Blood on the walls - vah full year results

[pauly7]

pauly7, one might have thought with the decline (from a very high base) of the WA mining industry that transcontinental demand for air travel would have declined quite a bit.

Unfortunately the statistics have a lengthy time lag, which may explain how in June 2013, the BITRE said that passenger numbers for PER - MEL - PER rose 15.2 per cent compared with June 2012, while BNE- PER - BNE was up 6.8 per cent and ADL - PER - ADL was up 3.8 per cent.

The laggard, however, was SYD - PER - SYD that rose only 1.1 per cent.

So at least in June 2013, the PER routes across the continent were doing quite well, although those figures above do not tell us the split between VA, QF, JQ and TT.

As a comparison total June 2013 passenger numbers on the monitored Australian domestic air routes (which is the vast majority) rose 3.9 per cent.

BITRE monitors those airline routes used by 8000 or more passengers in a month, but with the important rider that there must be two or more airlines competing on the route. So routes such as ASP - MEL and ASP - SYD sneak in (and have only just begun to be included) but a route such as AVV - BNE - AVV (which usually has one daily JQ flight in each direction, meaning about 5400 seats a month in each direction as capacity or 10800 seats in total) or AVV - SYD - AVV (usually with four return JQ flights a day) are excluded.

When the monthly statistics for industry-wide passenger numbers are issued for July, August and September, we may have a clearer picture about what your contact was saying.

To start - I'll just iterate that this was a casual conversation, I'm not one to shriek from the top of the forum that VA will now pull out of Tassie and reduce their Perth capacity - there are plenty of other members who do all the premature jumping to conclusions for me It was just a conversation about the general state of the business and strategy (top line). Only point I went a little deep on was QF re-entering OOL and the effect on VA.

All your points are valid - agreed, statistics however will not bear out a lot of things only the airlines themselves can recognise - e.g what price are they being forced to discount to fill the bus, what is the mix of J/Y, what is the mix of contracted travel on a route that earns volume rebates from the airlines (they don't show up on published individual route info) etc etc. Loads of variables.

As an aside since we are talking this route I'm sure VA will be cheering that a WA team made the AFL GF - but boy QF jumped on that a lot faster and harder than they have!

 

[anat0l]

I'm not sure whether VA should be so hasty. They did receive a rather generous loan (as in, the conditions on it) from their international allies (read: significant stakeholders), and a lot of their losses were tied in mostly once-off costs. Take those away and the situation might've been very different.

That said, would be interesting to see if VA have any significant capital works ahead that they need to expend - lounges, infrastructure, fleet...

I know it's only conjecture and completely unconfirmed yet, but people might not be looking forward to the whole TT repositioning to help VA out. VA has had a great advantage for a long time to have a homogeneous brand, unlike QF and JQ. Whilst VA would surely learn from the mistakes of QF and JQ if they emulated a similar model, I'm sure others here would not be so optimistic.

Then again, we have not necessarily seen the two-brand approach of Qantas been a complete and utter failure, even if we do not like it (overall).

 

[Ansettaddict123]

As an aside since we are talking this route I'm sure VA will be cheering that a WA team made the AFL GF - but boy QF jumped on that a lot faster and harder than they have!

I'm sure they would be! Pretty much every seat in the days leading up is booked out, and I'm pretty sure there's a pile of pent up demand if they get their act together and pile some more flights on!

I know it's only conjecture and completely unconfirmed yet, but people might not be looking forward to the whole TT repositioning to help VA out. VA has had a great advantage for a long time to have a homogeneous brand, unlike QF and JQ. Whilst VA would surely learn from the mistakes of QF and JQ if they emulated a similar model, I'm sure others here would not be so optimistic.

Valid arguments, but I think the primary differentiating factor here is that VA wont be selling TT fares through their website as QF has done with JQ.
Even if they did have to pull out of some routes and cede them to TT, at least this would help strengthen the group on the whole (VA running at a loss or on slim margins isnt a good long term strategy one imagines!)

 

[mono88]

Valid arguments, but I think the primary differentiating factor here is that VA wont be selling TT fares through their website as QF has done with JQ.
!)

Why won't VA sell TT fares on their website? Won't VA be able to bring TT to an acceptable standard?

 

[Melburnian1]

mono88, hasn't Mr Borghetti already ruled that out? (I'm not saying things can't change, though).

 

[AdMEL]

mono88, hasn't Mr Borghetti already ruled that out? (I'm not saying things can't change, though).

That's my understanding too. It will be a shame if they do things like swap all Tassie flights to TT, but I guess that will be the case if they're not making any money.

 

[mono88]

mono88, hasn't Mr Borghetti already ruled that out? (I'm not saying things can't change, though).

Yes these sort of statements are correct only at the time they are made...if it is not working it will be quickly changed. QF is a good reference point for this.

 

[mono88]

That's my understanding too. It will be a shame if they do things like swap all Tassie flights to TT, but I guess that will be the case if they're not making any money.

They may do a mixture. I have been to Tassie twice in the last 18 months using a combination of both QF & Jetstar. That may be the optimum to make money.

 

[day_mee]

Why won't VA sell TT fares on their website? Won't VA be able to bring TT to an acceptable standard?

I think the quote was something along the lines of no TT would be sold via VA to avoid "Brand Contamination"
To be fair, a lot of QF customers gripe about being funnelled on to JQ services and VA would want to avoid that.

 

[mono88]

I think the quote was something along the lines of no TT would be sold via VA to avoid "Brand Contamination"
To be fair, a lot of QF customers gripe about being funnelled on to JQ services and VA would want to avoid that.

Thanks. Interesting way to treat a brand they now own.

 

[day_mee]

Thanks. Interesting way to treat a brand they now own.

May seem confronting, but it's a reality. Tiger and Virgin are two very different value propositions. You don't want a customer who is used to the Virgin Experience to be shocked by the Tiger Experience. Tiger customers (should) know what they're in for, and same with Virgin customers. I don't think you'll find QF business class and JQ business class to be comparable at all. Same story.

 

[Timba-Jet]

VA would be smart to keep the tiger brand completely distinct from VA brand. That's the whole point two have 2 unique value propositions attracting different customer segments.

Also unlike JQ which is a 100% subsidiary of the Qantas group, VA have a 60% stake in Tiger Aust.

 

[mono88]

VA would be smart to keep the tiger brand completely distinct from VA brand. That's the whole point two have 2 unique value propositions attracting different customer segments.

Also unlike JQ which is a 100% subsidiary of the Qantas group, VA have a 60% stake in Tiger Aust.

I agree the brands are for different customer segments etc.
But VA needs to have a clear message that TT is a "different" brand and not a "bad" brand. The TT brand needs to be more than "maintained", it will need to be enhanced if the business performance of TT is to be improved. Some of this aspect may be covered in the Brand Licensing Agreement between VA and Tiger Airways.

I presume with the VA 60%/40% joint venture shareholding with Tiger Airways that VA will have management control.
JV's are often a very difficult business structure to effectively manage and run.

 

[grubbidok]

I agree the brands are for different customer segments etc.
But VA needs to have a clear message that TT is a "different" brand and not a "bad" brand. The TT brand needs to be more than "maintained", it will need to be enhanced if the business performance of TT is to be improved. Some of this aspect may be covered in the Brand Licensing Agreement between VA and Tiger Airways.

I don't see how Tiger bashing can be a bad thing. VA bashing TT makes VA customers feel better as it hits right to the concern many have that it could be VA's 'orange cancer' and shows VA is 'on their side'.

Talking down the quality of an ULCC never really hurts the ULCC either - in fact as Ryanair, Easyjet et al show it can actually reinforce to the budget conscious that the company is more focused on 'a good deal' than on niceties associated with other airlines. Let's face it, people are flying TT because it's cheaper than the bus, not because of the quality or experience.

