Qantas, Loyalty and Tiger Airways

[city8flyer]

Hi guys,
I want to pose an arguement to you guys.

I think most of you would agree....... Qantas relies heavily on the loyalty of its customers. Despite Qantas offering a superior product, it overcharges on its routes........ and thus relies heavily on customers' loyalty to sell its seats. Qantas is very smart, in that it achieves this loyalty to the brand through patriotism (of Australia). It strongly associates itself as 'proudly Australian' (slogan 'Spirit of Australia' on most QF aircraft....... except on QF NZ domestic aircraft lol), and it attaches itself to such icons as our national soccer (Qantas socerroos) and rugby (Qantas wallabies) teams....... generating these feelings of patriotism to our country whenever we fly Qantas. Qantas is very smart!!!!!!

However Qantas....... for a long time now, in return snubs the travelling public........
* Despite high profits.....Qantas has recently raised the prices of red-e-deals by $6-12 on many key routes, despite an imminent airfare war.
* Ridiculous fuel fines for the travelliing public
* A Frequent Flyer program which is sub-standard in terms of quality
* A general 'take it or leave it' attitude amongst many QF staff . I really believe that this is the general attitude amongst alot of QF staff. There are some really good staff, but saying this........ there are some real shockers.

Also- Qantas group has been further treating the Australian travelling public with 'contempt' when they transfer QF INTERNATIONAL routes into JQ........ and charge a fare (talking about Jetsaver fares) which is not all that different with QF's normal red-e-deal fare. In my opinion, half the discontent regarding JQ international is the fact that they do not differ too much in price to mainline QF's prices when routes are transferred...... even though Dixon has boasted about JQ's tremendously low cost base. Thus, when selling a Jetsaver fare, Qantas group are probably making more money per seat sold than when selling a Qantas red-e-deal seat. I may be wrong on this....... but it is my view/opinion

So basically, Qantas is not showing the same loyalty to its customer, as customers are showing to Qantas. Virgin Blue has had the chance to lead the way in terms of airfare prices, but has instead grown into a comfortable monopoly with QF- and prices have steadily risen post Ansett and the 'initial airfare plunge'. Because of Virgin not being the 'real deal' in terms of keeping airfares low....many of the travelling public remain loyal to Qantas....... and for this reason (despite Qantas not being as loyal to us) continue to fly Qantas.

When Tiger Airways comes into the domestic market, and offers fares which are geniunely WAY cheaper than QF...... will you continue to fly QF? Has QF shown you enough loyalty, and treated you 'well enough', so that you will stay loyal to them when Tiger comes into the fray? If Tiger Airways and JQ/'Qantas Group' offer the same domestic fares..... would you be loyal to Tiger Airways or QF Group?

In my opinion, Qantas's poor showing in the choice poll is not about Qantas's inflight product...... but more about the ill treatment and lack of loyalty Qantas displays to the Aussie public. Public are just getting sick of this. Opinions?

 

[Keith009]

I'd stick with QF for my AAdvantage miles, and because my AA PLAT/ow Sapphire status allows free access to the Qantas Clubs - I'd have to pay $30 for entry to Virgin's lounges. And horror of horrors - no lounge access at all if I fly TR.

Besides, work has a contract with QF so that's my monthly visits to CBR taken care of.

I've not flown JQ - and am happy to keep it that way, though this might change when I suddenly find myself on a route that sees me choosing between DJ/JQ/TR/DJ's proposed cheapo carrier. Rumour is that Sapphires/Emeralds get access to Qantas Clubs when on JQ but that's pretty YMMV atm.

I've got no problems with QF WHY or J services internationally (haven't got the luck to be in F). But if in WHY - I'd rather go via SYD to be on BA's WTP product - but since QF is seemingly introducing WHY+ on its A380, I might just fly direct with QF in future. Most of my premium cabin fares are bought as RTWs - no fuel fines there for QF/BA segments when ticketed with AA. Award seats on QF/BA etc are also ticketed by AA since I use AAdvantage miles - no fuel fines there.

Qantas Frequent Flyer is indeed substandard IMHO - hence I migrated to AAdvantage all those years ago, despite continuing to fly QF.( Umm ok there was that brief stint with SQ/LH for a while...) 120 000 miles for a oneworld return J award to Europe is a no brainer, cheaper than QFF MFU discount Y to J.

So for my personal circumstances - QF is fine really. Can't speak for everyone else of course.

 

[city8flyer]

Airfare prices: Aussie Domestic (QF, DJ) vs Intra-Europe (BA, Ryanair, Easy

Yeah.... if you have good status, it may get complicated........ but with QF's current prices and the lowly state of the Frequent Flyer Program....... you'd probably be better off financially to grab the cheapest flight option.

Example:
At the moment...... Australian Domestic Airfare prices are way too high. Look at a comaprison of Intra-Europe airfare prices vs Australian Domestic Airfare prices.

Example: Rome-London (Duration 2:45) vs PER-ADL (Flight Duration 2:50). All taxes and surcharges included in quoted prices. Further evidence that the QF/DJ team are ripping us off......

PER-ADL (2hrs 50min)
QF (4 direct flights per day) $256 (Red-e-deal)
DJ (2 direct flights per day) $199 (Blue Saver)

CIA(Rome)-LHR (2 hrs 45 min)
BA (5 direct flights per day) $114 (Normal fare)

CIA(Rome)-London Luton (2 hrs 45 min)
Ryan Air (1 direct flights per day) $55 (Normal fare)
Easyjet (2 direct flights per day) $83 (Normal Fare)

CIA(Rome)-London Gatwick (2 hrs 35 min)
BA (1 direct flight per day) $87 (Normal Fare)

There is no way that DJ have a better inflight product than BA.......but they charge $85 more. How does QF justify the $150 price gap between itself and BA for a comparable route? This is daylight robbery....... its worse than our current elevated fuel prices in Australia. But Qantas have raised the prices once again.......with no good explanation. QF and DJ need to be put on notice........ and we as a travelling public must make noise. Opinions?

 

[straitman]

city8flyer,

Interesting and something I need to think about.

One question though. When running these numbers have you taken into account taxes and how does this affect the equation :?: ie are the taxes through Europe and Oz proportional or not :?:

 

[city8flyer]

All prices quoted include all taxes and surcharges.

 

[straitman]

All prices quoted include all taxes and surcharges

city8flyer,

Understood, however I think you missed my point.

Are the taxes a similar % of the total in Oz when compared to Europe :?:

 

[Helot]

Sorry just joined this. One of your original assumptions is wrong city8flyer. QF do charge more but their product isn't superior to many airlines. QF won't get my loyalty when Tiger arrives assuming that they reward in Star Alliance FF programs.

 

[city8flyer]

Sorry straitman.......here are some more detailed figures in relation to air taxes in Europe and Australia .
Taxes:
CIA-LHR (on BA): $42, ($15 Fuel Surcharge included in this price)
ADL-PER (on QF): $47 ($32 Fuel Surcharge included in this price)

Thus QF's fuel surcharge is twice that of BA's. Airport Fees, Levys and Taxes are MORE expensive on the CIA-LHR route, but QF's Fuel Surcharge make their taxes on the ADL-PER route more expensive.

 

[Evan]

Sorry just joined this. One of your original assumptions is wrong city8flyer. QF do charge more but their product isn't superior to many airlines. QF won't get my loyalty when Tiger arrives assuming that they reward in Star Alliance FF programs.

But TR are not a star alliance member, so unless they plan to become one no chance there. Also LCC's drive there fleet very hard, an un-serviceable plane could cause a lot of problems, just witness Jet* current issue when an A332 goes unservicable. Me, done my share of LCC's, they are ok, but not generally for me i prefer a good network and the services that come with it.

I guess it all depends if its for pleasure or business.

E

 

[city8flyer]

Hi Evan, but compare BA and QF. Both are full service carriers of comparable quality (both are 4 star airlines according to Skytrax). QF is over 2.25 times more expensive on a comparable route......... meaning that QF are problably making 2.25 times more per seat sold than BA for the same/comparable route. QF are worse than the fuel companies/stations which come under so much scrutiny......

 

[Evan]

Hi Evan, but compare BA and QF. Both are full service carriers of comparable quality (both are 4 star airlines according to Skytrax). QF is over 2.25 times more expensive on a comparable route.........

Yes, i take your point QF is expensive, and profitable... BA is marginal.
I was only saying i am not in a hurry to use Tiger or any other LCC, but also why limit yourself to QF, why not use BA,CX,AA (and star airlines like SQ) when booking, if you don't use QF then the prices will come down as they need to. Fact is that QF have an 80%+ avg load in internation routes recently and with a lot of flights i have wanted to take being Y & J =0 (totally full) then whats the incentive to drop prices.

Simply laws of supply and demand, and yes the OP has a great point about being patriotic, so they also have a good advertising department

E

 

[city8flyer]

Evan, you're right- but I'm talking more about the domestic, rather than international markets of Australia. Thus, taking into account what you've said- we really need to get those loyal customers of Qantas to start spreading there business to Tiger........ so to keep Qantas honest. For the customers to win in terms of airfare prices in our domestic market, Tiger must be successful and command a good market share. Virgin won't keep Qantas honest.......they're just as bad and greedy as QF........81% rise in their first half profits recently. If Virgin were really serious about keeping the air really fair, they would significantly lower prices...... thus driving QF prices down as well. But Virgin, like Qantas will raise prices in lieu of loyalty if the business suits....... thus it is now time for the travelling public to teach the two major airlines a lesson when Tiger arrives

 

[oz_mark]

Sorry just joined this. One of your original assumptions is wrong city8flyer. QF do charge more but their product isn't superior to many airlines. QF won't get my loyalty when Tiger arrives assuming that they reward in Star Alliance FF programs.

Tiger have a philosophy of not having a loyalty program, much less being a member of Star Alliance.

 

[littl_flier]

Ok, time to add my thoughts on the issue.

Yes, i take your point QF is expensive, and profitable... BA is marginal.

QF is over 2.25 times more expensive on a comparable route......... meaning that QF are probably making 2.25 times more per seat sold than BA for the same/comparable route.

Firstly, QF is one of the most profitable airlines in the world and as an indirect shareholder, I can understand the moves it's making. HOWEVER, I completely concur with the OP regarding profitability. I too have been looking quite closely at BA's Europe pricing recently and was surprised at how affordable they are. Just remember, you have quoted non-sale Red-e-deals and I'm pretty sure the prices you have quoted reflect the current BA sale. There is still a considerable difference though. Whilst the majority of my travel now is work related, I still notice as I have mentioned elsewhere the prices soaring. Eg. BNE-SYD with QF have gone from $70 to $115 for a base red-e-deal over the last three years.

Qantas relies heavily on the loyalty of its customers. Despite Qantas offering a superior product, it overcharges on its routes........ and thus relies heavily on customers' loyalty to sell its seats. Qantas is very smart, in that it achieves this loyalty to the brand through patriotism (of Australia). It strongly associates itself as 'proudly Australian' (slogan 'Spirit of Australia' on most QF aircraft.

I am one of the suckers who have become extremely loyal. Previously I flew whoever was cheaper, however, over the last 6 months as the FF balance began to grow and I was gifted with a lovely thing called Qantas Club, I now fly Qantas for leisure where the price is within a reasonable margin to Virgin. I generally try to avoid JQ domestic all-together.

When Tiger Airways comes into the domestic market, and offers fares which are genuinely WAY cheaper than QF...... will you continue to fly QF? Has QF shown you enough loyalty, and treated you 'well enough', so that you will stay loyal to them when Tiger comes into the fray?

I will as mentioned above, decide each case on its merits. If there are rock bottom fares ie. for a BNE-SYD/MEL fare that is more than $60 cheaper, I will probably fly Tiger. Again, this is probably more to do with the benefits of some status and things would be different if I was a Bronze with no QP. It's not that QF have shown me any loyalty, its my loyalty to my favorite airline, where I feel at home at in the sky.

Qantas Frequent Flyer is indeed substandard IMHO - hence I migrated to AAdvantage all those years ago, despite continuing to fly QF. 120 000 miles for a oneworld return J award to Europe is a no brainer, cheaper than QFF MFU discount Y to J.

Here is where my loyalty to QF may die and I'm seriously considering the much debated move to AA. I will still fly with QF, AA will just get my FF points, particularly as I'll still have Qantas Club.


So, all in all, it will be interesting to see what happens. For me, it will no doubt be a case by case analysis. Having said that, QF, feel free to drop the red-e-deals.

 

[city8flyer]

Hi lil'flyer- BA fares quoted are not sale fares. Outside the sale periods, these fares are always available.....

 

[Keith009]

Thus, taking into account what you've said- we really need to get those loyal customers of Qantas to start spreading there business to Tiger........ so to keep Qantas honest.

Unless Tiger gets me lounge access and Star Alliance miles - which is unlikely because it's an LCC - that's not likely to happen.

I'm not loyal to QF - however it IS the only option domestically where my needs are concerned.

 

[littl_flier]

I'm not loyal to QF - however it IS the the only option domestically where my needs are concerned.

More to the point, big business is loyal to QF and that's where the big $$$'s are for QF. For work travel, I can't see myself having any option whether I'm loyal to QF or not, my decision is made by the CEO sitting in Sydney. I'd imagine its the same for QF009.

 

[SF&]

I will deicde when TG is here.

Being self employed I try to save where poss.

Basically it schedules, I am not flying midnight flights for $5!! I will pay $100 and get my nights sleep!!

QF
Inflight service is great
QF club I think is over - crowded and doesnt offer the service it once did.
+ with wi fi sit in Hudson's or whatever coffee shop with a decent coffee in peace with nice jazz music on and work.

If you save 20K on domestic or 30K then you can fly J class int'ly.

 

[NM]

It is very difficult to compare air fares for any purpose other than purchasing the tickets for where you want to fly. To assume that any particular fare that is available is a reflection of the cost or revenue of the airline is flawed.

Airline revenues and fares offered are very complex indeed and very much linked to yield management and volumes. The revenue earned from a flight is not the number of passengers multiplied by the lowest fare sold. It is made up of the spread of fares sold, and that is controlled by the number of seats the airline makes available makes available at each fare level. And that is the factor that is not known when looking purely at the fares being offered.

For example, BA may offer a very low fare (some airlines even sell tickets for $1), but the number of seats sold at that fare level will be restricted. They will also sell thickets on the same flight for much higher amounts, and the flight revenue is the combination of all ticket sales.

BA and QF operate in very different markets, and as such they manage their yield and revenues differently. BA may offer lower entry fares for a small number of seats, while QF offers higher entry fares (such as the red-e-deal example provided by the OP) but with more availability. In some people's opinions that may be ripping off the passengers. However, in my opinion that is sound business management practice. We don't know how many seats each airline makes available at their entry pricing, nor what their flight revenue is for such a mission, so we cannot make any real determination regarding revenue comparison.

As with all publicly listed companies, the legal responsibility of the board and management team is to maximise the shareholder value. As consumers of air travel services, we have a choice. QF is obviously selling their product in a manner that their primary market is willing to consume.

Remember that we do have a choice. I agree that the QF FF program has evolved into a program of poor value (earn/burn rate and other benefits). But it is not the only FF program available. If you don't like it, then don't use it and choose another (as I have done).

And also keep in mind that if we want to encourage competition from airlines that have lower cost bases (often due to being based in geographies where labour is less expensive), then we must also accept that in order to compete on price, QF must also be allowed to lower its cost base through whatever means is available - including off-shoring jobs.

[Note that I am not, and have never been a QF shareholder or employee]

 

[d15.in.oz]

I figure BA is having a going out of business sale…LOL That said, BA strategy sans-Connect, is difficult to line up against 2 branded QAN. (I would apply my hub&spoke, top+bottom of the market analysis, but they sold most of their domestic operations and are talking about outfitting business class only aeroplanes, so I am apparently just as confused as they are.)

QAN loyalty marketing is a magnificent beast. It is intricate, evolved & it works!

Tiger would do well not to dismiss it as mere parochialism. Aside from my belief that QAN would have contingency plans ready if domestic market share drops below 60%, and then stage two plans should it drop to50%, I reckon it is DJ that has the most to lose once the Tiger starts flying domestically.