Qantas, Loyalty and Tiger Airways

[vt01]

My main concern when flying is safety and then price. Work travel is always on QF as per company policy so I don't really have a choice.
However, should Tiger be safe and cheap I would consider using them for personal travel especially with my family. If I can save a hundred dollars or so on airfares for holidays, I would do it. Flying for work gives me enough FF points for status so I don't really need to consider the points lost for personal travel.
As others have pointed out, QF and VB have settled into a nice duopoly - aka QF and Ansett. VB started out cheap to get the market share and now can afford to price similar to QF.
I'm looking forward to Tiger to see what impact it has on the domestic market..

 

[oz_mark]

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.

Given the amount of sniping coming from Jetstar aimed at Tiger, I am sure that Jetstar is more concerned.

 

[jakeseven7]

i agree with the general gist of this thread that jetstar and virgin are the ones who will lose out here.

qantas, through many safety barriers already discussed has some protection.

jetstar and virgin mean less to australians, rely on a much higher % of leisure travellers and those are the ones more price concious.

you can already see jetstar posturing to cement it's position as the cheapest (with a very very smart 'match it and some' deal).

i am very suprised that virgin has done nothing except role out a few more tv's on planes (which they will try and charge for) with such a price war looming. maybe they will do a big turnaround and offer it for free to try and get people on board.

either way, some cheap fares from jetstar, virgin and perhaps qantas are on the horizon! (plus i reckon they will extend QFF to cover jetstar more as well)

 

[city8flyer]

NM: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

Hi NM- I disagree with this......here is one case study. Similar UK and Australian domestic routes are used as examples.

BA: London Heathrow-Edinburgh (Duration-1:25) for 1ST of July 2007 (this Sunday). ALL OPERATED BY British Airways (mainline)
Fares inclusive of all taxes:$162.50 (BA1462), $162.50 (BA1464), $188 (BA1458), $188 (BA 1452), $188 (BA1454)
Average Price:$177.60

Easyjet: London (Gatwick)- Edinburgh (Duration 1:25) for 1ST of July 2007 (this Sunday)
Fares inclusive of all taxes: $122 (flight 701), $138 (flight 703), $138 (flight 713), $164 (flight 705)
Average Price- $140.50

QF: Sydney-Brisbane (Duration- 1:30) for 1ST of July 2007 (this Sunday)
Seven cheapest fares inclusive of all taxes:$221 (QF540), $221 (QF550), $251 (QF548), $276 (QF546), $276 (QF532), $276 (QF544), $306 (QF502)
Average Price: $261

DJ: Sydney- Brisbane (Duration- 1:30 for 1ST of July 2007 (this Sunday)
Seven cheapest fares inclusive of all taxes:$149 (DJ 207), $179 (DJ211), $209 (DJ217), $209 (DJ221), $209 (DJ231). $209 (DJ237), $209 (DJ269)
Average Price: $196.14

Taxes-QF: $36 (this price includes a $31 fuel fine imposed by QF)
BA:$58.85 (this price includes a $15 fuel fine imposed by BA)
Easyjet:$40

QF's prices not only start significantly higher in comparison to BA, but they end up significantly higher as well (compared to BA).

 

[NM]

QF's prices not only START significantly higher in comparison to BA, but they END UP significantly higher as well (compared to BA).

Your example is for flights a week ahead of time during Australian school holiday period. Look further ahead and you will find QF's red-e-deals for Brisbane-Sydney actually start at $98.

As I mentioned in my previous post, it is very difficult to compare fares for any purpose other than purchasing tickets for a particular route and time you want to fly. There are too many variables at play to be able to make any projected assumptions such as airline revenue or profitability from the available airfares.

I don't begrudge any business for selling their product at whatever price the market will bare. And airline is not a charity or non-profit organisation, so why should they be pressured to sell their product for less than the price the market is willing to pay.

If you don't like QF (or any other business for that matter), vote with your feet. That is exactly what I have done regarding Qantas Frequent Flyer program.

 

[city8flyer]

NM:Look further ahead and you will find QF's red-e-deals for Brisbane-Sydney actually start at $98.

