New Low Virgin airline flagged

[lovetravellingoz]

On 3LO this morning Virgin flagged their intention to consider launchinga new Virgin Low Cost Airline.


So you thought Virgin were a LCA already???

Well they see they see themselves as having migrated up the value the chain (and flagged that will continue to do so) after having chased and secured Corporate and Governmennt Business.


The introduction by QANTAS of JetStar was mentioned as being an influence...and after prompting by the interviewer the possible expansion of Tiger Airways into Auastralia was acknowledged asa factor.

Virgin indicated that they would consider launching the "new LCA" with planes that could fit in more passengers.






So what does this mean????

Well they did not specifically say....but expect a Virgin JetStar (VirginAqua....ie light Blue ) with minimum seat pitch and no thrills.....while Virgin Blue probably is enhanced to more directly compete with QANTAS (ie to grab more of the corporate business...).


So VirginAqua to fight with Tiger and JetStar for budget reavel...and Virgin Blue to fight with QANTAS for "premium" travel.

With Tiger entering the market Virgin probably also foresee that unless they do something that Tiger combined with JetStar would knock them out of the skies.


Now if we are very lucky....this may lead to both Virgin Blue and QANTAS actually enhancing their FF programs as they actually actively compete for the "premium" traveller:?: :?:

 

[NM]

So VirginAqua to fight with Tiger and JetStar for budget reavel...and Virgin Blue to fight with QANTAS for "premium" travel.

I hope they don't try to go head to head with both the Jetstar/Tiger and Qantas models. It is my belief that a major factor in Virgin Blue's success is the fact that they are different to the others - a somewhat middle ground for those who don't want no-frills and also don't want to pay the Qantas fares.

I guess they are at a cross-roads and need to decide if they take the WN model of growing what has been successful to date, or take advantage of new opportunities. A tough choice and I hope they are successful in whichever way they choose.

 

[lovetravellingoz]

Yes....I guess that they are doing a lot of numbers at present to decide if that middle ground is big enough.

From the interview they are keen to poach more of thec QANTAS business.....but I guess they are mindful that Tiger and JetsStar are poaching the current Virgin business....and with more plains are routes coming that poaching will get worse (though very cheap prices will continue to also increase the size of the overall flight-pie).

 

[NM]

Virgin indicated that they would consider launching the "new LCA" with planes that could fit in more passengers.

[/QUOTE]
lets hope they are not eyeing off those fresh 777-300ER orders for high density domestic operations :evil: .

 

[simongr]

lets hope they are not eyeing off those fresh 777-300ER orders for high density domestic operations :evil: .

Why would that be a bad thing?

 

[lovetravellingoz]

Well if there is a "VirginAqua'...plus Tiger...plus JetStar in 2008...then the budget traveller is going to have a field day.


However anumber of Corporate Travellers may not be too pleased as it may also mean more companies adoptinga lowest avaialble fare policy.....


Tiger has flagged however their intention of flying to Regional Airports....However in australia the vast majority of the population lives in the Capitals...plus GOld Coast. So to be viable you would imagine that in some way they will need to cover the capitals too (plus for Tiger to connect with say SQ). Melbourne has Avalon.

 

[NM]

Why would that be a bad thing?

11 across and 26" pitch on a 777-300ER is not my idea of a pleasant trip :shock:

 

[simongr]

Doesnt sound like fun - but surely they could cram people into any plane - not just the 777?

I have a bit of a soft spot for the 777 after having watched the TV show about the design/build many years ago. I am still not concious too much of the aircraft type that I fly in (outside of 74x vs. everything else or the Dash8/Saab when I used to do a lot of regional flying) so I am always amused about people's preferences - I am lucky though flying J and now understanding never to book a 763 or 743 on QF...

 

[NM]

Doesnt sound like fun - but surely they could cram people into any plane - not just the 777?

indeed, it could be worse ... they may go for a high density A380!

I was making comment on this quote:

Virgin indicated that they would consider launching the "new LCA" with planes that could fit in more passengers.

which implied to me a different aircraft type to their current 737NG fleet. And since they are in negotiations to buy some 777-300ERs, I think it would be a real shame if they were used for high-density domestic services instead of the trans-Pacific and Asian international destinations.

Now a 777-300ER is not going to be a very effective aircraft for high density short domestic services so I think we are pretty safe there. My assumption is they will either be looking at 737-900 (to keep some fleet commonality) or A320 family. The A320 family is well suited to Aus domestic routes where they need a higher seating capacity than their 737NGs. But a new type comes with new costs .... such a dilemma to be solved.


