New Low Virgin airline flagged

[wandering_fred]

Considering that the 777s are supposed to be used for long haul and that at present DJ has no plane to compete with the 743s that QF are now using PER-SYD/MEL, maybe PER-SYD would see the 777 on the way TransPac......

Or to compete with NZ on the PER-AKL direct route that QF choses to ignore.......
Or SYD-CNS-DRW-SIN
Or SIN-BME-MEL

Or ....

Should we live long enough we will see what DJ has planned. And no doubts we will have similar speculation when the 787s start to arrive for QF.


Happy wandering speculations

Fred

 

[dajop]

clifford, I can't really understand what is so bad about DJ, aside from the fact that they have no status/alliances.

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.

How can you tell who are business travellers and who aren't? DJ until fairly recently primarly targetted the less mainstream type businesses (not just "suits"). Yesterday for example I flew back from TSV to MEL (via BNE - on QF), after doing some field visits in shorts & a polo shirt. With a laptop backpack, there is probably no way you could differentiate me from a leisure traveller. Yet at other times I wear suit & tie and you could. I am sure for some of the fares DJ are now charging, and given their profit results they are attracting business travellers.

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

Aside from some flights I took a some years ago, I have seen nothing but professionalism on DJ (but admittedly these flights have been on main routes at peak times, where one would expect that.

When DJ costs more than QF for a sector it's time to worry.

Supply and demand - why is it a worry? Is it a worry that some nights the Holiday Inn in Brisbane costs more than the Conrad? I find that usually at peak times fares on DJ are cheaper and on like for like fares (exclusive of corporate discounts), DJ is cheaper. During non-peak times QF often costs less (and even occassionally at peak times). Rarely however do QF cost less than DJ on PER flights. Also got to remember, despite being relatively low frills, two things that DJ offer are connections with interlining to leisure routes (whereas on the QF group this often involves a JQ flight and involves baggage collection & rechecking). Another subtle difference, that is useful for businesses - upon cancellation of lower fare DJ tickets, the credit can be used for people other than the original traveller, and does not have to be used all at once (unlike QF) (unless this has changed lately).

(who wants to sit 11 abreast in a 777 chicken coop buying their own food/drink for 14 hours?).

Can you point to where this is documented? I'll stand corrected if you can, but I don't think the product offer has been publicised yet, and even if it is 11 abreast and own/food drink, who cares? Once again, the travelling public will vote with their feet and that will decide what is acceptable and what is not.

Despite my defence of DJ above, I do have a preference to fly QF (mainly because of status credits and associated QC access) but I really don't think that DJ are as bad as many make out (if they were I don't think we would see them making profits), and they do keep QF honest.

 

[NM]

Considering that the 777s are supposed to be used for long haul and that at present DJ has no plane to compete with the 743s that QF are now using PER-SYD/MEL, maybe PER-SYD would see the 777 on the way TransPac......

Actually, the 743 is not very optimal for trans-continental missions. It carries a lot of dead weight for such a short flight. There are three main reasons that Qantas is using them on that route:

• Fleet limitations. They are waiting for the 787 and don't want to buy more current generation aircraft, so have to use the 743s somewhere to free up the A330s for international services.
• Freight. They can carry a lot of freight between east and west, making the flight more economical.
• Perth airport limitation. There are a limited number of gates available to Qantas at PER and

so they find using a fewer number of large aircraft more efficient at that port.
The most economical use of an aircraft is when the amount of fuel burned during the flight is the same as the spread between MTOW (Max Take-Off Weight) and MZFW (Max Zero Fuel Weight). If you need more fuel than that then you take a payload penalty. If you need less fuel than that then you are paying to lift more metal than necessary. SYD/MEL-PER ops are significantly under the optimal operating range of a 743, and pretty close to the optimal operating range for a 738. So even though one QF 743 can carry 3 times the passengers of a DJ 738, it probably costs more than three times the operating costs to do so (if only considering passengers and not freight opportunities).

 

[JohnK]

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

Long haul in a 737.

 

[crazydave98]

A few comments.

1. I'm amused by the comments that Tiger seems to have more specials than Jetstar or Virgin Blue. It's very easy to do this if you don't need to make a profit and are happy racking up huge losses. For the financially minded, attached are the critical pages from Tiger's financial statements for their financial year 2006, lodged with the Singapore corporate regulator. Unfortuately file size was too big to upload the complete statements but feel free to PM me for them. As you will see, they had revenues of SGD 75 million, but costs of SGD 112m for an operating loss of SGD 37.5m. That's a margin of -50% which I believe to be a record amongst Low Cost Carriers. Tiger's accumulated losses since startup are SGD 62m. We should all give thanks to the Singaporean taxpayer for subsidising cheap travel to and from Singapore. But once they get sick of bailing and Tiger has to actually make a profit to earn its keep what will happen to the specials?

2. The B777-300ERs are for long haul only. They will be configured (seats, galleys, toilets etc.) for long haul, as NM pointed out they are too heavy for short haul. In fact we compared them to the B738 on SYD-PER and the 738 is lower cost (mainly because it has lower fuel burn per seat because it is not lugging around the deadweight needed to carry 14 hours worth of fuel). In fact the B738 also burns less fuel per seat than the B767-300ER on any route within Australia. As to our long haul product, I think I'll sit back and continue to be entertained by the wild speculation.