$98 is a sale fare NM, I'm comparing non-sale fares. But-I take your point though...... about it being complicated to analyse. Its giving me a headache lol.....

Anyhoo....... doesn't change the fact that Qantas and DJ have raised prices by over 50% in the last three or so years...... to the point that Qantas fares 3 years ago are probably cheaper (if not the same) compared to today's Jetstar's fares. That's business I know....... but it is also exploitation of the travelling public

 

[NM]

$98 is a sale fare NM, I'm comparing non-sale fares. But-I take your point though...... about it being complicated to analyse. Its giving me a headache lol.....

Sale fare? I just went to Qantas we site, punched in a few random Sundays a few months out that are not during school holiday period and that was the price I found. If it is a sale, then its readily and regularly available.

That's business I know....... but it is also exploitation of the travelling public

Call it whatever you like, but its reality. I don't see it any difference to many other products that cost a lot more in Australia than in other countries. Have you compared the price of things like computers, cameras, cars, golf clubs etc? In my experience, these things are all significantly cheaper in different countries where market demands are different. And I am not just talking about buying these things in third world counties. Compare the costs of those things I mentioned in the USA with Australia. Does that means that IBM/Lenovo, Dell, Nikon, Canon, Toyota, Nissan etc are all exploiting the Australian public because the same product costs more in Australia than in the USA?

 

[Keith009]

That's business I know....... but it is also exploitation of the travelling public

Nope - just market forces.

 

[serfty]

Sale fare? I just went to Qantas we site, punched in a few random Sundays a few months out that are not during school holiday period and that was the price I found. If it is a sale, then its readily and regularly available. ...

Actually, there is a Domestic Sale on all of DJ, JQ and QF for flights Mid July up until 13th December (Excluding Holiday/Peak periods).

Sale ends midnight 28th June.

The point is the standard fare SYD/BNE of QF is $116 and next Sunday's $220 fare illustrates NM's point about school holidays and booking with a week of travel. (Standard cheapest fare for DJ seems to be $99 and $79 for JQ)

 

[trooper]

I'm wondering how valid a comparison Europe and Australia are anyway... shouldn't Aust be compared with another low-population (ie small market)area of similar size?

Say, Canada? Wonder what "equivalent" domestic fares are like there....

Just curious.... Europe and Aust are SO different....

 

[Lonely Flyer]

Does that means that IBM/Lenovo, Dell, Nikon, Canon, Toyota, Nissan etc are all exploiting the Australian public because the same product costs more in Australia than in the USA?

I think NM has hit the nail on the head.

It is about the size of the market and competition.

UK 60 million 3 times Australia's pop 20 mil.

EU pop abot 440 million including UK. More competing airlines.

It is as expensive as hell to live in UK as compares Australia yet their incomes are not that proportionally higher.

US population overall and from State to State are not all that well paid. So things need to be cheaper there for them to do things we do.

The market is changing and I think QF realises that they need to offer a good product but still need to turn a profit. Our insolvency laws in Australia are far more restrictive than Chapter 11 in US.

 

[JohnK]

Interesting thread and some interesting points raised.

For me status and a FF program are more important than the price of an airfare. That being said if the cheapest airfare SYD-MEL was $250 o/w, standard airfare booked a couple of months in advance, then I would seriously reconsider using a LCC.

I know it is difficult to compare airfares in different countries or continents but I find that domestic airfares, even international, in Australia are some of the most expensive in the world. I don't think it has anything to do with the size of our country but rather lack of competition. Anyone that believes DJ has brought worthy competition to the market is sadly mistaken. Recently I looked at airfares SYD-ADL return and DJ were priced exactly the same as QF for the dates I wanted. Guess which I would take?

When going overseas you really get an idea of how much we are overpaying for airfares in Australia. Around Christmas-New Year period the WHY airfares SYD-BKK, a 9 hour flight, are ~$1800 return. I meet people from the UK who travel LHR-BKK, an 11-12 hour flight, during the same period and pay €550 (~A$880) for a WHY return airfare or €1000 (~A$1600) for a business class return airfare. These airfares are for travel on carriers like Etihad, Oasis etc.

Bring on Tiger, Air Asia, Viva Macau and any other airlines that are interested in providing some competition in Australia. Maybe QF will wake up then and adjust its airfares in line with the deterioration of its FF program.

 

[d15.in.oz]

Bring on ... Viva Macau and any other airlines that are interested in providing some competition in Australia...

I wouldn't hold my breath on Viva Macau having any kind of impact.

 

[city8flyer]

NM-Does that means that IBM/Lenovo, Dell, Nikon, Canon, Toyota, Nissan etc are all exploiting the Australian public because the same product costs more in Australia than in the USA

NM-I know it is all about competition. I know the reasons and motivations. However- If all these companies raised their prices by over 50%, what would the general Australian public think? What if bank fees, or fares on public busses/trains increased by 50%? I think that the public would not be a happy bunch...... and complain- alot. Same would apply to Qantas, if the general public were aware of the 50% price hikes.

But QF and DJ are smart....... they continually raise their prices in small increments (around $6-10 every 6 months approx) ...... so no one really notices. From memory (don't hold me to this)- they normally do this directly after a sale-when things are most quiet. And with the introduction of JQ's low introductory fares.......news headlines focus on this...... providing a further smokescreen to DJ and QF price hikes

What bites at me most- QF gain customers' loyalty through cheap advertising rather than a half-decent FF program and good/stable airfares. And it works!

 

[NM]

I don't think it has anything to do with the size of our country but rather lack of competition.

I think those two points are very much related. The size of the Australian market is the reason there is less competition than in some other markets. I believe the small market size means we have so far been unable to sustain more than two major players in the domestic aviation market. Its a complex issue that cannot easily be brought down to a few simple cause/effect factors.

 

[JohnK]

I wouldn't hold my breath on Viva Macau having any kind of impact.

No, not on their own. But if enough LCCs join the market and reduce airfares through increased competition then some of the major players may be forced to reduce their airfares as well. And then again maybe not....

 

[straitman]

I think those two points are very much related. The size of the Australian market is the reason there is less competition than in some other markets. I believe the small market size means we have so far been unable to sustain more than two major players in the domestic aviation market. Its a complex issue that cannot easily be brought down to a few simple cause/effect factors.

city8flyer,

People write text books on this sort of thing and they don't all agree with each other let alone a few people without the knowledge of the 'Yield Management' systems or even the general politics of the 'Aviation Industry.' When you look at return on dollars spent you have to say why bother, even for the profitable airlines such as Qantas.

In reality, it's hardly price gouging.

 

[simongr]

I think those two points are very much related. The size of the Australian market is the reason there is less competition than in some other markets. I believe the small market size means we have so far been unable to sustain more than two major players in the domestic aviation market. Its a complex issue that cannot easily be brought down to a few simple cause/effect factors.

The size of the market really impacts australia massively - that coupled with the distance between population points and government intervetion and you really dont have a great combination for consumerism (maybe that's a good thing?).

In simple terms when I travel to the UK (60million peeps) and US (30 million peeps) - I can get a much broader range of products from the same supplier than I could even imagine in oZ.

also - take "ready meals" for example. In the UK there is a large range of of premium quality ready meals available - because of the lack of population density here ad the massive distance between cities -that range is just simply not possible here. Organic food is another great example - it's a fly speck here - barely even comparable to what I could buy in the UK 7 years ago.

As a consumer Oz is not a great place to be.

You need more peeps - get pro-creating!

 

[stryker]

In simple terms when I travel to the UK (60million peeps) and US (30 million peeps) - I can get a much broader range of products from the same supplier than I could even imagine in oZ.

You need more peeps - get pro-creating!

I think you mean "Immigrating".

And there are more than 30M souls in the US of A. (maybe not, though).

And don't forget, I'm a UK citizen too...

 

[straitman]

I think you mean "Immigrating".

And there are more than 30M souls in the US of A. (maybe not, though).

And don't forget, I'm a UK citizen too...

Only one zero too few :!: