Is Qantas’ 737 Business Class Worth $200 More than Virgin?

On the face of it, Qantas and Virgin Australia offer very similar domestic Business Class products on their Boeing 737s. Both airlines offer similar seats, with similar onboard service – and on exactly the same plane types.

So, why is Qantas domestic Business Class consistently more expensive than on Virgin Australia – even though Qantas has 50% more Business seats to sell on each flight? Is Qantas just being greedy, or is this the market’s way of saying that customers value Qantas’ 737 Business Class product more than Virgin Australia’s? And if so, why?

Qantas vs Virgin Australia Business Class pricing

While putting together the recent AFF Point Valuations, we compared the lead-in Business Class fares on the Sydney-Brisbane route between Virgin Australia and Qantas. When booking well in advance, Virgin Australia’s lowest Business fare on this route is consistently $348. Qantas’ lowest Business fare is $549.

The difference isn’t always $200. Sometimes it’s more, and sometimes it’s less. But there’s a consistent pattern on many other routes.

Here’s a comparison of the lead-in Business Class airfares on various other domestic routes flown by both Virgin Australia and Qantas:

Route	Typical Virgin Australia Business fare	Typical Qantas Business fare
Melbourne-Sydney	$369	$554
Melbourne-Adelaide	$338	$509
Brisbane-Cairns	$358	$491
Brisbane-Mackay	$338	$431
Perth-Kalgoorlie	$427	$620
Canberra-Brisbane	$461	$590
Launceston-Sydney	$369	$491
Hobart-Melbourne	$317	$511
Adelaide-Alice Springs	$461	$551
Darwin-Brisbane	$718	$1,109
Perth-Melbourne	$1,162	$1,518

The similarities between the products

On routes like Sydney-Brisbane, the vast majority of flights on both Qantas and Virgin Australia are on Boeing 737s.

On these jets, both airlines offer reclining leather Business Class seats in a 2-2 layout, with about the same amount of legroom.

Both airlines have free Wi-Fi in Business Class and streaming entertainment available. (Some Qantas 737s do also have seat-back entertainment screens, but only around half – and these are going to be removed in Qantas’ upcoming 737 refurbishment program.)

While each airline has its own menu and service style, Qantas and Virgin Australia domestic Business Class meals are pretty much on par as well. The main difference is that Qantas serves sourdough bread and butter on the side, while Virgin usually gives you a packet of cheese & crackers on the side. On both airlines, there are usually two choices and they’re both usually pretty good.

For example, this is the Business Class meal I had on a recent Virgin Australia flight from Melbourne to Canberra:

By comparison, this is the meal I had on a recent Qantas Business Class flight from Gold Coast to Melbourne:

Qantas has a few extra drinks that Virgin doesn’t have, and I do like the Santos nut mix in Qantas Business. Then again, Virgin Australia also has extra snacks available from its Business Class pantry. So, it’s hard to clearly say that one airline is better than the other in terms of catering.

I’ve generally found the on-board service, on both airlines, to be great as well. Both Virgin Australia and Qantas have excellent flight attendants, and the personable cabin managers looking after Business Class usually provide very friendly and attentive service.

If anything, Virgin Australia has a slight edge because it offers proper pre-departure drinks – including sparkling wine, which is served in a real glass. This elevates the experience just that little bit.

In addition, Virgin’s Boeing 737s only have 8 Business Class seats instead of 12. This means the Business Class attendant has fewer passengers to look after, which theoretically could mean more personalised service. But clutching at straws a bit now.

Basically, while there are a few differences, the on-board experience both airlines provide in Business Class is very much comparable. So, why don’t both airlines charge the same price?

If Virgin Australia’s Business Class was truly equivalent to Qantas, you would expect that in a free, competitive market, it would be priced the same. It’s not. Virgin Australia is almost always cheaper. Clearly, the market doesn’t value the two products the same way…

Why Qantas commands a price premium

The obvious answer to this question would be that Qantas customers are blindly loyal sheep who don’t shop around or compare prices. But I don’t think it’s that simple. Clearly, enough people are prepared to pay more to fly Qantas Business Class – even when they know Virgin is cheaper.

Of course, on routes like Perth-Melbourne where Qantas runs Airbus A330s, Qantas does actually have a much better product which can legitimately attract a price premium. Having a lie-flat bed on a red-eye trans-continental flight is worth paying for. But I would note that, on routes where Qantas runs a mix of 737s and A330s, Qantas itself charges exactly the same price for Business Class on both its aircraft types.

Corporate contracts

Another obvious answer could be that most people flying Qantas Business Class aren’t actually paying full price. Indeed, Qantas tends to fill a lot of empty Business seats through points and bidding upgrades. But so does Virgin!

