Qantas, Loyalty and Tiger Airways

[d15.in.oz]

…DJ is rather stretched/exposed at the moment and could be showing Tiger their soft belly when they launch... DJ are rolling out tvs, buying little jets and trying to expand internationally whilst raising their prices and perception of…The report suggests they are trying to be too many things to too many people and not being singleminded about what they stand for...

YES!

It really depends I guess how deep Toll's pockets … maybe they will go crawling back to Richard Branson for help?

NO!

Not crawling, rather the opposite, I predict an ultimatum being delivered to Sir Richard.
(Not to belittle his extreme business acumen. just describing the delivery method.)

DJ is a business which is attempting to deliver a mass market message, while being constrained by a niche branded voice. (Ask the huge corporates in the finance and communications industries - if they will allow their Virgin businesses to become anything more than extremely successful niche segment players in Australia!)

I figure, particularly given the current environment, TOLL will become aggressive with its newly acquired airline business or sell it to someone else! (I assume DJ’s management agrees, given their recent attempts at various PR & marketing pushes.)

 

[wandering_fred]

I have been ignoring this forum for awhile and apologize for the late comment. I have no great expectations for the Tiger Airlines entry into the Oz airline market. But every little bit of competition helps.

The success of QF internationally is based more on the gullibility of the Oz average airline customer (at least where alternatives exist - for all intents and purposes TrasnPAC they don't). All following prices include all the "extras" and have used September mid week flights. Presently a Super Saver (V class) ticket PER-SIN-PER is AU$1138. Originating in SIN the same flights (ie SIN-PER-SIN) is $AU558. That's for flights 2420 miles each way. The same time frame - September mid week super-saver flights SYD-PER-SYD are $AU752 (for 2041 miles each way)

Qantas will price their tickets as expensively as they can and still get reasonable passenger loads. One can argue over the different demographics of OZ versus Europe but arguably QF is using its market power to control exAus pricing. The airline remainders - up until this point - have simply quietly joined QF at the "trough".

I will make a predictiom on QF premium economy. It will be cheaper for me to fly Y to SIN and fly BA to eastern coast USA/Canada than fly QF Y to SYD and take their prem product to NYC. And AA will not get codeshare rights in the QF prem cabin.

Tiger - well maybe they can convice the PER airport to eventually combine domestic and international terminals.
And maybe when West Coast plays in MEL you'll still be able to find a seat on Fridays and Sundays.

My two cents wandering as usual.

Fred

 

[dajop]

Qantas will price their tickets as expensively as they can and still get reasonable passenger loads.

Anecdotally this is true, but in doing so I assume they are profit maximising. I have on several occassions wanted to take a 7:30am flight MEL-SYD, but QF were only selling full Y. Instead I've booked an 8:30 or 9 in K as a compromise, turned up at the QP moved my flight to 7:30 and found a half empty cabin (well maybe a one third empty cabin). Obviously there is more money to be made selling half a cabin at full Y than a full cabin on K's or lower.

Interesting that in an earlier post, questions were raised about whether Australia can maintain three airlines. WIth the collapse of Compass(es) and Ansett examples. One point though is economic conditions in the Compass era were vastly different to today (remember the "recession we had to have") and as for Ansett .. well that has been covered in a lot of detail elsewhere but really NOBODY, no matter how deep their pockets was going to invest in a struggling airline in Sept 2001. (except under the guise of national interest, i.e. NZ)

My question about the viability of three (or should that be 2.5?) LCC's in Australia, is about the whole "travel" price. Anecdotally again, I've found that since the advent of JQ two factors:
1) Weekend travel is dearer than ever, as peak travel time for LCC's is weekends, whereas when we only had full service carriers you used to see good discounts around weekends.
2) Accommodation at key LCC destinations has increased significantly in price. Cheap airfares mean higher demand for accommodation, and supply is slow in catching up. This will be exacerbated by Tiger.

 

[justinbrett]

I've been thinking of a way for QF/JQ to improve its service.

Rename Jetstar to Qantas Express or something like that, with a similar corporate image to Qantas mainline.