I have a bit of a soft spot for the 777 after having watched the TV show about the design/build many years ago. I am still not concious too much of the aircraft type that I fly in (outside of 74x vs. everything else or the Dash8/Saab when I used to do a lot of regional flying) so I am always amused about people's preferences - I am lucky though flying J and now understanding never to book a 763 or 743 on QF...[/QUOTE]

 

[Altair]

indeed, it could be worse ... they may go for a high density A380!

I was making comment on this quote:

which implied to me a different aircraft type to their current 737NG fleet. And since they are in negotiations to buy some 777-300ERs, I think it would be a real shame if they were used for high-density domestic services instead of the trans-Pacific and Asian international destinations.

Where is crazydave when you need him?
From Virgin Blue > News - February 2007 - Cheap Fares and Service You Can Count On

Domestic Fleet
The Company today announced additional aircraft for its domestic fleet. In addition to its firm orders for three Embraer E-170 and eleven Embraer E-190 aircraft, Virgin Blue has this morning exercised options for a further six aircraft, being three Embraer E-190 and three Embraer E-170 aircraft for delivery in 2008/9.
The Company also advises it has placed firm orders with Boeing Corporation for five 737-800’s for delivery in 2010/11 as replacement capacity and the Board has approved the acquisition of an additional three leased 737- 800’s to enter service in Q3 and Q4 of this calendar year. The Company will also retain for a further 12 months, two leased Boeing 737 aircraft due for return in 2007.
Both the Embraer and Boeing 737 aircraft will be fitted with adaptable configurations to allow maximum flexibility from single class to a high density seating. Virgin Blue's new Boeing 737-800 aircraft will be typically configured with a one class 177-180 seat layout, with ability to increase seat capacity by over 5% up to a 189 seat configuration and deploy these aircraft on price sensitive or leisure routes.

So it looks as if they will use these aircraft in standard DJ configuration but if they do do a LCC offshoot these aircraft will be earmarked for it. I guess they will just reduce the pitch and throw in an extra row.
Oh regarding the potential LCC offshot in Virgin may join no-frills set - Business - Business - smh.com.au

Mirroring Qantas's launch of Jetstar three years ago, Virgin Blue's chief executive, Brett Godfrey, said yesterday his airline was considering cramming more seats on some aircraft and establishing the new low-cost brand on low-yielding leisure routes.
"We could lower our seat costs overnight by 5 or 6 per cent by putting in 189 seats in our 737s," said Mr Godfrey, noting this would equate to an extra row of seats on a Boeing 737-800.
"I am not sure that the absolute rock bottom, jam them in, take off the window shades, no seat-back pockets, and no guard rails to stand in the aisles and hang onto, is what Australians want," Mr Godfrey said. "But if they do want it, we've always made a commitment to be relevant."

Wow lots of quotes have I broken any copyright laws yet?

 

[Standby]

my view is
1/777 will never se Dom action.With Govt protection as the 2nd Aussie carrier lots of opportunities in lomghaul.DJ are enough of a taking a risk introducing a 2nd aircraft type with rhe EMB jets to the simple Dom LCC model..sorry when you have to pay for water you can spin that yr a NEW WORLD Carrier but yr an LCC and not up to the benchmark Jetblue standard at this stage.
2/from yesterdays announcement DJ are doing vey nicely thankyou by maintaining current strategy in their niche..to change the formula too much isnt wise.The extra cap is to maintain current QD/DJ split as QF start to return 767s freed up by JQ INT expansion where both incumbents stay in a comfortable zone
3/the good news so far is that its QF expansion and not JQ on the dom front (no announcements of JQ aquiring more A320's)
4/The idea of a DJ lite sends a clear message to Tiger that they wont roll over and let someone eat their profitable business..JQ wont sit by as well.Let who has the deepest pockets win.
5/DJ have discovered there is only a market so big that wants to visit nanna with cheap fares and have dapted their approach.Tiger will be hard pressed to get access to the punters that make a difference business traveller.
5/forget Tiger and secondary airports talk..to fill a plane you need major airports..JQ using AVV is a distraction to keep MAP honest in their pricing
Lastly craming an extra 2 rows onto a 738 with its narrower cabin I feel will actually push punters to JQ ..the A320 is much more comfortable if the seatpitch is the same with wider seats.
All of this suggests a very interesting 12 months ahead and once we get rolling probobly at least 2 yrs of fare benefits to us whilst the platers sort themselves out...then back to a cosy duopoly again if past history repeats

 

[Deleted member 6404]

I for one hope Tiger Airlines will fly SIN-CNS will save me the hassel flying to Darwin with FF points to catch a flight on Tiger to SIN.

