VA - a value proposition?

[DJ332]

Just went ahead and looked at flights to CNS for next year (out on Monday 9 July, return Monday 23 July) and was surprised by what I found for travel during this peak period.

DJ; saver; tea, coffee and water; 23kg baggage $24 extra:
ADL-CNS (VIA SYD) $285
CNS-ADL (VIA SYD) $229
TOTAL: $538

QF; red-e-deal; two meals each way (no JQ segments); 23kg baggage included:
ADL-CNS (VIA SYD) $268
CNS-ADL (VIA SYD) $268
TOTAL: $535

JQ; starter; BOB service; 25kg baggage $60 extra:
ADL-CNS $199 (direct)
CNS-ADL $189 (direct)
TOTAL: $448

I'm not normally one to criticise Virgin's offering, but when John Borghetti assures us that VA is going to be "more competitive in the leisure market than ever," I'd have expected more competitive pricing than this. I realise this is merely one example, but unless VA is going to match QF with baggage and full meal service inclusions then what is the real incentive to fly this route with VA? Granted, VA is focused on high-yielding, business routes at the moment and want a greater slice of the corporate travel market, but if they want to remain a player in the leisure market then I think it's only fair they adjust their pricing to match. Of course I'm neglecting the value of Velocity points, brand sentimentality and superior service VA takes advantage of, but on the whole, leisure passengers are of course comparing carriers on price.

Would be very interested to hear the community's thoughts on this.

 

[medhead]

I assume those were the cheapest fares on those days. It would be interesting to know what flights are involved. IME Monday morning flights ADL-SYD are going to cost more. Depending on timing your 2 meals on QF might only be 2 biscuits.


Sent from my iPhone using Aust Freq Fly app so please excuse the lack of links.

 

[777]

I really think a comparison has to be based over several flights not just one random day.

But ... I just did MEL-CNS for the same day and the VA flights on the way over were cheaper than Qantas (by a few dollars) but dearer than Jetstar (by about $40) which is probably what i would expect. On the way back the Virgin flights were actually the same price as Jetstar (and cheaper once you added in luggage) and nearly $250 cheaper than qantas. I did note the Virgin Flexi fares were MUCH cheaper than Qantas's equivalents both ways and that is probably a clue to who they are targeting these days.

VA are trying to improve their yield. They and any airline will always charge the most they think they can for seats on any flight and that amount will vary based on a whole range of factors. Connecting flights in particular will always be a little hard to do price comparisons on and i think in the example you've cited it's not as though Virgin's flights are particularly high it's just that their competitors are also offering good prices.

 

[smit0847]

I don't think anyone is going to try and pretend that VA fares will be decreasing over the next 12 months (as they have not been over the past 6 - 12 months). They are now competing with QF for travellers, not with JQ.

I've flown MEL-CNS on DJ many times and its an expensive leisure route. I would be largely guided by price.

I fully expect those afternoon flights with the free alcohol to increase by 10% to cover this.

 

[docjames]

Having looked at BNE-SYD-BNE in a few weeks time, QF have cheaper flex fares on the day I want to travel.

 

[markis10]

Looking at flights that far out is a pointless exercise IMHO, we all know that they will be on sale at least 7 times before then, and usually the best deals are on offer over Xmas. Where the real difference is apparent is the short notice costs, or rewards costs:

DJ J 31200 points or 6900 points + $130
QF J 36000 points

 

[medhead]

Ok I thought I'd pump in some statistics from my work flying. These are 99% based on ADL-SYD vv flights. The one exception being a SYD-BNE. I have 2 years worth of numbers and I will give the N and the average price.

In 2010, I was new to commuting and my strategy was to book early on the first sale. This meant I was booked 4 to 6 months in advance. I booked DJ flights also in advance but towards the end of the year picked a a few happy hour fares maybe 1-3 months out. Results:

QF N=76 $114.65
DJ N=13 $113.58

A whole $1

2011 - this year I've booked much closer to departure date 2-4 months in advance. I've also moved a number of flights to DJ and taken advantage of happy hours. This includes my booked flights up to December.

QF N=61 $116
DJ N=31 $107 reducing to $97 if I remove the $319 for a last minute fare due to the ash cloud.

My view is you get the best from qantas if booking well in advance and taking advantage of their sales. But the reduced lead time has only cost me an extra $2 per segment on average. DJ is better value if you book closer to flight time or track the happy hours. There is also the fact that I'm better off having my money for as long as possible, which improves the value proposition for DJ, IMO, because I can book later.

I could get an even better picture if I data mined my credit card statements for purchase but I can't really be bothered.


Sent from my iPhone using Aust Freq Fly app so please excuse the lack of links.

 

[mannej]

Looking at flights that far out is a pointless exercise IMHO, we all know that they will be on sale at least 7 times before then, and usually the best deals are on offer over Xmas. Where the real difference is apparent is the short notice costs, or rewards costs:

DJ J 31200 points or 6900 points + $130
QF J 36000 points

How much is the points plus pay option on QF (both classic and JASA?)? Would be nice to throw both comparisons in

 

[markis10]

How much is the points plus pay option on QF (both classic and JASA?)? Would be nice to throw both comparisons in

QF dont have points + pay for classics, which is the cheapest option, and the above example excludes the taxes (loose terminology) of $60 odd for QF classics.

 

[DJ332]

Just as a point of interest, I did search for the best available fares around this date on all three carriers and QF appears to have the best deal this far in advance, with several flight pairings outbound and return at $268 each way. Interested to hear people's thoughts on QF being cheaper if you book far ahead compared to DJ.

I can certainly understand those of you who would argue this is a pointless exercise, looking at only one dummy booking example, but it's become evident that QF often are simply better value on a range of routes. Bear in mind many leisure passengers do indeed book 9 or 10 months in advance for their annual escape. I'd argue that if Virgin are actively chasing QF's customers, they really need to be matching QF's product!

I understand that DJ are seeking higher yields with good value flexi fares, but on a route like SYD-CNS with a majority of leisure pax, don't you think this is somewhat disadvantageous?

 

[markis10]

Virgin are chasing the corporate market, not the leisure market.

 

[DJ332]

Virgin are chasing the corporate market, not the leisure market.

Unfortunately, you neglect the quote I included in my first post. DJ understands it can't afford to snub the leisure market when QF still controls around 87% of the corporate market. Yes, this is one route, but it's not uncommon, particularly when comparing JQ and DJ.

 

[Mogul]

Just as a point of interest, I did search for the best available fares around this date on all three carriers and QF appears to have the best deal this far in advance, with several flight pairings outbound and return at $268 each way. Interested to hear people's thoughts on QF being cheaper if you book far ahead compared to DJ.

I can certainly understand those of you who would argue this is a pointless exercise, looking at only one dummy booking example, but it's become evident that QF often are simply better value on a range of routes. Bear in mind many leisure passengers do indeed book 9 or 10 months in advance for their annual escape. I'd argue that if Virgin are actively chasing QF's customers, they really need to be matching QF's product!

I understand that DJ are seeking higher yields with good value flexi fares, but on a route like SYD-CNS with a majority of leisure pax, don't you think this is somewhat disadvantageous?

Keep in mind that at the moment Qantas are doing things to keep existing clients as well as attract new ones after the issues of the last couple of weeks.

Comparing Qantas's current pricing against VA at the moment is not a true indication of where Qantas usually sits price wise in the marketplace. Sure there will be times where Q is cheaper than VA but on the whole I find VA cheaper overall.

 

[markis10]

Unfortunately, you neglect the quote I included in my first post. DJ understands it can't afford to snub the leisure market when QF still controls around 87% of the corporate market. Yes, this is one route, but it's not uncommon, particularly when comparing JQ and DJ.

I did not neglect anything at all, yes DJ will be more competitive in the leisure market where they can but that does not mean all routes,. Their focus has been in the last year to very much chase the corporate market first, which is actually quite significant for CNS, which is why QF are still there and have a QP, on current figures there is around 1000 business visitors to cairns on any given day.

The investor guidance given two weeks ago does not even mention leisure in its outlook:

 

[DJ332]

I did not neglect anything at all, yes DJ will be more competitive in the leisure market where they can but that does not mean all routes,. Their focus has been in the last year to very much chase the corporate market first, which is actually quite significant for CNS, which is why QF are still there and have a QP, on current figures there is around 1000 business visitors to cairns on any given day.

