome and Kununurra were being considered.
Virgin Blue commercial director David Huttner confirmed the airline was looking at Kalgoorlie, Broome and Bali. "We are evaluating a range of options for WA as our new batch of Boeings arrive," he said.
The 10 new 737-800s begin to arrive in August and it has options for 40 more.
The first intra-state or Bali services would start from September 15 when Virgin bases one 737 in Perth overnight and a second from October 27 to operate 6.15am flights to Melbourne and Sydney.
Virgin chief Richard Branson announced the new interstate service and a doubling of Perth-Adelaide flights last month in Perth.
The separate Broome and Bali services would probably be evening flights with early morning returns.
Last week, Virgin Blue announced year-round Adelaide-Broome flights so its infrastructure is in place in Broome and better than expected passenger numbers have encouraged the airline.
The best one-way fare from Perth to Broome with Qantas is $263 while Virgin Blue charges $275 for Adelaide-Broome.
The lowest Perth-Kalgoorlie fare is $135 with Qantas while Skywest is $175, according to websites. Both offer airfare/hotel packages which are better value.
But a Sydney based analyst warned there was not enough traffic for three operators going to Broome and Kalgoorlie and barely enough to support two airlines.
"Skywest will have to be very careful how it approaches any service that overlaps on Qantas' turf or they may jeopardise the new alliance with Qantas," he said.
This year Qantas agreed to feed traffic to Skywest's turbo-prop routes to Albany, Geraldton and Esperance.
Mr Huttner said Virgin Blue was more likely to operate in daylight to Kalgoorlie with a dedicated aircraft.
But he said many regional WA airports had Australia's highest landing fees and other centres lacked the accommodation to support a 189-seat 737 service.
Skywest has renegotiated leases for its five 46-seat Fokker 50 turbo-props on better terms but it must raise $2.67 million by July 31.
© 2003 West Australian Newspapers Limited
All Rights Reserved.
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Pic: Alliance Airlines Fokker F-100
Pic: Wirraway
==========================================
Last edited by Wirraway; 30th Jun 2003 at 14:52.
these expansion plans in the west, very interesting to see how it pans out, couldn't see dj having an aircraft parked overnight doing nothing, might as well be flying somewhere.
as well, skywest publicly stating they are looking at the kimberleys, this is very interesting too, currently airnorth have that whole bme-knx-drw corridor to themselves, everyone always says "how will airnorth go with some competition?". We may soon find out...
Broome - Darwin is one route that QF Link pulled out of after AN's collapse, now Airnorth is the only choice on this one, via KNX. the locals there jumped up and down when AN pulled out their 146's and replaced them with the Airnorth Bras services, a local operator with a shiny Fokker jet would give them a choice, whether it can be profitable though is another story. Gee i love rumours!
as well, skywest publicly stating they are looking at the kimberleys, this is very interesting too, currently airnorth have that whole bme-knx-drw corridor to themselves, everyone always says "how will airnorth go with some competition?". We may soon find out...
Broome - Darwin is one route that QF Link pulled out of after AN's collapse, now Airnorth is the only choice on this one, via KNX. the locals there jumped up and down when AN pulled out their 146's and replaced them with the Airnorth Bras services, a local operator with a shiny Fokker jet would give them a choice, whether it can be profitable though is another story. Gee i love rumours!
couldn't see dj having an aircraft parked overnight doing nothing, might as well be flying somewhere.
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Unless VB or Skywest get a contract with BHP,i cant see them making a buck in the Pilbara.
Rio Tinto have a contract with Qantas which covers Paraburdoo ,Tom Price and Karratha.Qantas pulled out of Pt Hedland in the Ansett days because most people had something to do with BHP.
Now of course Qantas rule the roost and the every now and again special cheapo fares have gone.
An airline running the Perth ,Karratha ,Pt Hedland,Broome route could make a buck though.
In the MMA and early Ansett days you could fly these routes with Learmouth ,Cararvon and Geraldton thrown in on the way to Perth (varied day to day).
But i also remember Cairns ,the Alice ,Perth ,then a tour of the Nth West (karratha,Hedland ,Newman Paraburdoo) in the same time i could have got to Yankieland.
So yes ,more choices the better,but as someone else said,be prepared to make a loss.
Rio Tinto have a contract with Qantas which covers Paraburdoo ,Tom Price and Karratha.Qantas pulled out of Pt Hedland in the Ansett days because most people had something to do with BHP.