Apart from that there would be alot more people flying to Cairns from asia which would be great for the tropical north economy.

I think their a great budget airline and I have flown on them many times.
Tiger will give Jetstar a run for its money. Bring it on Tiger

 

[Tooner]

I for one hope Tiger Airlines will fly SIN-CNS will save me the hassel flying to Darwin with FF points to catch a flight on Tiger to SIN.

Apart from that there would be alot more people flying to Cairns from asia which would be great for the tropical north economy.

I think their a great budget airline and I have flown on them many times.
Tiger will give Jetstar a run for its money. Bring it on Tiger

Interesting that at launch of Jetstar there was a worry that QF would be cannibalised by Jetstar (ironic given QF is doing that for them), yet it was DJ that got affected most. Perhaps Jetstar has more to fear from Tiger than DJ does?

 

[d15.in.oz]

Me thinks Virgin Blue has entered the “spin game” too late…and too fast! The nicely worded press release on their website, was just right…but the mention of a new LCC may really back fire on them!

If I worked for Qantas, I would have called in ALL the corporate sales team today, and been back on the phones (or even in person) to every corporate customer they have lost to DJ (and even those they didn’t)...

I would imagine DJ’s growth, at the corporate end of their business - comes from giving a good reduction, on what (at the time) many corporate travel decision makers thought would be good prices from a LCC. (With the pleasure of travel extras like - exit/front rows, lounges & frequent flyer points.)

Today & beyond... those corporate travel decision makers will be under pressure to explain why they moved business to a LCC, which now has fares so high that it is contemplating launching its own LCC!

 

[SF&]

I for one hope Tiger Airlines will fly SIN-CNS will save me the hassel flying to Darwin with FF points to catch a flight on Tiger to SIN.

Apart from that there would be alot more people flying to Cairns from asia which would be great for the tropical north economy.

I think their a great budget airline and I have flown on them many times.
Tiger will give Jetstar a run for its money. Bring it on Tiger

I agree and i think they have better more frequent specials than Jetstar or Virgin I reckon they will give them a massive run for their money ...
and anyone who deosn't mind flying budget are the winners...
It will be a boom for tourism..
The more access we have to asia and vice versa the better for all...
I couldn't work out why that Tiger flight never conitnued down to Adelaide like the old QF81& 82 ( SIN DWN ADL )and similar to how th CX and MH work they head to melb for another pick up then depart australia. they wld of picked up heaps the sooner tiger flies from more ports out of australia and domestically the better

 

[N860CR]

Perhaps Jetstar has more to fear from Tiger than DJ does?

I think that's very true. DJ has managed to build themselves quite a loyal passenger base and this has been done through offering a quality product at a good price. JQ on the otherhand has, if anything, built up the opposite and very few people fly JQ because they think its a good airline, they fly them because they're cheap and for no other reason. If Tiger come in and undercut JQ on price... what reason would people have to fly JQ anymore?

 

[codash1099]

It's interesting to contemplate the effects of the various proposed changes for DJ's operations on their operations. They started with a very simple operation that based its performance on the principle of single market approach, single aircraft type giving it economies that don't accrue to airlines such as Qantas.

Now we are looking at multiple a/c types (Embraer, 777 and possibly A320 for the LCC version) and Toll are throwing around the possibility of dedicated freighters (see http://www.frequentflyer.com.au/community/116316-6-post.html )

The markets expand to cover businesses, overseas, small regional and freight.

How does all of this impact on their efficiency and low cost as originally envisioned?

 

[Altair]

It's interesting to contemplate the effects of the various proposed changes for DJ's operations on their operations. They started with a very simple operation that based its performance on the principle of single market approach, single aircraft type giving it economies that don't accrue to airlines such as Qantas.

Now we are looking at multiple a/c types (Embraer, 777 and possibly A320 for the LCC version) and Toll are throwing around the possibility of dedicated freighters (see http://www.frequentflyer.com.au/community/116316-6-post.html )

The markets expand to cover businesses, overseas, small regional and freight.

How does all of this impact on their efficiency and low cost as originally envisioned?

Their original business plan went out the window when AN collapsed. DJ needed, and Australia as well, to expand rapidly and they managed to do that, with a hick-up with mx records and in some other areas. DJ is still efficient but their costs have gone up as in recent years, they have not increased the capacity to compensate for it. They also realised that they could successfully pursue some of the higher yielding corporate pax.
Regarding fleet types, well they do need to do it as a 737 cannot do everything. The 737-600 is just not cost efficent to operate as opposed to the E-Jets and who would like to do LH in a 737? Ok the capacity of a 737 is getting similar to a 707 and they share the same hull cross section, but I would ratehr do a LH in a widebody than a narrow body.
For LCC models, how many of them actually carry freight? Not many as it can increase the cost of operations and the 737 is not designed to carry PAX and freight. If Toll could start DJ again I bet they would have selected the A32S as that would have served their purposes better, as long as they were fitted for containers not bulk loading. Still I do not see DJ ordering any A320 as that would just complicate things too much, Ezy Jet converted from 737 to A319 for this reason and the way the new 737s can be fitted out for the high density seating, really 1 extra row (which is the max certified pax for the 738), indicates that they will be used.
For DJ trans-pac I believe they will set it up just like JQ (QF) did for their international arm in regards to staff and mx.

 

[dajop]

How does all of this impact on their efficiency and low cost as originally envisioned?

Is that really all that relevant? Two sides to any equation, and if the revenue gain is disproportionally greater than efficiencies lost then it would make sense to at least consider changing the plan. As with any business, airlines must adapt to the circumstances facing them, and just because they start as a LCC doesn't mean they have to stay that way (as Altair points out the AN situation is a big factor in this).

 

[clifford]

Their original business plan went out the window when AN collapsed. DJ needed, and Australia as well, to expand rapidly and they managed to do that, with a hick-up with mx records and in some other areas. DJ is still efficient but their costs have gone up as in recent years, they have not increased the capacity to compensate for it. They also realised that they could successfully pursue some of the higher yielding corporate pax.
Regarding fleet types, well they do need to do it as a 737 cannot do everything. The 737-600 is just not cost efficent to operate as opposed to the E-Jets and who would like to do LH in a 737? Ok the capacity of a 737 is getting similar to a 707 and they share the same hull cross section, but I would ratehr do a LH in a widebody than a narrow body.
For LCC models, how many of them actually carry freight? Not many as it can increase the cost of operations and the 737 is not designed to carry PAX and freight. If Toll could start DJ again I bet they would have selected the A32S as that would have served their purposes better, as long as they were fitted for containers not bulk loading. Still I do not see DJ ordering any A320 as that would just complicate things too much, Ezy Jet converted from 737 to A319 for this reason and the way the new 737s can be fitted out for the high density seating, really 1 extra row (which is the max certified pax for the 738), indicates that they will be used.
For DJ trans-pac I believe they will set it up just like JQ (QF) did for their international arm in regards to staff and mx.

Hi Altair,

A number of interesting points there.

It's a great pity that DJ was the only airline to fill the AN gap (killed off by our politicians who wanted less competition for QF, but that's another story).

People say that DJ is winning over business travellers, but from my personal observations (watching people get off planes), I don't see more than about 5% of pax as possible business travellers.

If Tiger do actually arrive on our fair shores, I believe they will give both JQ and DJ a good run for their money whenever they compete head to head. For one, they will employ competent and courteous flight attendants, and will be seen as a professional outfit (as they are). Not sure I'd say those things about DJ, and I don't know about JQ as I've never flown them (probably never will).

Not sure what you're referring to when you mention LH in a 737. You don't mean Lufthansa, I presume.

Most successful LCC's don't worry about freight as they make enough money just flying human pax (eg U2 and FR). These airlines would murder DJ, as they actually charge low fares, so as to make putting up with an LCC acceptable. When DJ costs more than QF for a sector it's time to worry.

As for DJ and their transpac aspirations, the sooner it happens the better. Ansett's international forays, I believe, contributed to their demise (aided by our conservative pollies) and I don't think that DJ would fare any better (who wants to sit 11 abreast in a 777 chicken coop buying their own food/drink for 14 hours?).

Just my little warped view of things, but don't forget I am Star Gold for life and a UA million miler (meaning that I have paid out of my own pocket to travel over a million miles on Star Alliance flights).

Otherwise you might think the only flights I take are to visit my granny.