VA halts plan for 737 lie-flat business class.

[HS-TQE]

Following on from his decision to defer the 737MAX deliveries (and convert some of the MAX8s to MAX10s), Scurrah has put the brakes on lie-flat business seats on the 737MAX aircraft.
In related news, the Brisbane International Terminal's 'MyLounge' operated by the No1 group will be further delayed to July 2019.

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[Pleb Status]

Not good news.

This decision may mean that the current international expansion to HKG/China using the existing A332 aircraft may also be put on hold (or even wound back) due to the ongoing HNA financial issues. VA cannot be making any profit on these routes.

If no more A332 are going to leave the domestic fleet (and two possibly return) then VA may feel that 737 J lie flats are not required.

I had a feeling that the change of CEO was only going to be good for VA shareholders and not for VA customers. Looks like this may be going to be true....

 

[jase05]

I think it will still happen but as a new CEO he has higher priorities currently

 

[ozstamps]

Have flown these lie flat 737 in the USA and a wonderful way to fly.

Plats get row 3 free, and any flyer can buy it for modest bucks.

Difference between row 2 and row 2 bears no relationship to the often $600 a seat extra they try and ask, hence so many are empty.

Missed opportunity.

 

[pauly7]

Again it’s a fiscally responsible decision, he has got a clear mandate from the shareholders and board after the JB splash and dash era which resulted in increasing VA’s operating costs, minimal share gain and millions of $ losses racked up

He’s clearly on a mission to get VA into a more financially stable and sustainable model and then innovate and modernise from there, once the business is stabilised.

Doesn’t need new planes (yet).
Doesn’t need new seats.
Therefore don’t spend the money.

Makes $ense.

 

[jase05]

Again it’s a fiscally responsible decision, he has got a clear mandate from the shareholders and board after the JB splash and dash era which resulted in increasing VA’s operating costs, minimal share gain and millions of $ losses racked up

He’s clearly on a mission to get VA into a more financially stable and sustainable model and then innovate and modernise from there, once the business is stabilised.

Doesn’t need new planes (yet).
Doesn’t need new seats.
Therefore don’t spend the money.

Makes $ense.

Agree wholeheartedly. I’d much rather VA get it’s financials into order and hopefully continue flying well into the foreseeable future than splashing unnecessary funds and going broke

 

[Saab34]

I read it as they are not necessarily deny/confirm what’s coming on the MAX but they are not reconfiguring anything at the moment. They still have 1.5 odd years before they need to confirm any product configs with suppliers.

The JetBlue type product would really be a weapon over QF.

 

[RooFlyer]

Doesn’t need new planes (yet).
Doesn’t need new seats.
Therefore don’t spend the money.

Makes $ense.

Just like Qantas a few years back. Flying VA will be a bit of a downward spiral the next couple of years.

 

[pauly7]

Just like Qantas a few years back. Flying VA will be a bit of a downward spiral the next couple of years.

I don’t see any evidence personally that things will get worse for us that fly VA, there hasn’t been any mention of cost cutting that impacts service (yet).

Suspect it will probably be status quo for a few years.

 

[pauly7]

I read it as they are not necessarily deny/confirm what’s coming on the MAX but they are not reconfiguring anything at the moment. They still have 1.5 odd years before they need to confirm any product configs with suppliers.

The JetBlue type product would really be a weapon over QF.

For it to be a weapon they would need to be able to charge a premium or at least improve their $ positioning v QF for it.

I suspect they have modelled it and found the likelihood of that happening is low / not easy to achieve. They have a lot of areas to focus on first.

 

[RooFlyer]

I don’t see any evidence personally that things will get worse for us that fly VA, there hasn’t been any mention of cost cutting that impacts service (yet).

If it goes the Qantas way, it'll be a route cut here, an amenity abolished there, a cost increase somewhere else, a lounge referb put off ...

 

[pauly7]

If it goes the Qantas way, it'll be a route cut here, an amenity abolished there, a cost increase somewhere else, a lounge referb put off ...

Sometimes you need to prune a tree back to get strong healthy growth but I’m an optimist!

 

[RooFlyer]

Sometimes you need to prune a tree back to get strong healthy growth but I’m an optimist!

Sure, but it'll be yours and my fingers they are pruning

 

[Justchecking]

To be honest I've been following VA since the Borghetti era (almost a decade) watching all the changes and seen most of them come to nothing (in terms of profit) so....

1. Not surprised at all by the announcement. Mildly surprised the idea wasn't canned outright.
2. The days of change are imo over. It's going to be a very boring era at VA in the next few years.

For what it's worth. I think it's clear now what Borghetti's mission really was. If he couldn't be CEO of QF then he'd be CEO of QF at VA. All the changes me made were to turn VA into something more comfortable and familiar for him. It's turned out that this direction wasn't the big turnaround for VA everyone thought it would be. It didn't make VA into a rising star. It made it into an airline that lost it's original character and is now lost at sea with multiple aircraft types, commitments it doesn't know what to do with and still no clear niche for the airline.