Then, have two classes of cabin - discount ecconomy and full ecconomy. In full ecconomy, the service would be just like Qantas - Free meals, VOD / TV screens, slightly better seats. Full ecconomy would have dedicated check in and you can check in late if you have no bags. For either class, baggage transfers available to any OW aircraft. Also, QF elite members in full ecconomy have their status recognised with priority bags etc.

Discount ecconomy would be pretty much like Jetstar is now.

Between Qantas Cityflyer and Qantas express, they would be able to cover all the domestic routes, and people can still pay extra and get the full Qantas service. Obviously the red-e-deals would only be for the discount ecconomy class.

Probably unlikely to happen, but it's nice to dream.

 

[NM]

Anecdotally this is true, but in doing so I assume they are profit maximising. I have on several occassions wanted to take a 7:30am flight MEL-SYD, but QF were only selling full Y. Instead I've booked an 8:30 or 9 in K as a compromise, turned up at the QP moved my flight to 7:30 and found a half empty cabin (well maybe a one third empty cabin). Obviously there is more money to be made selling half a cabin at full Y than a full cabin on K's or lower.

And some people who want to travel on the 7:30am flight would just pay the Y fare. You still bought a QF ticket so their pricing policy did not affect their revenue. Smart policy on QF's part I would say. And smart working on your part too.

 

[Mal]

Good old Jetstar and their publicity blurb:

http://www.jetstar.com/pdf/news/20070704.pdf

Jetstar to maintain year round daily Melbourne - Darwin service
Australia’s low fares airline Jetstar is to maintain its existing daily direct service between Melbourne and Darwin for the next scheduling season to meet existing market demand and provide travellers with a year round daily flight proposition with the carrier on the route.
From 28 October 2007, Jetstar will continue to operate a daily direct Melbourne-Darwin service having successfully grown Qantas Group capacity across a number of domestic routes into Darwin since the airline commenced its low fare Northern Territory flights from 1 May 2006.

Let's be scared of tiger. Let's be Jetstar!

 

[justinbrett]

I don't get it.

There has never been much demand on the MEL services - Qantas only operated about 3 flights a week in the wet season, Virgin about the same. How are they going to fill all those seats? There'll be nearlly as many seats on the MEL route as there is currently on the BNE route - which is the most popular.

A daytime Sydney service would be the way to expand the market (in addition to the token QF dry season service).

 

[NM]

I don't get it.

There has never been much demand on the MEL services - Qantas only operated about 3 flights a week in the wet season, Virgin about the same. How are they going to fill all those seats? There'll be nearlly as many seats on the MEL route as there is currently on the BNE route - which is the most popular.

I think that is part of the QF/JQ strategy. JQ can cope with low yield on a route for a while, but can a local up-start in TR cope with the low yields? So long as JQ manages to keep TR's flights operating with lots of empty seats and low fares, it may help JQ fight off the competition. JQ may also be able to make some revenue by filling the belly of their A320s with freight.

 

[oz_mark]

Moving capacity around to match a competitor was something Qantas did in previous times while there was a third operator around. I recall them boosting services on routes after DJ announced they were to begin services on them.

 

[JohnK]

Discount ecconomy would be pretty much like Jetstar is now.

Between Qantas Cityflyer and Qantas express, they would be able to cover all the domestic routes, and people can still pay extra and get the full Qantas service. Obviously the red-e-deals would only be for the discount ecconomy class.

I purchase red-edeals now and get the full Qantas service.

You are proposing red-edeals with no frills service and effectively no SCs or FF points. Hmm....

 

[wandering_fred]

I note (and suspect that QF does also) that red edeals are mainly of limited value to OW partner FF members and J* flights are of no use for mileage accrual........ except on QF

Perhaps another of QFs response to the flight to AA along with the now mandatory 4 flights on QF.

Happy wandering

Fred

 

[d15.in.oz]

How are they going to fill all those seats?

Not necessarily with people terminating in DRW! MEL to SIN via DRW at the right price may be attractive to some people. (P.S. Try to fly to DPS with QF, and you may be presented with a viaDRW option.)

