Platinum "anytime" lounge Access ceases from 1 February 2011

[AnonymousCoward]

You can't use an aggregate and say they only make a few hundred million in "profit" remembering that it is on paper! There are writedowns and other capital purchases built into it.

These are all costs of running an airline. An airline would very quickly go broke if it only figured out fares based on catering, staffing and luggage handling alone. It wouldn't be able to replace its planes when they needed replacing!

How do you know that QF don't make money from Y seats? That's a pretty silly statement. if Y seats didn't keep and airline flying, why do DJ (especially) and JQ still fly in the sky?

There are plenty of airline models. Some airlines like Ryanair can afford to have very cheap seats because they have very low overheads. QF is not such an airline (Jetstar is). DJ was, but it seems to be wanting to re-invent itself with a new model.

There is no way that QF (or SQ, or CX) would survive selling $5 fares like RyanAir does.

also if they made so much profit frmo F seats, why are they removing it from most routes?

Because there are not enough people willing to pay for them. Are these even serious questions?!?

And, as I said before, when no one on a route wants to pay for F, J or expensive Y, what happens to the route? QF stops flying it (...and it might go to Jetstar)

 

[AnonymousCoward]

As nlagalle says I'd like to see proof QF don't make $$ on cheap tickets. There's lots of variables around that scenario.

It's quite simple: take the total amount of money that QF makes each year from selling seats, and divide by the number of seats on sale. There is your average profit/seat.

Now, if you want to work out whether any particular seat is profitable, you'd need to know the cost of providing that seat. I can only provide anecdotal evidence that premium seats are more profitable:
- it's long been held that legacy carriers make more money on expensive seats
- on routes where QF can't sell higher yielding tickets, they stop flying there

Edit: I can offer a logical reason: a $1000 and a $2000 economy class ticket SYD-SIN would largely have the same costs. Yet I doubt that QF is only making $10 on both of those tickets. I suspect that it's making some more on the $2000 ticket Y ticket, since the costs are largely the same.

 

[JohnK]

The profitability to QF of any particular flyer depends on a combination of profit-per-flight plus frequency-of-flying.

And that in itself makes it very hard to put value on a client.

Both of these people are important as they need one another to survive. But to simply say that profit per passenger is more important than frequency of flying is wrong.

I didn't write what you are attributing to me. Can you correct it please? Thanks.

Terribly sorry. I have change quote.

I believe the words "yield management" were mentioned. well the mystery surrounding it workings.

Aah! Yield management. Mystery! Voodoo! And is what keeps an airline going.

The discussion has been done to death before about which pax is more valuable to QF, the person who flies J or F a couple of times a year, or the person who hikes it between MEL-SYD weekly?

It has been discussed way too many times and usually the ones that travel in premium cabins are putting down the ones doing the hard slog.

...and guess what - without all those folk in Y, J class passengers wouldn't get the frequency they desire.

Cheap seats? What cheap seats? We don't want to sell any cheap seats. And then the premium passengers can have an aircraft all to themselves flying to LHR once a week and LAX once a week.

Point is, whether the DYKWIA J passenger likes it or not, all those Y passengers are important to the viability of the airline, and for the frequency that is available to them.

Well said oz_mark, ozbeachbabe, trippin_the_rift and nlagalle.

 

[trippin_the_rift]

Also you need to factor in a thing called goodwill. It's what makes or breaks a company... example below.

I started out as a cheap economy class flyer, but now I'm a business class flyer... and in a few years I'll be a first class flyer. Heck -I'm not even 30.... that means there's a good 50 years of premium class travel left in me... Now is a fabulous time to **** up future earnings of an airline by pissing off platinums

Thing to remember is that it's not so much about how much profit you can make off an individual flight as much as it is how much you can pump from a consumer over their entire life.

Here's a great example... my local blue, white and black german car dealership... I get christmas gifts, birthday gifts, invites to free track days and treated like gold in general (including anytime access to their bar!), because my lifetime spend with their brand is significantly greater than a couple of sales. Guess what? I've since bought more cars there and will continue to do so in the future....

Investing in goodwill is the only way to grow for a brand that wants to be viable and profitable in the future.

