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Virgin buys 20% of Air Asia X

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stuartfaz

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It's been speculated for quite a while, and made official today.

Bloomberg.com: U.K.

I am led to believe that the airline will be marketed as a Virgin Group airline, and may even be renamed (Virgin Asia?)

I wonder what implications (if any) this has on the other Virgin airlines.
 

BiziBB

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I wonder when fares will be available? The Air Asia / X websites don't have OOL as an option yet or any mention of Australian destinations, despite the stories in the news media.

Fly from Australia to Malaysia for $A31
Air Asia X - an offshoot of Asia's biggest low cost carrier Air Asia - announced the Gold Coast would be its first global destination from its Kuala Lumpur-base, with flights potentially from next month.

"The Gold Coast would be the first destination," Air Asia X founder Tony Fernandes said.

"Fares would range from as low as 90 ringgit to an average fare which would be in the 1,900 ringgit ($A647) mark return."

The new long-distance budget airline has previously flagged standard fares 30 to 50 per cent cheaper than its competitors, from Australia to the Malaysian capital, and then a host of far flung places, including the UK, Middle East, India and China.

It will have close ties with Australian carrier Virgin Blue, with colourful billionaire founder Sir Richard Branson on Friday taking a 20 per cent stake in the venture in a lavish ceremony in Malaysia.

Branson's Virgin Group also has a 26 per cent stake in Australia's Virgin Blue, which is based at the Gold Coast.

"There's a good linkage with Virgin Blue," Air Asia X founder Tony Fernandes said.

"The Gold Coast was an airport that was very, very aggressive.

"Coolangatta gave us a very attractive deal, it's a wonderful tourist destination for all of ASEAN and other parts of Asia to go (there)."

Victoria's Avalon airport and Stansted in London are also likely to be early destinations, after the airline was on Friday granted the rights to fly there.

The airline is still in the process of getting other approvals to fly to Australia.
 

NM

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benhadi said:
How come Air Asia can survive with fares so low, and Jet Star or Vigin Blue can't.
Because Jetstar and Virgin Blue employ a significant number of Australian staff and pay them Australian wages. And I am not just talking about cabin crew - the labour costs for Jetstar and Virgin Blue will be significantly higher than those of Air Asia X, resulting in a higher cost base.

And its not just labour costs that are higher for a company based in Australia than for one based in say, Malaysia. There is the cost of providing office space and associated professional services (such as IT) etc.

Can you image the outcry if Jetstar or Virgin Blue tried to move their call centre to Malaysia, or if they tried to move all their back-office staff and facilities off-shore, or tried to employ 100% of their cabin crew from a low-cost labour market?

Thankfully those things are unlikely to happen. But we need to understand that opening up more competition from foreign carriers may have the effect of providing lower fares, but for our local carriers to compete with these new low fares they need to reduce their baseline costs as well - and that generally will result is the removal or reduction of services we have previously enjoyed.

Competition from foreign airlines from low-cost labour markets is not always a good thing in the long term.
 

benhadi

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I think that is only partially true. In order for a foreign airline (or any other foreign business) to be given permission to enter the local market, they need to satisfy certain requirements, more specifically it needs to be beneficial to the local economy. In this case, it needs to create certain number of local employment opportunities. The overheads for that would be the same as for local-based carriers. Granted that foreign-owned and operated airlines do have a lower overhead, they are also operating largely in their own local market, thus income-expense for them would be the same ratio as a local company i.e. Jetstar and Virgin. They spend less in their home market, but the earn less too.

I am of course over-simplifying it. I'm no economist, but it seems logical. If my hypothesis is correct, Airasia X should earn a lot more money from their western-destinations compared to what Jetstar can from their asian-destinations.

Anyone have any opinion on that?
 

d15.in.oz

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benhadi said:
In order for a foreign airline… to be given permission to enter the local market, they need to satisfy certain requirements,
i.e. CASA Civil Aviation Safety Authority regulations, just like Australia's airlines.
benhadi said:
…more specifically it needs to be beneficial to the local economy.
Only if they want to fly into SYD, MEL, BNE or PER! i.e. foreign airlines wanting to operate to; e.g. OOL, NTL, AVV, ADL - do not have red tape to struggle through. (*Free Trade Agreements may also effect decisions, e.g. Singapore, Thailand, NZ.)

benhadi said:
How come Air Asia can survive with fares so low, and Jet Star or Vigin Blue can't.
We need to wait and see if it CAN survive?!!

