Virgin bows to fuel price pressure

[bambbbam2]

From
http://www.news.com.au/travel/story/0,26058,23831480-27977,00.html

VIRGIN Blue is set to whack the beleaguered tourism industry with a double whammy, flagging a new luggage tax for passengers and cutting flights to Queensland's Gold Coast.

Virgin Blue chief executive Brett Godfrey yesterday said skyrocketing fuel prices and greater security-screening processes had combined to severely increase check-in costs.

The budget carrier has also put Coolangatta services on the chopping block only days after the State Government delivered a $4 million rescue package when Qantas and Jetstar revealed flights between Cairns and Japan would be slashed.

"A bag costs us more to put through an aeroplane than a passenger," Mr Godfrey told Channel Nine.

"There's markets such as Coolangatta that has seen a 40-odd per cent increase (in) capacity this year, so even though that has been a profitable route for us in the past, maybe we have too much in there."

His comments came as Queensland Premier Anna Bligh stepped up her calls for national help as she labelled the issue one of "national significance" given the visitors Queensland attracts who travel elsewhere around Australia.

The State Government has been criticised over the past week after the Tourism Queensland budget was cut by $3 million before the rescue package emerged.

Federal Tourism Minister Martin Ferguson yesterday refused to comment on suggestions the Commonwealth was planning an assistance package for tourism operators.

But he said: "The problems facing the Queensland and Australian tourism sector are significant and require a serious, properly considered, strategic response rather than a knee-jerk reaction."

Ms Bligh insisted national help was needed given the "ripple effect" the state's tourism had across the nation.

"There has been discussions with the Federal Government (and) I expect we will hear something from Canberra in the not-too-distant future," Ms Bligh said.

"This is of national significance. This is not just an issue for Queensland."

Mr Ferguson said key stakeholders would meet with Tourism Australia and Queensland Tourism this week to work on a response.

Queensland Tourism Council chief executive Daniel Gschwind said tourism was a shared responsibility between states and the Commonwealth.

 

[oz_mark]

WHile I understand that in applying such a fee (and not a tax as the article calls it), they are only following other airlines, the fact that they make out that they have been doing it for free in the pas is a joke. It is simply bundled into the cost. It smacks of them realising that they (the airlines) have taken fuel surcharges as far as they can, so lets apply a surcharge on something else.

 

[Fluid-Flyer]

Checked Bag Fees at DJ

This course of action is also one step forward two steps back in their campaign to reposition themselves as a “new world carrier”.

I don’t think anyone really gets what a “NWC” is, so most people tend to interpret a positioning for Virgin Blue via Qantas’ proposition, i.e. Virgin Blue is trying to be more like Qantas.

Problem is everyone gets Qantas’ positioning - “full service airline” (i.e. full fare network airline + “service”). And Qantas’ positioning also cleverly creates a secondary perception that all a’ la carte airlines are ugly “LCC”. Thus, this new add-on fee from Virgin Blue will re-enforce a market perception of DJ as “LCC” (particularly if the fee remains unmatched by Qantas).

Being (re)viewed as a “LCC” will not be helpful to DJ’s attempts to successfully introduce ticket price increases. Virgin Blue has also shown an unwillingness to compete on lead-in price perception, so I am a little confused as to its proposition. The others are easy;

• Tiger – really low prices,
• Jetstar – reasonable fares, choice, good customer service including Qantas “drop-down” amenities (e.g. Qantas Club),
• Qantas – all inclusive, “top notch”.

I think Virgin Blue wants to be in there somewhere just above Jetstar, but it has employed too many “preening princesses” to be able to deliver quality customer care, and (I feel) really doesn’t offer anything of value to induce a payment premium over a Jetstar fare (unless you are after DJ points/status).


[http://flyderrie-air.com/ -LOL]

I just want to add, a great move from the Qld govt (+Feds) would be to start planning consultations for a new airport somewhere just south of Logan & connecting the GC rail line to the GC airport!

 

[pauly7]

WHile I understand that in applying such a fee (and not a tax as the article calls it), they are only following other airlines, the fact that they make out that they have been doing it for free in the pas is a joke. It is simply bundled into the cost. It smacks of them realising that they (the airlines) have taken fuel surcharges as far as they can, so lets apply a surcharge on something else.

I agree, its pretty funny

I think Jetstar took quite a smart approach with this one on luggage - by introducing Jetstar Light, which is actually pretty smart: creating a product that creates a discount/saving for the customer - going about it in a positive way instead of coming out complaining and possibly slapping yet another surcharge/fee/tax on top of things.

RE FF's post I think the critical issue for DJ is that the general public believe that Qantas is clearly the #1 airline choice for 'those who can afford it' then DJ/JQ are tied as the cheap 'friendly' airlines and Tiger as the very cheap and not so cheerful 4th.

Thus when DJ prices edged closer to QF without any really clear percieved benefit for the masses - people get confused and their role becomes unclear in a purchasers mind.

I think DJ were on the right track for a while but dropped the ball. I think they should make their TV FREE and install AVOD(!) (its such a huge competitive advantage but on all my DJ flights no one is using it!), Smarten up 'premium economy' by putting in some decent seats (Again - i have not seen one pax in DJ premium Y yet!) and include meals on certain fares. Then people will be able to justify the airline price/choice more easily (and further price increases that are surely in the works!)

I know, I'm dreaming

Another story:
http://www.smh.com.au/news/travel/v...to-remain-aloft/2008/06/08/1212863458328.html

 

[JohnK]

The baggage surcharge to be introduced by DJ does not sound like good news. They are getting closer to JQ than QF.

The airfare difference between DJ and QF is $10-$15 at most and as I will more than likely be commuting from BNE to SYD every week with checked luggage I see no reason to purchase DJ airfares. Their loss. I just hope that QF does not implement something similar....

 

[Hvr]

A baggage surcharge for DJ may mean they are more expensive on many trips and as a result they will miss out on organisations which enforce BFOD.

This will only help sink them that little bit faster.

 

[Dave Noble]

A baggage surcharge for DJ may mean they are more expensive on many trips and as a result they will miss out on organisations which enforce BFOD.

This will only help sink them that little bit faster.

I would suspect that many business travellers travel without baggage anyway

Dave

 

[NM]

I would suspect that many business travellers travel without baggage anyway

Dave

As do many passengers who transit LHR - planned or otherwise

 

[straitman]

As do many passengers who transit LHR - planned or otherwise

I recently managed (unplanned) to go MEL - HBA without baggage so anything is possible. .... and it was Qantas :!: :evil: