What is Virgin Blue doing wrong?

Discussion in 'Virgin Australia Velocity' started by dajop, Oct 30, 2006.

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  1. dajop

    dajop Senior Member

    Jul 1, 2002
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    I do ask what is Virgin Blue doing so wrong (or right from the consumer perspective?) that it's fares are in many instances quite low compared to competitors?

    I give some examples on prices compared to QF, which as dramatic as the variations are, I can understand due to QC & ff points/status credits. Last week flying CBR-MEL one afternoon no QF flights from about 2:30 pm until after 6pm, and then the first flight was $365 one way. On DJ the 5pm flight was selling for $139. I guess therein lies the power of the govt contract. Next week SYD-MEL. QF fares $300+. DJ flights at same times in the $129-$159 range. But I can at least understand this differential.

    Second example is less understandable though. Early Jan MEL-OOL. DJ offering fares on different flights on same day ranging from $119 to $149. Same day JQ flights - only availability is on Jet Flex fares for $329. Is JQ's marketing so far ahead of DJ's that they can fill planes on people paying higher fares without even considering DJ as alternative? Or is it just a vast difference in business model and/or yield management?
     

  2. Mal

    Mal Enthusiast

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    Fares on each of the carriers are all over the place. I can sometimes fly on DJ cheaper than QF, but conversely I can also often find QF to be cheaper by up to $40 one way.

    Why? Their individual route patterns and yield predictions. Both manage their seats differently.
     
  3. aus_flyer

    aus_flyer Established Member

    Feb 15, 2005
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    As noted above, DJ is often not cheaper than QF.

    The few times that I have compared DJ (out of interest), QF has been cheaper.

    I think DJ might do better if instead of having the occasional fire-sale of deep, deep discounts, they should consistently focus on under-cutting QF fares and became recognised as the always cheaper alternative. At the moment, they are the "sometimes" cheaper option. If DJ guaranteed to always be cheaper than QF and JQ, I think we might see a serious change in market position.

    Furthermore, DJ's FF program is a joke. I think the big drawback is that no international awards are available in Business/First on the International carriers that offer these classes. Personally, the big benefit of QFF is the occasional treat to a premium class on long-haul.
     
  4. stryker

    stryker Member

    Sep 28, 2006
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    Whoa. I could've talked about one-eyed, but I didn't.

    Just look at the on-line costs to DRW in January.

    Nuff said?

    :)
     
  5. aus_flyer

    aus_flyer Established Member

    Feb 15, 2005
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    I wasn't meaning to sound one-eyed, just providing my honest (and constructive?) response in relation to the OP's question.

    Qantas have their own issues, but that's for another day.
     
  6. acampbel

    acampbel Member

    Oct 31, 2005
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    I don't think that Virgin are doing anything "wrong".

    My company has the ubiquitous BFOD rule which I bend slightly due to my QC membership and the desire to redeem awards to the UK every couple of years. I find if I book well in advance then the QF and DJ fares are pretty much line ball - and so I choose QF naturally. With less notice there's more chance that DJ will be significantly cheaper and so I use them. Sometimes I go out on QF fixed Red E-deal, and return on a more flexible DJ fare.

    All of these are generalisations, of course, but I have no doubt that the average Virgin seat will be cheaper than the average Qantas one. They are able to do this because of lower operating costs, but to expect Virgin to always price themselves below the cheapest Qantas fare is ludicrous. That is the way to a dusty death (remember Compass?) and Branson et al have shown themselves to be far too savvy. If Qantas believe they can spoil the party with a Jetstar pincer move, then they are the ones with their heads in a cloud.


    Cheers,

    Andrew

    .
     
  7. Yada Yada

    Yada Yada Established Member

    Dec 6, 2004
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    I also think Virgin Blue is doing a great job, and now fly with them whenever I can. I have been really happy with the service, the schedules, the lounges, the fares, everything.

    (Well, except perhaps for the on-board instant coffee, although I always have a real one in the lounge before boarding so it's only really an issue on the longer sectors. :oops: )

    While I know that QF have red-e-deal fares at a similar level to DJ, I'm only ever booking a few days in advance so can never get them between SYD and MEL. For me, Virgin Blue is heaps cheaper and everything about them is better.
     