I have posted before, but I'll say it again - DRW is a perfect hub for a single aisle / regional jet operator, targeting people travelling between SEAustralia & SEAsia, if the airport is willing to spend on airside enhancements.

 

[dajop]

DRW is a perfect hub for a single aisle / regional jet operator, targeting people travelling between SEAustralia & SEAsia,

What is the range of a LCC version of the A320? I note airbus has 3000 nm as the limit for a 150 pax configured aircraft. This would make Bangkok, Hong Kong, Hanoi, Malaysia & the Philippines all possible from DRW.

 

[littl_flier]

I've been thinking of a way for QF/JQ to improve its service.

Rename Jetstar to Qantas Express or something like that, with a similar corporate image to Qantas mainline.

Then, have two classes of cabin - discount ecconomy and full ecconomy. In full ecconomy, the service would be just like Qantas - Free meals, VOD / TV screens, slightly better seats. Full ecconomy would have dedicated check in and you can check in late if you have no bags. For either class, baggage transfers available to any OW aircraft. Also, QF elite members in full ecconomy have their status recognised with priority bags etc.

Discount ecconomy would be pretty much like Jetstar is now.

Between Qantas Cityflyer and Qantas express, they would be able to cover all the domestic routes, and people can still pay extra and get the full Qantas service. Obviously the red-e-deals would only be for the discount ecconomy class.

Probably unlikely to happen, but it's nice to dream.

This is a great idea which to some extent is already being replicated with the Jetstar model but does have limitations as JohnK mentioned.

Qantas would be unlikely to offer product similiar or the same as offered on a Cityflyer service as this would lead to overcapicity and the confusion between two brands. Take the BNE-SYD market for example. Qantas Cityflyer offers a service that your proposed Qantas Express would offer in Full Economy, and thus the discount economy would cater mainly for the leisure market and stingy employers. In the 4pm - 7pm section of the market when travellers are looking for a premium product, the Discount economy product proposed would not be demanded. In the non-peak corporate travels hours, Jetstar will begin (discount economy service) on the routes to cater for the discount market.

Short-haul I can;t see your model working, but longhaul is certainly a different story.

 

[d15.in.oz]

What is the range of a ... Bangkok, Hong Kong, Hanoi, Malaysia & the Philippines all possible from DRW.

I like interactive visuals like - Great Circle Mapper - then you can plug in whatever factors you want.

 

[justinbrett]

Short-haul I can;t see your model working, but longhaul is certainly a different story.

Well I actually had the DRW/BNE-SYD-MEL-ADL-PER routes in mind, since our QF routes up here are gradually turning into Jetstar routes, in turn reducing the full service Y and J options.

I'm not like some who think given a few years, there won't be QF domestic operating from Darwin. There are quite a lot of business and government travellers who pay full Y and J fares - and the flights are always so full given the lack of services. They would have to be making more money with QF operating those routes than Jestar would.

However it seems if a route doesn't make a heap of money, QF are happy to turn it over to Jetstar.

Qantas isn't very popular up here, especially with no daytime services to Sydney and Melbourne (most locals aren't fond of red eye flights).

If QF could commit one or two aircraft to overnight in DRW, we could have an early morning departure (0600) and arrive on the East coast at 1030ish. turn around at 1115, arrive back in Darwin at 1500. Turn around again at 1600, arrive on the East coast at 2030. Final flight leaves at 2115, arrive in Darwin at 0100.

This model allows for some use outside curfews (the northbound legs of the red-eyes are fine), and also two decent flights for business (the 0600 out of DRW and the 1600 ex-East coast).

 

[pauly7]

Good old Jetstar and their publicity blurb:

http://www.jetstar.com/pdf/news/20070704.pdf



Let's be scared of tiger. Let's be Jetstar!

A couple of people have raised DJ's sleepy status this year.... they have sent teaser emails out talking about a BIG NEW ENHANCEMENT to Velcocity and Virgin (see the almost dead Virgin forum on this site for details!) so maybe that will be their answer.

