Virgin challenges Qantas on US route

[Dave Noble]

AIR fares to the US may be slashed, with discount airline Virgin Blue expected to announce plans within the next two months to fly across the Pacific.

.....

http://www.smh.com.au/news/business...ntas-on-us-route/2006/09/23/1158431951337.htm

Apparantly, according to the article QF's only competitor is UA on the trans pacific run

Davel

 

[snufl]

With 1:1 conversion of Amex points to VS (+ 20% till end Sept) and Virgin Blue "coming soon" as a partner airline, I will be watching this with great interest.

 

[Yada Yada]

There is a slightly longer report on this in The Age:
Virgin bid may slash fares - National - theage.com.au

(Thanks to Dave Noble for directing me here after I duplicated the topic in another section!)

Can't wait for another Aussie airline to run this route. My wife and I have been discussing another family holiday to LOTFAP, so this is very encouraging to me.

 

[NM]

I believe the entrance of DJ to the AUS-USA market will be a very good thing for Aussies. But I do not expect it to result in the huge fare savings being touted. Yes there will be opening specials, and some seats generally available at good discount levels. But DJ's operating costs will not be so much less than QF that they can sell fares that are consistently 1 third lower than the current QF ticket sales.

From time to time you can purchase a SYD/MEL/BNE-LAX return fare for around $1300, and at the right time of the year that can also include a few night's accommodation and a day at Disneyland. If DJ enter the trans-Pacific market, I expect we will see more availability of these low fares, but not much in the way of even lower fares.

Qantas is already able to sell their seats at a premium price compared with UA, so a once-daily flight carrying 350 seats (such as a 777-300ER) is not going to make a huge hole in QF's operations. But it will mean that 350 more people per day could potentially find cheaper fares to the USA. My expectation is that DJ's entrance to that market will help to grow the number of people flying the route rather than take much of the demand from QF. And that would be good for DJ and good for travellers. I think it would be neutral for QF.

So I believe Qantas would like to see DJ start trans-Pacific flights as it would remove some of the pressure for government approval for other airlines like SQ and EK from starting on that route, and Qantas is more concerned with SQ's and EK's ability to undermine their trans-Pacific ops than they are concerned about DJ's entrance into that market.

 

[jasonja3]

But I do not expect it to result in the huge fare savings being touted. Yes there will be opening specials, and some seats generally available at good discount levels. But DJ's operating costs will not be so much less than QF that they can sell fares that are consistently 1 third lower than the current QF ticket sales.

I agree, as long as they can compete with QF, they will sell tickets, without the need to heavily discount, and loose potential profits.

Does anyone know what aircraft they are looking to use and where it will come from ie: Lease or purchase.

 

[NM]

Does anyone know what aircraft they are looking to use and where it will come from ie: Lease or purchase.

This is the big debate. There are only three types of aircraft that can currently operate the mission - Boeing 747-400, Boeing 777-200LR or 777-300ER, and Airbus A340-500 or A340-600. Of course some new type will be capable in the future including A380, A350XWB, and 787.

The 777 options require ETOPS certification and this is costly and time consuming to obtain for a new airline or type operator.

My best guess is that Virgin Blue could wet lease from VS the A340-600 and operate under the Pacific Blue name in VS colours and with VS codeshare. That would allow VS to position the aircraft using their current LHR-HKG-SYD services, and to operate a true ATW schedule using the VS codeshare on the Pacific Blue service.

 

[aus_flyer]

I hope that Virgin take the opportunity to introduce a premium-economy or business class-type offering.

 

[NM]

I hope that Virgin take the opportunity to introduce a premium-economy or business class-type offering.

I do not think there is any doubt that will be the case. I certainly expect them to do something innovative if and when they commence such services. So I would think a premium economy product is a certainty and probably a VS-style business class product. In fact, that would be another good reason to wet lease from VS as their aircraft have the right mix of cabin/seating to make some standout differences with QF.