Now of course Qantas rule the roost and the every now and again special cheapo fares have gone.
An airline running the Perth ,Karratha ,Pt Hedland,Broome route could make a buck though.
In the MMA and early Ansett days you could fly these routes with Learmouth ,Cararvon and Geraldton thrown in on the way to Perth (varied day to day).
But i also remember Cairns ,the Alice ,Perth ,then a tour of the Nth West (karratha,Hedland ,Newman Paraburdoo) in the same time i could have got to Yankieland.
So yes ,more choices the better,but as someone else said,be prepared to make a loss.
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Ah GT another inferior article...
So Skywest only signed up with QF for Albany, Geraldton and Esperance...?
Not the 7 other ports they service at the moment?
You have to wonder how accurate the rest of the article is....... (again)
Virgin might have extra capacity but if it happens they won't be flying when the punters want to. (back of the clock Broome it seams to read)
So Skywest only signed up with QF for Albany, Geraldton and Esperance...?
Not the 7 other ports they service at the moment?
You have to wonder how accurate the rest of the article is....... (again)
Virgin might have extra capacity but if it happens they won't be flying when the punters want to. (back of the clock Broome it seams to read)
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If the price is right, I don't think the punters mind when they fly. The popular Adelaide - Broome, back of the clock service is testament to the fact. Only a matter of time before Virgin has a presence in WA.
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If Virgin introduced a flight now PH - BRM, it wuld probably be very profitable. Trying to get a flight to Broome or Kununarra in the middle of the dry season has always been a ******. If they start in September it really only gives them a month of good loadings before they will rapidly start to fall off. As for starting on Oct 27 with their second aircraft, I think they are really going to be pushing their luck.
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MU2 and others...
Simply reporting what I was told and what is in Skywest's prospectus.
Simple recipe really.
1. Skywest (SH) says it wants to increase hours on the F100 in the tourist area and that will not be to Exmouth.
2. Virgin has two 737s overnighting in Perth and wants to do Kal and Broome.
I am sure nobody wants a price war but that is what they will get and if they think otherwise just look at what Virgin did to Alliance in QLD.
My article leaves aside the mining contracts which are currently tied up and simply focused on KAL and Broome which are the only two jet routes that can support competition from a tourist/ VFR point of view.
It will be interesting to see how each sides evolves their strategies on this one.
GT
Simply reporting what I was told and what is in Skywest's prospectus.
Simple recipe really.
1. Skywest (SH) says it wants to increase hours on the F100 in the tourist area and that will not be to Exmouth.
2. Virgin has two 737s overnighting in Perth and wants to do Kal and Broome.
I am sure nobody wants a price war but that is what they will get and if they think otherwise just look at what Virgin did to Alliance in QLD.
My article leaves aside the mining contracts which are currently tied up and simply focused on KAL and Broome which are the only two jet routes that can support competition from a tourist/ VFR point of view.
It will be interesting to see how each sides evolves their strategies on this one.
GT
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LIked the GT article the first time I read it, and liked it again after re-reading it critically here.
About the only point to add is:
The best one-way fare from Perth to Broome with Qantas is $263 while Virgin Blue charges $275 for Adelaide-Broome
should become
The best one-way fare from Perth to Broome with Qantas is $263 but you can't buy any at that price and end up paying $800-1000 for a discount return flight most of the year while Virgin Blue charges $275 for Adelaide-Broome.
About the only point to add is:
The best one-way fare from Perth to Broome with Qantas is $263 while Virgin Blue charges $275 for Adelaide-Broome
should become
The best one-way fare from Perth to Broome with Qantas is $263 but you can't buy any at that price and end up paying $800-1000 for a discount return flight most of the year while Virgin Blue charges $275 for Adelaide-Broome.
We pay far too much for air travel within WA
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MU2...
We are still waiting for you to support your last spray that I report "every in and out at Skywest". All we get is deafening silence. Do you want me to post all my Skywest articles on Pprune to show everyone how wrong you are?
I have reported the facts as told to me buy each airline's senior execs or CEOs.
I am sure no one wants a price war but if you get three operators that is what you will get, unless they all want to fix prices and there are laws about that but I suppose you have an answer for that to?
MU2, what about some constructive comment? Please!
GT
We are still waiting for you to support your last spray that I report "every in and out at Skywest". All we get is deafening silence. Do you want me to post all my Skywest articles on Pprune to show everyone how wrong you are?
I have reported the facts as told to me buy each airline's senior execs or CEOs.
I am sure no one wants a price war but if you get three operators that is what you will get, unless they all want to fix prices and there are laws about that but I suppose you have an answer for that to?
MU2, what about some constructive comment? Please!
GT
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MU2...
Please re-read my article. Where did I say that Scott said there would be a price war! No where at all becuase he never said it nor did Qantas nor did Huttner BUT that is what will happen according to leading industry analysts and that is what you always get when you have too many operators for a given market.
Price wars have been with airlines since 1919!!
What Scott said, and what is in the prospectus, is that Skywest wants to increase its F100 hours with tourism related services and Scott DID mention Broome and Kununnura.
Huttner also said Broome and Kalgoorlie for his 737-800s overnighting in Perth.
So what you have is three operators on Kalgoorlie and Broome and do you really think that Qantas is going to give up traffic to Skywest. In your dreams!!
And how are the economics of a F100 are going to work against a 737-800 on Broome...not very well I would think.
Perhaps you can enlighten us all.
GT
Please re-read my article. Where did I say that Scott said there would be a price war! No where at all becuase he never said it nor did Qantas nor did Huttner BUT that is what will happen according to leading industry analysts and that is what you always get when you have too many operators for a given market.
Price wars have been with airlines since 1919!!
What Scott said, and what is in the prospectus, is that Skywest wants to increase its F100 hours with tourism related services and Scott DID mention Broome and Kununnura.
Huttner also said Broome and Kalgoorlie for his 737-800s overnighting in Perth.
So what you have is three operators on Kalgoorlie and Broome and do you really think that Qantas is going to give up traffic to Skywest. In your dreams!!
And how are the economics of a F100 are going to work against a 737-800 on Broome...not very well I would think.
Perhaps you can enlighten us all.
GT
GT,
I wouldn't be so sure about the 800 being so much better than a F100: the F100 runs on the smell of an oily rag, would be cheap as chips, relatively new so it has good pax appeal. I reckon it would give the 800 a run for it's money!
The problem SW will have will be actually getting passengers to fill the thing (none of them will be QF on-carriage, that's for sure!).
I wouldn't be so sure about the 800 being so much better than a F100: the F100 runs on the smell of an oily rag, would be cheap as chips, relatively new so it has good pax appeal. I reckon it would give the 800 a run for it's money!
The problem SW will have will be actually getting passengers to fill the thing (none of them will be QF on-carriage, that's for sure!).
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Capn Bloggs,
Oily rag or not, and cheap price or not, the F100 doesn't quite stack up against the pride of Boeing's technology. I'd guess about 0.063 Australian dollars per seat-km for the 737-800 in DJ service on PER-BME and 0.078 Australian dollars per seat-km for the F100 XR. Give or take a peanut or two.
Capital, maintenance, fuel, crew, airport, en-route, provisioning, ground handling included, of course. Excluding ticketing/agent and head office costs.
That's about 23% more seat-km cost for the F100, before any thought of how many of the seats are actually filled. And DJ are pretty damn good at that load factor thingy. QF don't have to try hard to be good - their yield management software is and that's what counts.
Oily rag or not, and cheap price or not, the F100 doesn't quite stack up against the pride of Boeing's technology. I'd guess about 0.063 Australian dollars per seat-km for the 737-800 in DJ service on PER-BME and 0.078 Australian dollars per seat-km for the F100 XR. Give or take a peanut or two.
Capital, maintenance, fuel, crew, airport, en-route, provisioning, ground handling included, of course. Excluding ticketing/agent and head office costs.
That's about 23% more seat-km cost for the F100, before any thought of how many of the seats are actually filled. And DJ are pretty damn good at that load factor thingy. QF don't have to try hard to be good - their yield management software is and that's what counts.
Last edited by OverRun; 10th Jul 2003 at 19:12.
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Operating costs aside, Skywest would, in my view, make a serious error of judgement in taking on Qantas, and almost certainly Virgin Blue on Broome.
Right now the opportunities for its F100 are unfortunately somewhat limited and this will be a challenge for management to increase the aircraft's utlization without upsetting its new partner--QF. It will be an interesting test of their skill and BM would have faced the same very difficult challenge as he was pushing jets over a year ago before he got the flick.
GT
Right now the opportunities for its F100 are unfortunately somewhat limited and this will be a challenge for management to increase the aircraft's utlization without upsetting its new partner--QF. It will be an interesting test of their skill and BM would have faced the same very difficult challenge as he was pushing jets over a year ago before he got the flick.
GT