The investor guidance given two weeks ago does not even mention leisure in its outlook:

My apologies, I just thought your brief comment was an over-simplification of what will have to be a delicate balance for DJ - corporate vs leisure. Mogul also raises an important point with regard to the current situation at QF, although I don't think the perceived poor value is entirely to do with QF's discounting. DJ have definitely raised their fares over the last couple of years as they've added extra costs to the business and edged more upmarket.

 

[markis10]

My apologies, I just thought your brief comment was an over-simplification of what will have to be a delicate balance for DJ - corporate vs leisure. Mogul also raises an important point with regard to the current situation at QF, although I don't think the perceived poor value is entirely to do with QF's discounting. DJ have definitely raised their fares over the last couple of years as they've added extra costs to the business and edged more upmarket.

No apologies needed, this is after all a discussion board. I must admit I have noticed QF drop their pricing in the last few weeks, while JQ and DJ have risen theirs, I also wonder how the grounding of Tiger has affected long term bookings taking out the cheaper fare buckets, events have cartianly played into JQ and DJs hands!

 

[Justchecking]

It really depends on what your value proposition is, as to whether VA has any value to you.

Jane and Bob planning their once a year getaway probably won't be too concerned about aircraft type, what's on the menu, how many status credits they get, or how grumpy the flight attendants are known to be. They are very likely to be looking for overall price and convenience of schedule in terms of their holiday plans. In which case the example given in the OP would be relevant for a value proposition based on price. Infrequent leisure travelers very often choose the cheapest overall price, wanting to save money for holiday activities.

But John Platinum who sits on an aircraft for 30% of his life is likely to be highly concerned with all of the above. He's looking not just for the cheapest price but for the best overall experience payoff according to his needs, and how much value he can add to his FF account at the same time. For JP, whether or not the hangars in J class are wood or metal matters.... Having coloured headrests, 36" legroom or a classic understated cabin with the right selection of wines may not drive his decision but they may influence the outcome should price and schedule be quite similar.

This is the basic conundrum of airlines. All airlines are the same in terms of hard product. They all use the same planes, similar seats and very similar layouts. They sell tickets to go from one point to another. They all basically charge similar prices too because there is a fixed cost to providing an airline service that all of them are subject to. The once a year traveller is nice, but they don't regularly pay the rent. Profitability, as demonstrated by QF, comes mostly from people who are repeat travelers. QFF, is qantas' biggest profit centre. The value proposition for the FF is very different to the occassional traveller. Airlines structure their product to accommodate those who travel most often, the price seems less competitive, but it's all the FF trimmings which influence the most profitable passengers one way or the other.

For the leisure traveller, there are sale fares and basic fares which are offered at various points in the forward bookings calendar. It's widely known that airfares are least competitive both very far out from the travel date and very close to it. There's usually a sweet spot for every airline where their fares dip in price to try and stimulate more demand for seats.

 

[Oneworldplus2]

I assume those were the cheapest fares on those days. It would be interesting to know what flights are involved. IME Monday morning flights ADL-SYD are going to cost more. Depending on timing your 2 meals on QF might only be 2 biscuits.


Sent from my iPhone using Aust Freq Fly app so please excuse the lack of links.

Can confirm that at certain times of the day, all you'll get in Y on a ADL-SYD vv sector is; choice of fruit/biscuit + tea or coffee.

 

[DJ332]

Can confirm that at certain times of the day, all you'll get in Y on a ADL-SYD vv sector is; choice of fruit/biscuit + tea or coffee.

You're correct, although I was careful to select flight pairings, of many available at this price, which offered full meals on both legs between ADL and CNS, and the return CNS-ADL. Obviously, flights which only offer the refreshment service on Qantas brings the two products much closer together - that's why that info box with aircraft and meal information is so important!

 

[Deleted member 29185]

I don't know if this adds anything to the discussion, but I'll throw it in anyway. Our last trip to CNS (BNE-CNS) ended up with me flying DJ and my wife flying JQ. Not because she wanted to, but because DJ did not have 1 single seat left............JQ had heaps.

footnote: the DJ flight was an E190, but I don't know what the JQ was so that could explain some of the seating difference.