 

[nlagalle]

These are all costs of running an airline. An airline would very quickly go broke if it only figured out fares based on catering, staffing and luggage handling alone. It wouldn't be able to replace its planes when they needed replacing!

I'll reiterate what I said. You can't base a profit as to what is shown on paper.

There are plenty of airline models. Some airlines like Ryanair can afford to have very cheap seats because they have very low overheads. QF is not such an airline (Jetstar is). DJ was, but it seems to be wanting to re-invent itself with a new model.

But you still didn't answer my question. You've stated that QF lose money on these seats

There is no way that QF (or SQ, or CX) would survive selling $5 fares like RyanAir does.

Yes but you pay for everything else.

Because there are not enough people willing to pay for them. Are these even serious questions?!?

And, as I said before, when no one on a route wants to pay for F, J or expensive Y, what happens to the route? QF stops flying it (...and it might go to Jetstar)

You are saying that QF makes no money from the cheaper fares, yet this is part of what makes it money! so how does QF make money if there aren't enough premium pax? simple, it's Y pax that do it.

 

[nlagalle]

It's quite simple: take the total amount of money that QF makes each year from selling seats, and divide by the number of seats on sale. There is your average profit/seat.

Now, if you want to work out whether any particular seat is profitable, you'd need to know the cost of providing that seat. I can only provide anecdotal evidence that premium seats are more profitable:
- it's long been held that legacy carriers make more money on expensive seats
- on routes where QF can't sell higher yielding tickets, they stop flying there

So there is no hard proof that premium seats make more money? And is it higher yeilding tickets? or lack of patronage?

Edit: I can offer a logical reason: a $1000 and a $2000 economy class ticket SYD-SIN would largely have the same costs. Yet I doubt that QF is only making $10 on both of those tickets. I suspect that it's making some more on the $2000 ticket Y ticket, since the costs are largely the same.

Ok what makes more money? selling 2 x $2000 tickets or 10 x $1000 tickets?

Yield Management - They know how many seats and at what price they can be sold at. They also know it better than you or I too.

 

[ozbeachbabe]

If you help people get what they want, you get what you want. This point however is lost on beancounters who don't believe in 'giving' anything away & just expect a one way street of undying loyalty by customers no matter how they're treated or what benefits are eroded. :evil:

They are seriously dreaming because in the real world that just doesn't happen.

 

[JohnPhelan]

Yield Management - They know how many seats and at what price they can be sold at. They also know it better than you or I too.

Absolutely correct! So ask them - do an airline's passenger profits come largely from F and J tickets, or from discount Y tickets? I think you know what the answer will be!

This latest tangent began because someone made the comment that WPs are where QF's profits come from. The simple answer is that some of the profits come from WPs - those flying F, J, Y+ and full Y. And the more those people travel, the greater the profit.

And some of the profit also comes from lower status (or no status) pax who are travelling F, J, Y+ and full Y.

All pax are valuable to QF - but all WPs are not of equal commercial value, because QF makes much greater profits from some of them than it does from others.

And I suspect that - as in most things in life - it's generally those WPs who display the DYKWIA attitude that are actually the least profitable!

 

[medhead]

Just to report: I did Arrival access in ADL today and they are checking that you have a flight. That's 2/2 checks for me and I'd say that ADL QP is definitely enforcing the new rules.


Certainly not shooting you at all, this is an interesting discussion

Really? I think there is a vast spectrum of WPs - flying a few F flights will bring in a lot more money to QF than someone doing 120 $100 SYD-MEL flights, or a WP doing some YUPPs in the US.
Don't shoot the messenger - I'm just stating what I think is obvious commercial reality.

Anyway - this is just mis-direction. Profits are not being made by people on cheap tickets. Just because you're a WP doesn't mean you are making lots of profit for QANTAS. And giving out freebies can make one an unprofitable customer. No one seems to be willng to address this.

I think that you're missing one basic point. Qantas is not pulling numbers out of their backside. They have worked out the QFF system and that system equalises all the various types of flying by the use of SC. Qantas has determined if you get X SC then you have made them enough profit to get free stuff. That is a fundamental starting position - Qantas know their business.

As always someone has said it better and before me, in this case nlagalle

As QF base your staus on SC's earnt which is based on distance and fare type - I would say you don't have anyone that is more important.