3. Clifford just hates us and enjoys slagging us off. I suspect he lost a bucket load of points with Ansett (he's Star Gold) and pines for the good ole days when only business travellers could afford to fly and he didn't have to mix with the hoi polloi. To claim that only 5% of our guests are travelling for business is just loopy. Maybe he was on Hamilton Island when doing his little survey? I debated whether it is even worth responding and giving him attention.

4. The assertion that our costs have gone up only holds if you include fuel. If you take out fuel, our controllable costs have gone down as we moved from older B737 "classic" models to the NG models and gained economies of scale moving from 5 to 55 aircraft. The reason for looking at an Ultra Low Cost Carrier has more to do with positioning than any problem with costs, which is why we have been considering it well before Tiger announced their market entry. We want the Virgin Blue brand to compete with Qantas for the corporate market, and the second brand to return to our roots as a price-leader and compete against JQ & TR. The fact is it is difficult to span the market with just the one brand now. Tiger coming in may affect the timing (doing it sooner than we otherwise would have) but that's it.

5. Embraers and costs. There is an old truism in the airline industry that cost per seat only counts if you can fill the seats. E-jets are higher cost per seat than the B737. But if you only have half the seats full on certain routes or at certain times, it's more profitable to run the smaller aircraft because it has lower cost per trip. This applies to some routes we operate and some we would like to operate. Plus the Embraers get to places that the B737 physically can't get in and out of and are lower cost per seat than the Dash8 with a much more pleasant cabin to travel in.

cheers
CrazyDave98

 

[jasonja3]

Thanks for the info crazydave98b . It is always interesting reading some researched facts, and getting from the horses mouth.

 

[Altair]

1.....In fact the B738 also burns less fuel per seat than the B767-300ER on any route within Australia. As to our long haul product, I think I'll sit back and continue to be entertained by the wild speculation....

3. To claim that only 5% of our guests are travelling for business is just loopy....

4. The assertion that our costs have gone up only holds if you include fuel. If you take out fuel, our controllable costs have gone down as we moved from older B737 "classic" models to the NG models and gained economies of scale moving from 5 to 55 aircraft. The reason for looking at an Ultra Low Cost Carrier has more to do with positioning than any problem with costs, which is why we have been considering it well before Tiger announced their market entry. We want the Virgin Blue brand to compete with Qantas for the corporate market, and the second brand to return to our roots as a price-leader and compete against JQ & TR. The fact is it is difficult to span the market with just the one brand now. Tiger coming in may affect the timing (doing it sooner than we otherwise would have) but that's it.

5. Embraers and costs. There is an old truism in the airline industry that cost per seat only counts if you can fill the seats. E-jets are higher cost per seat than the B737. But if you only have half the seats full on certain routes or at certain times, it's more profitable to run the smaller aircraft because it has lower cost per trip. This applies to some routes we operate and some we would like to operate. Plus the Embraers get to places that the B737 physically can't get in and out of and are lower cost per seat than the Dash8 with a much more pleasant cabin to travel in.

cheers
CrazyDave98

Thanks CrazyDave98 for your comments I loved reading them. A couple of comments....

1. I guess the 767-300ER suffers the same issue as the 747-300 to a lesser extent. It still has the additional weight for the LH flying. Does the non-ER 767-300 (not that QF have them nor Boeing produce them anymore) change to calculations? I am sure you guys have also looked at the 787 (different dashes) and have planned for when QF bring them into the domestic RPT. Comments regarding the LH product....you tease!!!!

3. I am sure that 5% was ridiculously low on the entire network, as you said 5% on Hamiltion Island, must be convention traffic....

4. "Controllable costs" are just not non-fuel eg. landing fees. DJ overall costs have increased but they have affected other airlines as well. DJ are just managing their margin better and still investing in their product to entice more revenue and I hope forging a better air freight operation with Toll.

5. The E-Jets seem to be a good move. Limiting yourself to just 737 or A320 for OZ domestic is just to silly. I do wonder though if E-jets beat ATR, DH D8 across the under 1 hour routes....
All up DJ is doing well to compete against QF and JQ but like you said there looks to be demand for two different markets and therefore brands. I just hope they handle it better than QF/JQ.

Do not forget I own TOL shares and I have only flown DJ twice, nearly 5 years ago, so I do not comment on their inflight service.

 

[NM]

1. I guess the 767-300ER suffers the same issue as the 747-300 to a lesser extent. It still has the additional weight for the LH flying. Does the non-ER 767-300 (not that QF have them nor Boeing produce them anymore) change to calculations?

Would be pretty much the same for ER vs non-ER. The real diff between ER models of most aircraft is the fuel capacity and max weights. The ZFW is often pretty similar. The 767 has been good for QF since they could use the same type for both domestic and medium range international services and that allows them to optimise the maintenance program by mixing number of cycles with hours of operation.

I am sure you guys have also looked at the 787 (different dashes) and have planned for when QF bring them into the domestic RPT. Comments regarding the LH product....you tease!!!!

I doubt the 787 will be seen on DJ domestic services. My guess is that DJ will continue with 737NG aircraft until Boeing and Airbus produce their next generation of narrow-body aircraft. The next generation of narrow bodies will have improved efficiencies that are promised in the 787 and A350.