Toll struggles to sell its stake in Virgin Blue

[jakeseven7]

You could well be right but I will stick to my original description until I have had a chance to fly with them.

What criteria are you using John? Because when they start pushing the trolley around trying to flog you lollies and coffee from it I think you will probably retain your original description for them.

 

[straitman]

Not very hard to achieve. I think if you and I started an airline in Australia we could get to be the number 3 ariline in no time at all.

Agreed, however the step from #3 to #2 would be a large one.

There are many factors involved here. One is perception. They are a LCC, which is not reflected in the airfare prices, trying to compete with QF.

No matter what people may wish to think the cliché of 'perception is reality' keeps coming to mind

With QF I have access to more airlines with the Oneworld alliance. I have access to more airports. I have access to more lounges. I have access to more scheduled flights between most destinations. I have access to more FF partners. I feel QF has better customer service.

As crazydave98 pointed out recently 'watch this space' for future developments.

Now maybe my opinion will change in May once I have flown DJ. Just maybe. Time will tell....

As I've stated previously on this forum, I'm in the same boat with this one.

 

[Yada Yada]

Its just corporate business talk so don't take it so personally

I also note everyone is willing a great new owner/part owner for DJ - and I will add myself to that list!

pauly7, I'm not taking any of it personally. Despite what a few here think, I'm just a Virgin Blue customer and don't work for the company. In fact I am currently Gold level with both QF and DJ so you can't get more balaced than that. I just don't get some of the comments above about Virgin Blue, e.g. "The airline, without the name, is not worth much." That's just nuts. :shock:

Anyway, I also hope that VB gets a good long-term owner, as should anyone who flies regularly because competition is needed. I have not forgotten what it was like back in the bad old days when there no more than bee's donger between the airfares and schedules of AN and QF (TN/AO etc). While DJ may have moved more up market and their fares have increased, it is nothing like the rip-off fares that were being charged in decades passed. A cosey duopoly has not developed between DJ and QF, and we're all winners as a result.

Let's just hope that Air New Zealand does not buy Virgin Blue. They would have to be the prime candidate given that Pacific Blue is starting to eat more into their market. I bet the only thing stopping them is the embarrassment they must still feel over the AN debacle.

 

[straitman]

Let's just hope that Air New Zealand does not buy Virgin Blue. They would have to be the prime candidate given that Pacific Blue is starting to eat more into their market. I bet the only thing stopping them is the embarrassment they must still feel over the AN debacle.

Does anyone really think this would stop them :?:

I don't :!:

I don't think another NZ Government bail out would be on the cards though.

 

[JohnK]

Because when they start pushing the trolley around trying to flog you lollies and coffee from it I think you will probably retain your original description for them.

The minimum I would expect from a LCC is free nuts and soft drink. If DJ are competing with QF and are a full service carrier I would a little more.

I have flown A3, Aegean Airlines, ATH-SKG and received nuts and soft drink service during the 45 minute flight. I have also flown 9R, coughet Air, BKK-HKT and received a meal and drink service for the 75 minute flight. These are true LCCs with cheap airfares at all times not just sale periods for travel 8+ months in advance.

 

[Yada Yada]

The minimum I would expect from a LCC is free nuts and soft drink. If DJ are competing with QF and are a full service carrier I would a little more.

I have flown A3, Aegean Airlines, ATH-SKG and received nuts and soft drink service during the 45 minute flight. I have also flown 9R, coughet Air, BKK-HKT and received a meal and drink service for the 75 minute flight. These are true LCCs with cheap airfares at all times not just sale periods for travel 8+ months in advance.

Hang on a sec... that's all QF offers to pax and they are supposedly full service!

You'd better brace yourself John. On DJ, you will get nothing for free at all. Even water is $2 a bottle.

On the other hand, you may be shocked when the crew members smile at you and are genuinely nice. And it's free. Bet you ain't seen that in a while!

 

[jakeseven7]

Let's just hope that Air New Zealand does not buy Virgin Blue. They would have to be the prime candidate given that Pacific Blue is starting to eat more into their market. I bet the only thing stopping them is the embarrassment they must still feel over the AN debacle.

You would think so, it all makes sense on the surface I guess. QF moving in hard on their heartland (+ DJ) is going to hurt them big time - more than anyone thinks I have a feeling....

Emirates are the only airline who have ruled themselves out publicly AFAIK...

Hypothetically... of course...Does NZ even have the cash? Could they even get the finance in this market..? DJ would be more of an easy target to assimilate than Ansett surely, sound business and much smaller as well.

Oh and Star Alliance I am suddenly all for it lol

 

[codash1099]

Agreed, however the step from #3 to #2 would be a large one.

Well VB didn't have to work too hard to make that step - AN kind of laid that out for them on a platter. However they haven't been able to advance their market share much beyond what was gifted to them.

 

[oz_mark]

Not very hard to achieve. I think if you and I started an airline in Australia we could get to be the number 3 ariline in no time at all.

But how long would you stay around?

There are many factors involved here. One is perception. They are a LCC, which is not reflected in the airfare prices, trying to compete with QF.

I think DJ has long left behind being a true 'LCC'. When Qantas introduced Jetstar, DJ was sort of caught in a pincer movement and had to go somewhere. From what I can see, their response has been to be less true to their LCC roots, and add services where they can command higher premiums. This seems to have been a successful commercial response to the position they were in. Would thay have done the same thing if there were no Jetstar? Maybe, maybe not. Although I suspect the nature of some of their owners aong the way may have given them a nudge in the same direction.

They have introduced a mickey mouse FF program and achieving status is beyond most people. Am I correct in assuming that Gold status comes in at 50,000 SCs. At 3 Velocity points per dollar that would be ~$16,666 worth of flying to achieve top tier. Remember that I can get QF Platinum with a spend of <$8,000/year. There are other people who spend less than me.

Introducing a value based system is hardly Mickey Mouse. I think the truth is that the QF system has some distortions based on the band system, that the savvy are willing to take advantage of.

With QF I have access to more airlines with the Oneworld alliance. I have access to more airports. I have access to more lounges. I have access to more scheduled flights between most destinations. I have access to more FF partners. I feel QF has better customer service.

These are definite areas where Qantas has got the advantage. But I would expect that DJ will address these issues in due course.

Now maybe my opinion will change in May once I have flown DJ. Just maybe. Time will tell....

I await your trip report

 

[JohnK]

But how long would you stay around?

With Yada Yada and I were in charge the airline would be around a long time.

I think DJ has long left behind being a true 'LCC'.

Well this is where the definition of LCC seems to be distorted. When an airline does not provide any complimentary inflight service then it is a LCC.

DJs airfares are not that much cheaper than QF in fact most times they are more expensive. It happens to me regularly when I decide at the last minute that I want to go somewhere and look for alternatives to QF only to find that the pricing and schedules are not as appealing as QF.

Introducing a value based system is hardly Mickey Mouse. I think the truth is that the QF system has some distortions based on the band system, that the savvy are willing to take advantage of.

Either way there is no incentive for me to fly DJ.

I don't think I am taking advantage of QF or the Oneworld Alliance. OK so ~$8,000/year may not be a great amount to spend on airfares but it is more significant than the average Australian traveller who travels 3 times a year domestically on $29 airfares.

I await your trip report

If I survive the experience you will have the first installment at Ozfest V.

 

[dajop]

Well this is where the definition of LCC seems to be distorted. When an airline does not provide any complimentary inflight service then it is a LCC.

Aaah, so if Tiger were to provide a single glass of water with each flight you wouldn't consider them an LCC? I think the lines are blurred as to what defines an LCC. if you look at the things DJ do that are beyond a traditional LCC model they include:
- lounges
- status with priority check in
- FF program
- airbridge usage
- connections/through checked luggage
- network based fare structures (as opposed to point to point only)

Personally, the other day I was very happy that I could outlay an extra $5 to buy a sandwich on DJ when my flight was delayed due to thunderstorms at SYD and was pushed into meal times. If I had been on the ($100 more expensive) QF flight leaving at the same time, I would have had one of their "full service" snacks.

 

[JohnK]

Aaah, so if Tiger were to provide a single glass of water with each flight you wouldn't consider them an LCC?

Not quite!