If there are that many flights ($10m in revenue at $1000/flight is 10,000 flights) then there is a lot of people using a lounge when not flying QF . Either it's happening a lot, or it's not happening much at all. Not sure which way your personal opinion goes.

Except in my case if they keep ATA then I would be flying mostly with QF, not switching those flight elsewhere.

 

[DC3]

If you help people get what they want, you get what you want. This point however is lost on beancounters who don't believe in 'giving' anything away & just expect a one way street of undying loyalty by customers no matter how they're treated or what benefits are eroded. :evil:

They are seriously dreaming because in the real world that just doesn't happen.

Yes, it's ONLY about the money. Nothing else counts, unfortunately.

 

[Archphoto]

Yes, it's ONLY about the money. Nothing else counts, unfortunately.

Shareholders probably prefer their $$$ dividends to SCs and lounge access. . . . . .

 

[ozbeachbabe]

Shareholders probably prefer their $$$ dividends to SCs and lounge access. . . . . .

I'm not saying they don't however if they were smart about it they could actually be earning more $$$ by way of firstly keeping customers happy so they will remain customers & keep on spending money so shareholders keep getting their dividends etc.

Wasn't it Richard Branson's philosophy to:

1) keep the staff happy who will of course in turn be nice to customers
2) look after customers so they will keep returning and spending money
3) by way of 1 & 2 the shareholders will be happy as the dollars will be rolling in

 

[Paddy55]

...meanwhile back on topic...

Just refused entry at PER as not flying same day... Just wanting to rest my bones for an hour before Mrs Paddy arrives from Syderney.

Pissed off Paddy :evil::evil::evil:

 

[Fantic125]

Wading into the deep end here, but a business is in business to make money. :shock:

Every business needs to make a return to survive, satisfy it's shareholders and re-invest to maintain and grow the business (and increase profitability).

It's not rocket science. Cash flow is king in any business.

If I had to choose between a 'precious' who spent $20k once a year and expected the red carpet treatment and a 'grunt' who spent the same amount of money but with lower expectations, I know which one would give me greater profitability...

 

[Archphoto]

I'm not saying they don't however if they were smart about it they could actually be earning more $$$ by way of firstly keeping customers happy so they will remain customers & keep on spending money so shareholders keep getting their dividends etc.

Wasn't it Richard Branson's philosophy to:

1) keep the staff happy who will of course in turn be nice to customers
2) look after customers so they will keep returning and spending money
3) by way of 1 & 2 the shareholders will be happy as the dollars will be rolling in

Yes it was and I think it is a brilliant philosophy! :mrgreen:

Unfortunately, there aren't many companies that think along those lines; the only line they care about is the bottom line.

A pity that shareholders aren't sold on that philosophy either - if they were, they'd look a lot closer at how Qantas is being run and how decisions can make or break their chances of even greater dividends.

 

[AnonymousCoward]

Unfortunately, there aren't many companies that think along those lines; the only line they care about is the bottom line.

There are many means to an end. There are many places that pay their staff well, but they are the McDonalds of the world. McDonalds exists to provide cheap food and consistent, not to provide extensive facilities and Nordstrom service.

A pity that shareholders aren't sold on that philosophy either - if they were, they'd look a lot closer at how Qantas is being run and how decisions can make or break their chances of even greater dividends.

Shareholders work out how to get their best return. If that means, like Gucci or Goldman Sachs or CitiGold, that they look after their best customers well, then that's what the shareholders will want.

Remember that shareholders are everything from people with a bit of money to invest to the everyman's Superannuation fund, to everything in between. Would *you* accept a 1% cut in your super return per year so that a company could spend more money coddling certain customers? I think you'd be asking some hard questions before you did.

 

[Archphoto]

Shareholders work out how to get their best return. If that means, like Gucci or Goldman Sachs or CitiGold, that they look after their best customers well, then that's what the shareholders will want.

Remember that shareholders are everything from people with a bit of money to invest to the everyman's Superannuation fund, to everything in between. Would *you* accept a 1% cut in your super return per year so that a company could spend more money coddling certain customers? I think you'd be asking some hard questions before you did.

I'm certainly not saying that "Any-time Lounge Access" was a correct decision on Qantas' behalf; in fact, the number of times I accessed some domestic lounges when flying, only to find them so full that you couldn't swing a cat, certainly didn't win brownie points for Qantas.