  8. Standby

    Standby Active Member

    May 25, 2006
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    I agree DJ don't do too much wrong.they offer a value based product that has been tweaked and improved.
    Their real issue and the issue they will continue to have in chasing large corp and govt is they really arent a network carrier in the sense QF is.Whilst they fly to most major ports their schedule into CBR is average vs QF freq(they dont even fly SYDCBR having tried with a couple of flights a day and failing). The NT is only done on non business friendly onight flights and again not even direct from SYD ,ADL or PER. Their PER schedule vs QF and product is rubbish vs multiple 747s with a business class product where companies will pay for it out of SYD and MEL and internally in WA in the biggest resourse boom we've seen they arent on the radar .This is just to name a number of reasons I rarely use them except between SYDMEL and SYDBNE.
    Unless you have the frequency that allows Qantas to charge more for they wont win an even share of business.
    Dont complain and whinge you dont get a fair go..get out and get another 20 aircraft and compete
     
  9. dajop

    dajop Senior Member

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    Standby, you get to the heart of my question.

    No doubt DJ have a good product, and there are lots of times when they are not cheaper than their competitors (but I don't count +/- $30 or so as significant anyway). But constantly at peak times, QF seem to be filling their planes with business traffic at significant premiums over DJ ($400+ vs $150 -where more than just operating costs are at play). And all the business traffic gets is a beer or two and a packet of nuts at double the price. In the peak christmas period it just plain odd that the variation on a non business route such as OOL is so significant that JQ are getting away with charging nearly triple the airfare in some instances - why isn't the demand for DJ services that high on the same day? Or is JQ just gouging?
     
  10. NM

    NM
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    With the rumoured Embraers coming next year, they should be able to enhance their schedules for SYD-CBR. So lets hope the second fleet of smaller aircraft gives them the operational flexibility to suite different markets rather than a one-aircraft-fits-all route map and schedule that was necessary as a startup low cost carrier. In my view, DJ has grown up and is no longer a LCC, so the term New World Airline probably does suit - whatever it means.
     
  11. Standby

    Standby Active Member

    May 25, 2006
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    just a quick comment on a couple of points in the last 2 posts
    1/trust me just because a price shows a high variance between the 2 doesnt mean thats the case.Trust me my company gets acess to Y class but pays significantly less than that so the difference isnt what it seems. Just as some companies have a BFOD policy others have signed up for volume deals that get them access to the highest clas as a loyalty reward
    2/Embrarers on CBR sound great but the reality introducing a new aircraft type if they announced now and had access to the aircraft wud take 12 months to get thru CASA reqmnts. The other problem they have is introducing another aircraft type adds significant unit costs . Up until now
    DJ have done a good job of keeping within the LCC model. One fleet type simple systems and you pay for everything. Its would be a bold move away from that winning formula
     
  12. Yada Yada

    Yada Yada Established Member

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    #12 Yada Yada, Nov 1, 2006
    Last edited: Nov 1, 2006
    I've been keeping an eye out for an announcement although Brett Godfrey dismissed it last week. I wonder if it is just scuttlebutt?

    I tend to agree with you. While I really like the idea from my consumer point of view, I also want DJ to remain lean, mean and highly competitive, not end up in the mess that QF has to deal with.

    p.s. A post I just made in another thread, which is veering off-topic, probably more appropriately belongs in here. :D
     
  13. NM

    NM
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    Indeed it must be a very tough decision to make. Lets hope they make a good one. And yes, the rumour has them for delivery in early 2008 so its not an immediate solution to the CBR market.

    Their single aircraft type plan has worked well to date. But there is only so much growth in that part of the market in Australia and at some point they either have to settle for status quo, or look for new ways to grow. Hence why they appear to be considering regional and international operations as potential growth areas.
     
  14. Standby

    Standby Active Member

    May 25, 2006
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    The main diffference is the int operation will effectively be set up as a seperate business with which they effectively sign an interline agreement with DJ Dom. Keeps the businesses and costs separate.
    CBRSYD unfortunately has to coexist as part of their Dom network so those
    costs cant be easily split. DJ dosent like having markets subsidised by others for the good of the network . A perfect example was SYDASP,PERKGI&SYDDRW. They dont seem to accept that you need some loss makers (and CBRSYD is just breakeven at best due the short distance vs high relative operating costs-little cruise distance that saves fuel burn) to grow yr network. Again this will be a fundamental change away from the model. You only have to see how aggressive Ryan air is ..iF a market doesnt make money on its own its gone.
     
  15. NM

    NM
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    Isn't the best way to confirm a rumour is to have it denied :D .
     
  16. N860CR

    N860CR Established Member

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    Considering DJ was the only one of the 3 major carriers to have increased profits last financial year, I'd say they're doing not much wrong and a hell of a lot right.
     
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