But if DJ are going to compete against QF, and this is reflected in their airfares, then I expect them to provide a service comparable to QF inclusive in the airfare.

 

[dajop]

Not quite!

But if DJ are going to compete against QF, and this is reflected in their airfares, then I expect them to provide a service comparable to QF inclusive in the airfare.

I guess I would argue that the service is almost comparable, except during QF designated meal times (in fact at least one can buy a decent sandwich or the like on DJ during non meal times). If the FF program/status & corporate preferences were out of the equation, I would choose between the two solely on price*, as I consider DJ & QF offerings comparable. I think it is perfectly acceptable for DJ to price close to QF.

(*the rider here is at meal times adding $10 to the DJ fare for a meal - $20 for longer flights (>3 hrs) to include IFE, and at non meal times maybe factor in $2.50 on DJ for a soft drink, as frankly I find what QF offers as a snack as no value to me.)

 

[Yada Yada]

Not quite!

But if DJ are going to compete against QF, and this is reflected in their airfares, then I expect them to provide a service comparable to QF inclusive in the airfare.

Well, they just don't have to match QF! They are not trying to be a legacy-style full service carrier and match QF feature-for-feature. This is what the New World Carrier model is all about - offering the things that they feel are important, e.g. lounge, priority check-in, FF program, and asking pax to pay for the things that they regard as non-essential (e.g. food/drink service, IFE).

The great thing about this model is that when you pay for these add-ons, they have to be decent quality - they can't be low standard. The food/drink selection is outstanding, notwithstanding the coffee but at least the barista service in The Lounge is fanstastic. And the IFE is great too - 29 channels of live pay TV that operates gate to gate. QF handing out a small bag of nuts and a drink is not what I call full service and you can't actually purchase anything more substantial. And on short sectors such as SYD-MEL the IFE is shut off quite early and it's up to a day later in terms of news etc. Live sport on the afternoon flights on DJ is worth $5 to me!

I think Virgin Blue are on the right track, and the fact that QF and other legacy carriers must reduce food/drink service offerings to compete is probably proof the model works for the market.

 

[JohnK]

Well, they just don't have to match QF! They are not trying to be a legacy-style full service carrier and match QF feature-for-feature.

If they are not trying to be a legacy-style full service carrier then why does their airfare structure resemble one?

It is all fine and dandy to say that they are marketing themselves as a New World Carrier where the user pays for what they need but this should be reflected in their airfares. At the moment they are a LCC, come New World Carrier, charging full legacy-style airfares.

And the IFE is great too - 29 channels of live pay TV that operates gate to gate.

If this is anything like the Optus/Foxtel pay TV I have at home then 'great' is not how I would describe it. If it was offered for free I may pass the time watching it. I certainly would not pay for this service, again.

QF handing out a small bag of nuts and a drink is not what I call full service and you can't actually purchase anything more substantial.

Breakfast, lunchtime and dinner flights are all OK on QF. On yesterdays 4:00pm return flight from MEL they served something like Buritos and a salsa dip and I had 3 complimentary bottles of wine. Personally I think that is 'great'.

I think Virgin Blue are on the right track, and the fact that QF and other legacy carriers must reduce food/drink service offerings to compete is probably proof the model works for the market.

I don't see where QF have reduced their airfares! QF is increasing airfares all the time and DJ just follows suit.

To me it is all about perception. DJ airfares are too close to QF, in fact many times more expensive, and they offer very little. I can sit here and give you examples of airfares but other people have already done that so no point in me doing it as well.

 

[pauly7]

The great thing about this model is that when you pay for these add-ons, they have to be decent quality - they can't be low standard. The food/drink selection is outstanding, .

I'm sorry, choke, to interrupt the DJ cheerleadering routine but I'm not letting you get away with 'outstanding' as a description of DJ onboard catering. It is average at best, in terms of quality and range - and about the same quality as JQ I'd say.

I'm with John, QF catering is fine for me as well, your 'nuts and a drink is all you ever get on QF' line is getting a bit old as well YY, I haven't had that from QF for over 18mths actually . Actually I lie, I had it in J as part of a 4 course meal .

Please don't get so lovestruck by with your campaigning for DJ that it makes everything you say sound like a DJ press release. It is actually a little weird, because it seems really over the top borderline fake sometimes.