 

[ziggypop]

With DJ getting the Aus-US link up you will already have an alternative ATW ticketing with Malaysian, Virgin Atlantic, and Virgin Blue plus Emirates. I think you will find some interesting ticketing arrangements happening between these airlines which opens up the city choice enormously. That would give the OW and Star alliance a bit of a shove. And if their ATW ticketing prices are reasonable then that just gets us more choice.

The potentials are looking good. It may even shake Qantas up a bit. But what you will see is QF leaving almost all their long-haul except for flaghsip routes and codeshare into and out of the hubs. It is cheaper for them as an end of the line carrier and gets them more options. The next couple of years should be very interesting on the international ticketing scene.

cheers

Bill

 

[NM]

With DJ getting the Aus-US link up you will already have an alternative ATW ticketing with Malaysian, Virgin Atlantic, and Virgin Blue plus Emirates. I think you will find some interesting ticketing arrangements happening between these airlines which opens up the city choice enormously. That would give the OW and Star alliance a bit of a shove. And if their ATW ticketing prices are reasonable then that just gets us more choice.

Not much different to the multitude of ATW specials put together between various airline partners. The big problem with this is the flexibility and restrictions for intra-region flights in places like North America and Australia. For example, how would you cover places like Perth and Sydney in the same ticket, or LAX, DFW and JFK in the same ticket, or LHR, FRA and FCO in the same ticket. In most cases you can pick one destination in each region and maybe a maximum of two. So yes they can do it cheaper, but if they don't hit the places you want to go then they might as well be selling ice to Eskimos.

 

[ziggypop]

Excellent point about intra region. I suppose I am thinking about a more modified ticketing type of ATW. For example I last travelled to Asia and Europe with QF and AY on a tie-up fare structure which basically allowed you to buy a mix of Y and J fare base. The rules allowed 4 stopovers and 2 transits in either direction to wherever the twin airlines served ports. It allowed therefore a number of stops in any country. You could also add extra coupons for additional stops for an extra $160AUD each.

Thus I went CBR-BNE-SIN-BKK-HEL-AMS then from BUD-LHR- then from LHR-HEL-HKG then from HKG-BNE-CBR over 7 weeks. Bolded airports is where I stopped and had multi day stopovers. The long haul flights were all J class and the internals were all Y (unless I upgraded with points). The cost per person for all this was $4.2k including all taxes in May this year and I got QFF points, cabin bonuses etc. The tickets were QF-AY- BA tickets depending on which port I left from. I got the use of lounges in BA AY and QF. Pretty good deal and we arrived refreshed and ready to party at each stop.

It is amazing what ticketing and airlines tie-ups are available and for not much money especially if you need to stop in various ports. These are slightly different from the OW ATW explorer tickets and the star alliance equivalents. Usually you need to book through TAs (I used my local flight centre who were just bloody good).

I just hope Virgin get the message about flexible cabin options and seamless connections. Heaven knows we need the competition out of OZ on some routes.

cheers

 

[NM]

It is amazing what ticketing and airlines tie-ups are available and for not much money especially if you need to stop in various ports. These are slightly different from the OW ATW explorer tickets and the star alliance equivalents. Usually you need to book through TAs (I used my local flight centre who were just bloody good).

indeed there are some great deals to be found, especially when they include the places you need/want to travel.

 

[jakeseven7]

I believe the entrance of DJ to the AUS-USA market will be a very good thing for Aussies. But I do not expect it to result in the huge fare savings being touted. Yes there will be opening specials, and some seats generally available at good discount levels. But DJ's operating costs will not be so much less than QF that they can sell fares that are consistently 1 third lower than the current QF ticket sales.

Qantas is already able to sell their seats at a premium price compared with UA, so a once-daily flight carrying 350 seats (such as a 777-300ER) is not going to make a huge hole in QF's operations. But it will mean that 350 more people per day could potentially find cheaper fares to the USA. My expectation is that DJ's entrance to that market will help to grow the number of people flying the route rather than take much of the demand from QF. And that would be good for DJ and good for travellers. I think it would be neutral for QF.

So I believe Qantas would like to see DJ start trans-Pacific flights as it would remove some of the pressure for government approval for other airlines like SQ and EK from starting on that route, and Qantas is more concerned with SQ's and EK's ability to undermine their trans-Pacific ops than they are concerned about DJ's entrance into that market.