I really hope Virgin take this seriously, wouldn't want another Ansett and their owners (Toll) will be the ones with the least patience in this battle...

Let's stick our head in the sand. Let's be Virgin!

 

[Evan]

Thats a good point, i don't see Toll as the most persistant of operators, if it all gets too hard then they would tend to dump and run in the past, but an airline is a bit bigger than what they have been used to. It takes a lot of persistance to run an airline and a lot of $$$, both of which Qantas and Tiger have. (It takes a lot of persistance to loose money year after year the last few years for Tiger and still be aggresivly investing and expanding)

You will also notice QF group now has 65 x 787's on firm order + when they moved up the extra 20 x 787-9's its also reports they again took and extra 20 options, or rather the new order for an extra 20 are simply just firm orders.
+ 20 x A380's on order. + the 6 extra A320-200's this year and next (With extra J setas !!), + an extra 6 or so 737-800's to be delivered in the very near future.

All i can say is bring on the fight ! QF are making sure they wont have a shortage of airframes to provide any required services and also renew there fleet to stay efficient and everybody likes new planes.

Seems all the LCC's are using the single type in fleet of new fuel efficent aircraft model, i am sure they have done the figures and realised it cant be done on old aircraft.

Getting back OT, a lot of people prefer direct as its faster, and sometimes cheaper due to less taxes etc, or hose who do fly in-direct is for other reasons, like status which you don't get on tiger.
Unless they do something with the airport up there as was mentioned by another poster then its not a great place to stop, and tiger donw have lounges.

E

 

[justinbrett]

Let's stick our head in the sand. Let's be Virgin!

I actually don't think it's such a bad idea, to some extent.

Tiger will have a small capacity, and if they are making the fares that cheap, they will sell out quickly. Tigers more expensive fares will compare with the existing Virgin fares - some people would prefer to fly Virgin.

Look at Qantas - it doesn't compete with Jetstar (no need) and doesn't bother to compete with Virgin when Jetstar already flies the route - and yet plenty of people fly Qantas.

After flying some budget European airlines recently, I don't think the Australian public appreciates that Virgin and Jetstar are actually not too bad (although the fares are higher). Tiger will show them what a budget airline is.

If Virgin tries too hard to compete with Tiger, they'll lose a lot of money. One strategy is to let Tiger sell their fares, and pick up the remainder with healthy sustainable fares. One would argue they'd lose less money that way.

Most people realise that the crazy fares back in the Ansett/Qantas war were a major factor in the collapse. It was a bit different then because Ansett and Qantas were both large carriers - but I believe the damage could be conatined with Tiger.


Of course this all goes out the window when Tiger bring more than 5 aircraft.

 

[jakeseven7]

I actually don't think it's such a bad idea, to some extent.

Tiger will have a small capacity, and if they are making the fares that cheap, they will sell out quickly. Tigers more expensive fares will compare with the existing Virgin fares - some people would prefer to fly Virgin.

Look at Qantas - it doesn't compete with Jetstar (no need) and doesn't bother to compete with Virgin when Jetstar already flies the route - and yet plenty of people fly Qantas.

After flying some budget European airlines recently, I don't think the Australian public appreciates that Virgin and Jetstar are actually not too bad (although the fares are higher). Tiger will show them what a budget airline is.

If Virgin tries too hard to compete with Tiger, they'll lose a lot of money. One strategy is to let Tiger sell their fares, and pick up the remainder with healthy sustainable fares. One would argue they'd lose less money that way.

Most people realise that the crazy fares back in the Ansett/Qantas war were a major factor in the collapse. It was a bit different then because Ansett and Qantas were both large carriers - but I believe the damage could be conatined with Tiger.


Of course this all goes out the window when Tiger bring more than 5 aircraft.

Yea, but QF has a much higher degree of loyalty and corporate business than DJ. I too am suprised about their lack of action - BUT as the OP pointed out, DJ are about to make an HUGE announcement concerning Velocity, some people are even saying Star Alliance!