(Just ‘cause Sir Richard gets involved, doesn’t mean instant success for an airline – Virgin Express is no longer with us & Virgin Atlantic might not be either, if Singapore Airlines had not bailed it out! Perhaps, we can speculate about the fate of Virgin Blue, had Ansett not collapsed!)
BiziBB's the Age quote said:
It will have close ties with Australian carrier Virgin Blue…
Someone might want to mention that to Malaysia Airlines & Velocity!
 
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pauly7

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NM said:
Can you image the outcry if Jetstar or Virgin Blue tried to move their call centre to Malaysia,

.
Well Virgin Blue already have some of their call centres overseas, in the phils i think if you haven't guessed by some pretty funny accents when you try and change bookings with them etc....
 

stuartfaz

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pauly7 said:
Well Virgin Blue already have some of their call centres overseas, in the phils i think if you haven't guessed by some pretty funny accents when you try and change bookings with them etc....
I've never had a funky accent ringing Virgin Blue.

I think their guest contact centre is based in Bris Vegas, with the rest of the company. Jetstar's is outsourced to a Melbourne call centre company (SalesForce) and I'm not 100% on Qantas but I think theirs is in Melbourne too.

The only accents I've had are trying to ring local offices of US airlines. I needed to replace my UA MP Card and it sounded like i got connected to Bangalore.

One thing in these articles that caught my eye

Meanwhile, Sir Richard said Virgin Blue was sticking with its own Victorian destination Tullamarine, but would look into a switch to Avalon.
Is this Sir Richards idea or DJ's idea? Or maybe something for Virgin Aqua? Because surely DJ moving to AVV is anything but a good idea...
 

jakeseven7

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stuartfaz said:
I've never had a funky accent ringing Virgin Blue.

I think their guest contact centre is based in Bris Vegas, with the rest of the company. Jetstar's is outsourced to a Melbourne call centre company (SalesForce) and I'm not 100% on Qantas but I think theirs is in Melbourne too.

...
Virgin Blue definitely has most of its calls serviced in Australia but yes it does send some calls overseas, somewhere in Asia (can't remember where specifically).

I thought QF had a centre in Tas actually...
 

dajop

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stuartfaz said:
I think their guest contact centre is based in Bris Vegas, with the rest of the company.
I've read in the Virgin Blue magazine (staff profiles section), one of the staff members being interviewed stating one of her best experiences with the airline was helping to set up the Virgin Blue call centre in the Philippines. From what I gather it is for overflow calls (can't remember where I read that), and I have definitely spoken to staff on the Virgin Blue line with a distinctive Filipino accent (an Asian type accent with an American twang).
 

Standby

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stuartfaz said:
I've never had a funky accent ringing Virgin Blue.

I think their guest contact centre is based in Bris Vegas, with the rest of the company. Jetstar's is outsourced to a Melbourne call centre company (SalesForce) and I'm not 100% on Qantas but I think theirs is in Melbourne too.

The only accents I've had are trying to ring local offices of US airlines. I needed to replace my UA MP Card and it sounded like i got connected to Bangalore.

One thing in these articles that caught my eye


Is this Sir Richards idea or DJ's idea? Or maybe something for Virgin Aqua? Because surely DJ moving to AVV is anything but a good idea...
DJ overflow calls gor to Manilla.this was confirmed to me after I hung up on their res agent because he couldnt understand me (one of the reasons i gave Citibank the flick).I rang back and definitely got a BNE based res agent who openly,although embarrased ,that they sent calls outside OZ.
 

JohnK

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I have been trying to look for cheap airfares and I still don't see any mention of Australia destinations on the website.

If flights are due to start in October this does not leave a lot of time to purchase in advance.
 

moa999

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and no doubt trying to avoid the embarrasing (and expensive) Viva Macau situation


underpromise and overdeliver
 

JohnK

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Speaking of Viva Macau, what has happened?

I have been looking at some of their airfares MFM-SYD return and it prices well over A$1200 for travel just before Christmas returning around Easter. For the same dates BA WT+ BKK-SYD return is around A$1400.

The choice seems very simple. If not for sale airfares then LCCs appear to be as expensive as full service carriers.
 
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