Airline lounge war could prove futile for Qantas and Virgin

[benmay]

Reading this and thought, who better to discuss but this group

"Former Ansett marketerMaxwell Winchester argues that Qantas and Virgin are risking alienating ordinary customers by concentrating too much on those who turn left."

Qantas and Virgin need to take a look at what they are doing. Spending millions of dollars on lounges that will benefit a very small proportion of their customer base while reducing the attractiveness of their airline to “typical” customers may not be the best way forward. But constructing flash lounges that most Australians will never see does get plenty of PR.

To Alan Joyce and John Borghetti, ‘typical’ customers may seem irrelevant. Ignore them at your own risk.

Airline lounge war could prove futile for Qantas and Virgin - mUmBRELLA


I see valid points - but with minimal competition, who else are people going to fly?

 

[MartinMemo]

I get it - But you only have to spend a weekday afternoon in the MEL virgin lounge to know that there isnt a "very small proportion" of their customers using it. It really needs attention fast.

I wonder as well what percentage of those that fly with each company just chase the bargain ticket with hang luggage only at 5am or 9pm and have no airline loyalty or even care for such things? At the end of the day both lounge have membership for sale; so if you don't fly business and are not gold/platinum but see the value in the lounge you are welcome to buy (like i did).

My parents and I live for the lounge - me VA, them QF Business - but my sisters who fly half as often as me but more than my parents have no interest in it. They would rather get to the airport later then walk around the shops. We have been at the same airport at the same time and they wernt interested in me guesting them in.

It really just comes down to if you want it, you can have it.

 

[Deleted member]

Well the author needs to spend a bit more time talking to the Likes of your average AFF'r.
clearly Maxwell doesnt get the "status" issue of frequent flyers who most of the time Don't turn left, but are frequent Y class flyers with the need / desire to have the benefits of increased luggage limits, lounge access, proiority boarding etc.
I suspect that lounge access is granted to more pax flying at the back than the front on any day. No I dont have figures to prove this , but notice that when I have been in J the other pax ( in the lounge with me) on my flight have in the majority gone down the back.

 

[MartinMemo]

Well the author needs to spend a bit more time talking to the Likes of your average AFF'r.
clearly Maxwell doesnt get the "status" issue of frequent flyers who most of the time Don't turn left, but are frequent Y class flyers with the need / desire to have the benefits of increased luggage limits, lounge access, proiority boarding etc.
I suspect that lounge access is granted to more pax flying at the back than the front on any day. No I dont have figures to prove this , but notice that when I have been in J the other pax ( in the lounge with me) on my flight have in the majority gone down the back.

I noticed that recently, then got sat down the very back as a fly ahead. After talking to most of the people in the very back row 3/4 of them were gold/plat fly ahead too.

 

[dk4]

The other glaring omission IMO, is that he doesn't see the positioning of Jetstar and Tigerair (in Australia) as part of the overall proposition from Qantas and Virgin (respectively), rather in some parts he sees them more akin to competitors against their parent brands. This flaw in particular makes the analysis marginal in validity.

 

[Melburnian1]

For anyone who flies domestically less than once a fortnight, paying for an airline lounge membership is highly dubious value unless one is going to be at the airport for hours each time and drink and eat at least moderately. If one regularly flew internationally (or domestically), lounge access would become automatic through accumulation of FF points or status credits or both.

Isn't the real test that neither QF nor VA as conglomerates make sufficient money? (QF $6 million profit overall, VA $98 million loss). This is respectively a very poor and abysmal return on capital.

The airline industry has huge fixed costs. It is impossible for either to stop investing in lounges, as then their competitor would steal a huge march, but whether it is overdone is another story.

 

[dajop]

FIsn't the real test that neither QF nor VA as conglomerates make sufficient money? (QF $6 million profit overall, VA $98 million loss). This is respectively a very poor and abysmal return on capital..

Interesting that one Australian airline (Rex) claims a profit of $19 million, and they don't do loyalty, but do have a very modest lounge network. Of course, Rex doesn't have the depth of competition (or any competition) on many of routes that QF & VA has!

Going beyond Australia, historically SQ has had a very measured approach to loyalty, and has tended to provide a reasonable quality offering across the customer base, attracting loyalty to the product rather than the perks, and that has worked well in the past for them (along the lines of what the commentator was talking about). With increased competition from CX, QF/EK, middle eastern carriers and LCCs, and even a revamped GA (in the Indonesian market where SQ historically has been - and probably still is - the carrier of choice at the top end of the market), it remains to be seen if that success can continue. But nevertheless, it enjoys significant price premiums over its competitors in many of it's key markets, with probably one of the less generous loyalty offerings out there.

 

[samh004]

There's always going to be more passengers who don't have access to lounges, or care about them, but investing money into both groups appropriately is what QF and VA need to do. If you alienate either group, you risk losing business, but it's probably easier to please those not in a lounge as their standards are already quite low.

Recently QF installed free wifi throughout the whole of BNE airport (at least QF's area). Probably didn't cost that much, and keeps all those outside of the lounge that much happier.

But improving on what is already in the lounge is a much tougher task, and in fact recently certain spirits and liqueurs have been disappearing from the menu in QF's lounges... so sounds like the focus is on "those who turn right".

 

[benmay]

Well the author needs to spend a bit more time talking to the Likes of your average AFF'r. clearly Maxwell doesnt get the "status" issue of frequent flyers who most of the time Don't turn left, but are frequent Y class flyers with the need / desire to have the benefits of increased luggage limits, lounge access, proiority boarding etc.

Ha, true, you'd only have to check the likes of instagram or twitter to see narcissism at it's best with announcements of every movement made inside a "special room" by people who suffer from the "status" issue.......

 

[dk4]

I agree, and think that the author fails to take into account that Qantas (in particular) has transformed itself into an aspirational brand.

And it is very clever at managing its customers up this aspirational ladder, right through to the Chairmans Lounge.

So rather than feeling "alienated", their customers aspire to the next level. Thus rather than thinking - "it's not fair that I can't get in", many are thinking "how do I get to the point where I can get into the Qantas Club/..."

 

[pauly7]

I agree, and think that the author fails to take into account that Qantas (in particular) has transformed itself into an aspirational brand.

And it is very clever at managing its customers up this aspirational ladder, right through to the Chairmans Lounge.

So rather than feeling "alienated", their customers aspire to the next level. Thus rather than thinking - "it's not fair that I can't get in", many are thinking "how do I get to the point where I can get into the Qantas Club/..."

Agreed.

But an even bigger miss is the fact that QF and VA also cater for the influencers in the corporate world who make the big decisions - the GM's MD's and Department heads are the ones that have the power to move corporate travel contracts of size, and guess what - they usually travel a lot and like lounges!

 

[Simo]

I have alway had lounge access.

I could not imagine not having it.

I have flown with airlines who i have no status and have tolerated no lounge access but I try and avoid it.

My loyalty goes to who gives me something extra.

 

[MartinMemo]

I grew up in the Qantas pub when flying and only got VA lounge march this year when I hit silver after loving it when flying J - at the time I didn't see the $300 fee as worth it because I didn't think I'd fly that much, but it was a gift from mum and dad for my birthday. 30 flights later since march and I could never live without it. So far that works out at $10 a visit and I drink a tonne when I'm in there. Further to that I found it invaluable for Friday afternoon flights to Sydney when I was specifically flying to go out clubbing. That relaxing nap in the quiet zone for just an hour was enough to keep me up till 3am. Without it id be crawling home at 11.
If I'm feeling especially cheap when I land in Sydney I'll go into their lounge, have dinner and have pre drinks there before heading direct to the club or part Haha.

 

[boomy]

Look at how much Qantas and Virgin are spending on their J product. Every domestic airport I go to I see their massive adds. How many pax will ever get to fly J class?
Same goes for the lounges. They don't care about the regular pax who will go for the cheapest option available. The big $$ are with the FF's who fill up the lounges and sometimes fly J & F. Their loyalty is what the airlines want to secure the most.

 

[MartinMemo]

Especially if you earn something like J or F lounge through elite loyalty status. If that product is amazing, why wouldn't the passenger pay a little more per flight to remain with you?

 

[jetlagger]

Look at how much Qantas and Virgin are spending on their J product. Every domestic airport I go to I see their massive adds. How many pax will ever get to fly J class?
Same goes for the lounges. They don't care about the regular pax who will go for the cheapest option available. The big $$ are with the FF's who fill up the lounges and sometimes fly J & F. Their loyalty is what the airlines want to secure the most.

Very true.
In my business I have a great portfolio of wonderful & loyal clients.
The price point often becomes less emphasised than our consistent high levels of service & appreciation of the client's repeated patronage.

 

[Deleted member]

I agree, and think that the author fails to take into account that Qantas (in particular) has transformed itself into an aspirational brand.

And it is very clever at managing its customers up this aspirational ladder, right through to the Chairmans Lounge.

So rather than feeling "alienated", their customers aspire to the next level. Thus rather than thinking - "it's not fair that I can't get in", many are thinking "how do I get to the point where I can get into the Qantas Club/..."

Buy an online JASA occasionally. Oops. Sorry that's been enhanced

 

[Isochronous]

The man purports to lecture at Victoria "University". No surprises that his article is drivel