I fly all 3 major domestic carriers pretty much equally now thanks to BFOD and I certainly know that DJ isn't holier than now (and for that fact neither are QF/JQ). I really do respect your opinion but a bit of balance wouldn't go astray

Back on topic, I was on a DJ flight today and the trolly dolly's were gossiping to each other about the sale as they sold food. One swore to resign if Air NZ bought in .

 

[dajop]

If they are not trying to be a legacy-style full service carrier then why does their airfare structure resemble one?

It is all fine and dandy to say that they are marketing themselves as a New World Carrier where the user pays for what they need but this should be reflected in their airfares. At the moment they are a LCC, come New World Carrier, charging full legacy-style airfares.

Why wouldn't DJ charge like QF, they are running a business to maximise profit and if the market will let them get away with, sobeit? At particular times, on particular days QF can be cheaper, and at other times on other days DJ are cheaper. About two weeks prior to Xmas, I did a MEL-SYD day return and at the times I needed to travel, my return fare was $250 less on DJ than on QF, with that $250, I could have had more than four bottles of wine, in fact I could have wined and dined at some good restaurants for that and still had change. On other occassions I have flown QF as they have been cheaper. Free market at work - very simple.

However, if you are to look at comparable fares without taking into account loadings, it is easy to compare DJ & QF fares with similar conditions. I think you will find in nearly all instances, DJ's price levels are below those of QF, for comparable fares. Some examples look at following (DJ/QF fares - excluding promo fares & red e-deals)

Blue Saver/Super Saver Flexible/Flexi Saver Corp Plus/Fully Flex

MEL-SYD $139/$172, $269/$290, $339/$412
SYD-BNE $139/$180, $249/$310, $330/$430
MEL-BNE $169/$215, $369/$415, $464/$615
SYD-ADL $155/$211, $289/$366, $395/$526
MEL-PER $279/$370, $569/$687, $699/$837

One other comment I would make is that QF's pricing structure has become more akin to that of a LCC than a legacy carrier. When I first started flying from MEL through SYD to regional NSW, through fares were common (eg MEL-SYD-TMW cost less than the two component fares). Now QF basically adds together the two route fares as an LCC does. The only routes I could find exceptions to this was where they compete with DJ directly (such as CFS - interesting that the full Y fare on QF from MEL-SYD-DBO is 30% more than the full Y fare MEL-SYD-CFS). Again market forces at work,

Also QF have moved away from the legacy carrier model, as they have moved services to JQ (which require you to collect bags and re-check which is typical of an LCC) whilst DJ have full network connectivity (like legacy carriers do).

Whilst I don't think the sun shines out of DJ's proverbial, it certainly doesn't out of QF's either, and whilst a few glasses of wine are nice, they aren't the be-all and end-all of flying!

 

[Keith009]

I'll always fly a carrier that is part of an alliance over one that isn't, where possible - for FF mileage and lounge access. Hence it's always QF domestically on routes that they serve.

If QF isn't available I'll fly DJ over TT or JQ for the ability to purchase lounge access - much better than being stuck out in the terminal with the great unwashed.

AAdvantage is my primary FFP so JQ jetflex fares are out of the question.

Most of my domestic flights are shortish - so cabin crew-wise I reckon QF vs DJ is much of a muchness (but no I wouldn't consider DJ 'fantastic' either) and so I might as well pick an airline for abovementioned reasons. Further, after all the add-ons required on DJ to lessen the trauma of the LCC (or NWA...whatever!) experience such as lounge access (Qantas Club access is complimentary with my AA status), extra legroom, food/drink (by no means 'outstanding'!) etc, the QF fare almost always comes out cheaper!

 

[pauly7]

If QF isn't available I'll fly DJ over TT or JQ for the ability to purchase lounge access - much better than being stuck out in the terminal with the great unwashed.

Doesn't your AA give you access to QF club when you fly JQ?? That is a bit annoying if it is the case?...

 

[Keith009]

Doesn't your AA give you access to QF club when you fly JQ?? That is a bit annoying if it is the case?...

Not officially. It seems to be pretty YMMV according to reports on FT. I wouldn't want to chance it.