In hindsight they may have done better to forget the widebodies altogether, concentrated on what they were, a
narrow body airline and had the best narrow body seat experience in Aus. If their narrow body J was better than QF then they could have beaten QF in seat experience on most of the network, losing out only on transcon and only on those flights where an international widebody was operated. They would have maintained their cost savings across the network over QF, could have spruced up all the lounges the way they did, kept the ejets which were hands down the best passenger aircraft they had and rolled out something really innovative across their entire fleet, like lie flat J on 737/e-jet. They would have avoided the whole VARA disaster and the unprofitable experiment which was turboprops. Kept a unique and recognisable corporate identity as well as being a market innovator instead of an also ran.

Hindsight, it's beautiful isn't it.

I was mildly interested when John Thomas was being touted as heir apparent but when they sacked him knew that this little Aussie business would go no farther than all others before it. Personal ego's and fiefdoms are apparently still the way Australia runs. My big prediction is that Virgin will now enter an era of steady decline and fading into the sunset as placeholders are shuffled in and out of the CEO's chair each one being blamed for it's lack of performance and inability to turn a profit. A condition almost entirely caused by the long standing list of poor decisions made during the last 10 years. Namely spending money they didn't have for very little gain and in the process messing up the business model that got them started. There is simply no more money to spend, no more bank rollers with large coffers and the only changes the airline can now make are cost cutting and those it can pay for. Aka....not much.

It's all a bit sad and uninteresting now. Their last hope was to get someone with vision into the CEO's chair. I don't see an ounce of vision in Paul Scurrah, its just business as usual in Australia.

 

[Bagpuss]

Lets be honest, the A330 “the business” is really an international standard, it’s over the top for domestic. Qantas only updated their due to Virgin’s implementation. If Virgin never introduced it Qantas wouldn’t have upgraded theirs and both companies would probably saved a lot of $$$

 

[Quickstatus]

An en

If it goes the Qantas way, it'll be a route cut here, an amenity abolished there, a cost increase somewhere else, a lounge referb put off ...

Enhancements are a comin
...

What are VA ‘s core competencies?. Maybe start here?

 

[Pleb Status]

Lets be honest, the A330 “the business” is really an international standard, it’s over the top for domestic. Qantas only updated their due to Virgin’s implementation. If Virgin never introduced it Qantas wouldn’t have upgraded theirs and both companies would probably saved a lot of $$$

QF had even 'enhanced' their last tranche of domestic A332 aircraft from 2-2-2 in J to 2-3-2. The aircraft were being delivered new from Airbus with this 2-3-2 J arrangement months after QF had announced the introduction of their current J seat. The 'seat infill table' was a stop gap solution to limit the embarrassment...

 

[dajop]

At some point airlines do have to start drawing a line on business class! You can't just have better and better seats, whilst prices remain flat or even decreasing. And many companies I know are tightening the policies on who can fly business class and/or what length the flight must be.

 

[pauly7]

An en

Enhancements are a comin
...

What are VA ‘s core competencies?. Maybe start here?

Better priority boarding?

From a business perspective it’s very slim pickings nowadays what are their advantages now, especially with their cost base for mainline now apparently comparative to QF mainline (and above QFLink).

What is their play in skinnier routes now VARA is marginialised, e-jets gone and their props an endangered species? They can only now fly oversized 737’s with empty seats and reduced frequencies while QF flexes around their props and 717s and REX picks up the rest.

I think a very good smart first step though strategically would be to close Tiger down. Huge distraction. Ongoing issues. Terrible brand equity in Australia.

 

[azza_1992]

Virgin has got themselves into a tough spot.

This low-cost/full-service hybrid operating model they've gone for has resulted in confusion amongst their consumers. The common perception is that Qantas is premium, Jetstar is cheap, and Virgin is neither.

While very unlikely due to their lack of cash and fragmented ownership, I believe the best path forwards for them is to:

1. Go more premium with the Virgin Australia brand. They already have a great business class product, so the lie-flat J is probably unnecessary, but their rough edges hurt them. If they match Qantas on in-flight catering, join an alliance, and fix their website/apps, they'll have addressed the most common reasons business travellers prefer Qantas, and are routinely spending $50 more (of their company's money) to fly Qantas.

2. Rebrand and grow Tiger. Bring operations under one roof, rebrand them to be more obviously related to Virgin (maybe "Blue" and paint the planes bright red) and give them a decent number of aircraft. While Tiger's brand equity sucks, it is still useful to have a low cost carrier to capture the price-sensitive end of the market. By transferring some VA birds to their LCC, VA can then confidently charge higher prices without fretting about having so many seats to fill.