I'm sure that most of those in the lounge were flying on the day, but if you had 100 non-flyers taking part in the QP celebrations, meaning 100 flyers couldn't get in, how do you think the 100 flyers felt?

Yes, it was a perk for being amongst the "Elite" but in reality, I'd be more angry at losing my extra baggage allowance and Express Arrival Pass than that particular perk.

I don't expect any company to "coddle certain customers" - I expect them to look at how best to service their loyal customers *and* keep the shareholders happy.

The two can work hand in hand - it just needs some foresight by both the company and the shareholders, rather than keeping the myopic view that often prevails.

 

[samiam]

Also you need to factor in a thing called goodwill. It's what makes or breaks a company....

I started out as a cheap economy class flyer, but now I'm a business class flyer... and in a few years I'll be a first class flyer. Heck -I'm not even 30.... that means there's a good 50 years of premium class travel left in me... Now is a fabulous time to **** up future earnings of an airline by pissing off platinums

And then you find yourself in a position where you set the policy for employee travel - annoy the business owner/senior manager with enough enhancements, and the organisational travel policy is suddenly less brand loyal.

 

[medhead]

Absolutely correct! So ask them - do an airline's passenger profits come largely from F and J tickets, or from discount Y tickets? I think you know what the answer will be!

This latest tangent began because someone made the comment that WPs are where QF's profits come from. The simple answer is that some of the profits come from WPs - those flying F, J, Y+ and full Y. And the more those people travel, the greater the profit.

And some of the profit also comes from lower status (or no status) pax who are travelling F, J, Y+ and full Y.

All pax are valuable to QF - but all WPs are not of equal commercial value, because QF makes much greater profits from some of them than it does from others.

And I suspect that - as in most things in life - it's generally those WPs who display the DYKWIA attitude that are actually the least profitable!

Interesting idea. But do tell us why they sell discount tickets and not only Full Y and above. Clearly because that is not viable. A given flight is not going to make a profit with full F, J and Y+ cabins and 15 full Y pax.

It is also false to look at the high price of a J or F ticket and think that those tickets are making a massive profit over a Y ticket. The fact is an F passenger requires a much greater overhead on an aircraft. The F seat is much heavier than a Y seat, the catering, the crew per F passenger much greater cost and weight required. All of these things cost so much more in fuel. Thinking of a 747, would it be a reasonable guesstimate to say that 3 Y seats would occupy the space of 1 F seat? In that case, the comparison is not between the fare paid by 1 Y passenger vs 1F passenger it is 3 Y vs 1F.

I would also ask you about my ADL-SYD flights. The advertised base red-e-deal fare is $137. Except the flight that I have to regularly take is set at $201 as standard. During the April school holidays it was about $230 or $250 IIRC. If I buy that red-e-deal, tell me again how I'm not providing profit to Qantas.

Interesting that you bring commercial value into this. No one has claimed that all WPs are of equal commercial value. Clearly that is not the case. Someone (straitman I think) has already outlined a number of different levels of WP benefit related to annual SC earn and metal flown. However, the fact remains that once you get the SC then you are a platinum member that has done enough flying to be given the benefits of that level. Those with higher commercial value get extras, more OP-ups etc. You can pontificate as much as you like about who brings in the most profit, the fact remains that Qantas has determined that someone with 1400 SC is a platinum. It is the SC that are used to equalise the various ways of earning SC.

The DYKWIA attitude seems to stick around those who claim to be worthy because they fly F.

 

[moa999]

I'm not saying they don't however if they were smart about it they could actually be earning more $$$ by way of firstly keeping customers happy so they will remain customers & keep on spending money so shareholders keep getting their dividends etc.

Wasn't it Richard Branson's philosophy to:

1) keep the staff happy who will of course in turn be nice to customers
2) look after customers so they will keep returning and spending money
3) by way of 1 & 2 the shareholders will be happy as the dollars will be rolling in

Unfortunately having met a few VA FAs a couple of years ago in Thailand who after a fw drinks said - Virgin is this marketing auru of Richard being a superstar, enabling VA to recruit staff, then pay and treat them badly , all for the aura of meeting Richard and the 'island' getaway