I completely agree, I think QF would MUCH MUCH rather have DJ flitting about on the route than the likes of government backed airlines (SQ/EK) with loads of capacity and deep pockets to sustain a pro-longed price war in order to grab market share. DJ wouldn't be able to muster the scale to hurt them in the short-medium term.

I just hope the route doesnt emulate Pacific Blues poor performance on overseas flights and NOT go with the 777!

Will look forward to seeing their business class - hopefully more like Virgin Atlantic!

 

[NM]

More media speculation

From news.com.au

Virgin may fly to US

October 23, 2006 11:13am
Article from: AAPFont size: + -
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LOW cost carrier Virgin Blue is expected to make a decision soon on it will begin long-haul flights to the US.

"Overall, Virgin Blue (vba.ASX:Quote,News) is now well positioned and we expect benefits from revenue and cost initiatives developed in the past year, to deliver further value," Chairman Mark Rowsthorn said at the airline's annual general meeting in Brisbane today.

He said the airline was advanced in its examination of opportunities for potential long haul operations to the US.

 

[maninblack]

If they do codeshare with VS then you will be able to do a RTW with them or a LHR via USA. All good for us travellers. I just hope, and they would be crazy not to, that they offer a true Business class product. Don't know that VS has spare A340's (or 744's) that Virgin could lease though. I gather that they would need at least 2, possibly 3 to offer a daily service.

 

[Kiwi Flyer]

I think you mean VS (Virgin Atlantic) not VJ (Royal Air Cambodge)

 

[maninblack]

I think you mean VS (Virgin Atlantic) not VJ (Royal Air Cambodge)

Obviously as Royal Air Cambodge has gone out of business. Shame because they were a great airline. I used to use their Phnom Penh to Siem Reap service regularly

 

[NM]

If they do codeshare with VS then you will be able to do a RTW with them or a LHR via USA. All good for us travellers. I just hope, and they would be crazy not to, that they offer a true Business class product. Don't know that VS has spare A340's (or 744's) that Virgin could lease though. I gather that they would need at least 2, possibly 3 to offer a daily service.

Apparently (according to a report in Australian Aviation magazine) Virgin Blue has issued an RFT to Boeing and Airbus for five 777-300ER or A340-600 size aircraft to be used on Trans-Pacific and Asia routes.

 

[maninblack]

Apparently (according to a report in Australian Aviation magazine) Virgin Blue has issued an RFT to Boeing and Airbus for five 777-300ER or A340-600 size aircraft to be used on Trans-Pacific and Asia routes.

5 aircraft :!: A Melbourne service perhaps. Here's hoping. Quite simply on a J class ticket Virgin or whoever else would have to be at least $1000 cheaper than QF for me to transit through Sydney, which of course adds at least 3 hours and hassle to what is already a long trip.

 

[NM]

5 aircraft :!: A Melbourne service perhaps. Here's hoping. Quite simply on a J class ticket Virgin or whoever else would have to be at least $1000 cheaper than QF for me to transit through Sydney, which of course adds at least 3 hours and hassle to what is already a long trip.

Keep in mind the restriction that any new-comer to the Aus-US route may operate a maximum of four weekly return services for the first 12 months, and we see that 5 aircraft will permit them to launch more than just trans-Pacific routes. So expect to see some new services in Asia. One possibility is that they codeshare with VS on the HKG-SYD route since VS has not had great loads on that part of their LHR-HKG-SYD service.

But they will want to maximise the utilisation of such expensive aircraft, which means we could be in for some interesting new routes and perhaps some interesting fares.

I suspect they will not be able to codeshare with VS on the trans-Pacific route since VS do not have route authority. But they could perhaps codeshare with Virgin America, who were recently established in the USA as a paper airline with their head office at SFO. So Virgin Blue and Virgin America could perhaps share the operating costs by way of a codeshare agreement and hence offer a Virgin ATW service.

All very interesting options and only time will tell what they chose to do. I suspect they will be keen to ensure the timing is right as many good airline products fail due to the timing of their introduction.