 

[Melburnian1]

grubbidok, Michael O'Leary has just announced that he is changing the strategy at Ryanair, acknowledging that he (and his management?) have annoyed too many passengers or prospective passengers with their remarks over the years. If I recall, he has called his passengers 'morons' or similar.

 

[mono88]

I don't see how Tiger bashing can be a bad thing. VA bashing TT makes VA customers feel better as it hits right to the concern many have that it could be VA's 'orange cancer' and shows VA is 'on their side'.

That is an interesting take...that VA would bash the TT brand when it will invest millions of dollars in that business. I am also not aware of the contents of the Brand Licensing Agreement between VA and Tiger Airways, but I doubt it includes the word bashing. [/QUOTE]
Belittling others/things to make yourself look better in a business that relies on trust is rarely successful in the long run.

 

[grubbidok]

grubbidok, Michael O'Leary has just announced that he is changing the strategy at Ryanair, acknowledging that he (and his management?) have annoyed too many passengers or prospective passengers with their remarks over the years. If I recall, he has called his passengers 'morons' or similar.

Bash, in retrospect, was probably too harsh a word. There is a big difference between 'bashing' O'Leary style and openly acknowledging that another service offers an inferior (compared to VA - though still adequate) product at an extraordinary low price that VA, QF and even JQ could never hope to match. They're totally different markets with totally different concerns.

I would say the risk of TT potentially polluting VA by being too chummy would be much more than TT is hurt by open acknowledgment that TT is the 'no frills' brand of airlines. I'm sure there are many former QFFs (myself included) who were pushed to VA partly because we kept finding ourselves on a JQ flight when we didn't want to be on one. I'm certain JB doesn't want to push those people back.

 

[jakeseven7]

Bash, in retrospect, was probably too harsh a word. There is a big difference between 'bashing' O'Leary style and openly acknowledging that another service offers an inferior (compared to VA - though still adequate) product at an extraordinary low price that VA, QF and even JQ could never hope to match. They're totally different markets with totally different concerns.

I would say the risk of TT potentially polluting VA by being too chummy would be much more than TT is hurt by open acknowledgment that TT is the 'no frills' brand of airlines. I'm sure there are many former QFFs (myself included) who were pushed to VA partly because we kept finding ourselves on a JQ flight when we didn't want to be on one. I'm certain JB doesn't want to push those people back.

The end game is no doubt going to be VA taking full control (mgt and/or equity) of TT.

Personally I'm at my wits end with VA, at the end of the day they promise so much and then are half-coughd in delivery - on EVERYTHING.

It is quite frustrating.

I'm on a committee that is reviewing our travel arrangements at work, we've been on BFOD for a while but people hate it, people are sick of mixed itineraries, so we are looking at what we do from here. ASX top 50 company, and I'm fighting hard to go back to QF!

 

[Globetrotter]

The end game is no doubt going to be VA taking full control (mgt and/or equity) of TT.

Personally I'm at my wits end with VA, at the end of the day they promise so much and then are half-coughd in delivery - on EVERYTHING.

It is quite frustrating.

I'm on a committee that is reviewing our travel arrangements at work, we've been on BFOD for a while but people hate it, people are sick of mixed itineraries, so we are looking at what we do from here. ASX top 50 company, and I'm fighting hard to go back to QF!

I agree that there's far too many inconsistency with VA. The thought of having to jump on their website/s is exhausting in itself. It's easier to book with Qantas.

 

[mono88]

The end game is no doubt going to be VA taking full control (mgt and/or equity) of TT.

Personally I'm at my wits end with VA, at the end of the day they promise so much and then are half-coughd in delivery - on EVERYTHING.

It is quite frustrating.

I'm on a committee that is reviewing our travel arrangements at work, we've been on BFOD for a while but people hate it, people are sick of mixed itineraries, so we are looking at what we do from here. ASX top 50 company, and I'm fighting hard to go back to QF!

Not a surprise that there are difficulties with BFOD; too much emphasis on price and not enough on value and customer service. Good luck with your Committee decision!!