Qantas does do a great job of attracting lucrative corporate contracts, which do indeed come with discounts off the retail Business Class airfares. Qantas Business Rewards members can also get discounts when booking some fare classes.

But Virgin Australia has every opportunity to win over corporate customers too, if it has an attractive offering. And it too offers discounts to businesses through its Virgin Australia Business Flyer program, which extend also to some partner airlines such as United and Qatar Airways.

Overall, I think that Qantas manages to attract more corporate contracts simply because it has a much larger regional and international network. This has nothing to do with the quality of the service on a route like Sydney-Brisbane, and everything to do with the fact Qantas also serves London, New York, Johannesburg, Santiago and Wagga Wagga.

Still, I don’t think this fully explains the consistent price gap. I think there’s more to it…

Qantas Business Lounges

One area where Qantas is a clear winner in the domestic Business Class experience is with its lounges.

At six of the seven airports where Virgin Australia even has a lounge, Qantas offers dedicated Business Class lounges for Business, Platinum and Platinum One customers. These are a step up from the regular Qantas Club and are arguably pretty luxurious, as far as domestic airport lounges go.

Many of Qantas’ domestic Business Lounges even have special food stations, like the spice bar in Melbourne or the pizza oven in Perth.

And you’ll find pretty good Qantas Club lounges at a large number of airports where Virgin Australia doesn’t even have a lounge at all – such as Cairns, Darwin, Townsville, Mackay and Broome.

I’ve visited most of the Qantas and Virgin Australia lounges around Australia, and I do generally find the Qantas lounges better. For example, in the Qantas lounge you can usually enjoy some pretty good wines and spirits. The Virgin Australia lounges offer cheap, barely drinkable wine and don’t have spirits at all.

The Qantas Frequent Flyer program and Oneworld

As many of us know, loyalty programs can have a huge influence on the buying behaviour of frequent flyers. Many travellers are prepared to pay more for an inferior product because of status. They’re loyal to a particular airline, they want to enjoy the benefits of their status, and they want to make sure they maintain their status. So, they keep booking with their preferred airline, even if they offer less convenient flight times.

In Australia, I don’t think it’s controversial to say that Qantas Frequent Flyer offers a more attractive status program.

Not only does Qantas fly to a lot more places, but its Oneworld alliance membership makes Qantas status particularly appealing. If you earn Platinum status with Qantas, you get to enjoy all the Oneworld Emerald benefits when flying on any Oneworld alliance airline. This includes access to things like Qantas and Cathay Pacific First Class lounges, which are incredibly nice.

Sure, Virgin Australia status comes with some nice benefits too. But you don’t even get lounge access on Virgin Australia international flights (except to/from Doha), and the benefits on partner airlines are incredibly inconsistent and confusing.

For these and other reasons, Virgin Australia status is just not in the same league as Qantas status. It’s also for this reason that so many more people go crazy over Qantas’ double status credit promotions.

So, what has this got to do with Virgin’s Business Class pricing? Well, firstly, the appeal of Qantas Frequent Flyer is one of the things that keeps many people loyal to Qantas. And many people choose to buy a Business Class ticket for the much higher status credit earn.

Yet, at the same time, with the recent changes Velocity made to its program, many Virgin Australia Business Class tickets earn fewer status credits compared to Qantas. For example, on a $358 Virgin Australia Business Class ticket from Brisbane to Cairns, you’d now earn 30 Velocity status credits. On a $491 Qantas Business ticket on the same route, you’d earn 60 Qantas status credits.

I think Virgin shot itself in the foot a bit with that one!

The price difference is smaller closer to departure

Admittedly, the fare difference is not quite as extreme when you book less than a month out from departure – as many business travellers do.

Virgin Australia offers lower fares in its lowest Business RBD (fare class) if you book at least 28 days in advance. Within 28 days of departure, the lead-in price goes up (even if Virgin hasn’t yet sold any seats).

On the Sydney-Brisbane route, for example, Virgin’s lowest Business fare for travel in 27 days from now is $410 (and not $348). This could indicate that Virgin’s cheapest Business fares aren’t actually aimed at business travellers at all – but primarily at premium leisure travellers that Virgin feels it can win over from Qantas on price. That said, $410 is still significantly less than Qantas’ $549 price point.

Qantas, on the other hand, removes its cheapest Business fares from sale a week before departure.

Would you pay more for Qantas Business Class?

Do you think the market has got it right, or are Qantas and Virgin’s Business Class products truly comparable? Would you pay more to fly with one over the other?

I invite you to share your thoughts on the Australian Frequent Flyer forum, and will be interested to read what the community has to say!