Tokyo Haneda slot - how will Virgin Operate it?

[HS-TQE]

Overall operating HND is not a good idea IMO for VA2. It seems like Borghetti's ghost still lives...

Overall

Bain aren't that Borghetti-level clueless here.

After they saw QF get AAIF money (ie Queensland taxpayer money) to partially subsidise their own BNE-HND 3 weekly service (and thus taking away from their own original plan to serve MEL-HND daily) as well as going up to UA with AAIF money after originally stating they weren't originally planning to serve BNE after the VA partnership announcement. It's a no brainer that Bain and by extension a desperate Qld government meet to negotiate a CNS-Tokyo subsidised service in an attempt to revive a lagging North Queensland tourism industry.

 

[justinbrett]

40% comparing a twin with a twin?. Even AJoyce never went as far as that. For him it was 20% comparing a twin with a quad

You're comparing apples and oranges, they're very different aircraft. A332 can barely make it to LAX and even then with reduced payload.

Fuel burn isn't a static figure. It changes depending on payload and how much other fuel you're bringing. Stretch the range long enough and you're just carrying fuel with zero payload, then the percentages get a hell of a lot higher than 40%.

Squeezing the A332 on these US routes are going to give sub par performances. But even on mid range flights like Japan, 789 out performs the older A332 considerably - but not 40%, I never claimed that. That was route specific to LAX.

 

[Bagpuss]

Bain aren't that Borghetti-level clueless here.

After they saw QF get AAIF money (ie Queensland taxpayer money) to partially subsidise their own BNE-HND 3 weekly service (and thus taking away from their own original plan to serve MEL-HND daily) as well as going up to UA with AAIF money after originally stating they weren't originally planning to serve BNE after the VA partnership announcement. It's a no brainer that Bain and by extension a desperate Qld government meet to negotiate a CNS-Tokyo subsidised service in an attempt to revive a lagging North Queensland tourism industry.

Remember that Virgin Australia is owned by Bain, Virgin Group (undisclosed percentage I think), Queensland Investment Corporation (QIC) (Queensland Government) (7%)

 

[oz_mark]

Overall operating HND is not a good idea IMO for VA2. It seems like Borghetti's ghost still lives...

Overall

I suspect that until we see all of the pieces of the jigsaw puzzle that is VA2, one can't tell. It really seems like a placeholder type of operation while they line up stuff in the background.

 

[HS-TQE]

Remember that Virgin Australia is owned by Bain, Virgin Group (undisclosed percentage I think), Queensland Investment Corporation (QIC) (Queensland Government) (7%)

Virgin Group was publicly 5% as reported in the MSM.

The State of Queensland had a miniscule 2% (or was it 1%?).

 

[Quickstatus]

publicly 5%

VAH was delisted from the ASX in Nov 2020.

 

[HS-TQE]

VAH was delisted from the ASX in Nov 2020.

I was talking about Virgin Group (Branson) aka Corvina Holding's stake as agreed upon by Bain.

Branson's Virgin Group nabs 5pc stake in Virgin Australia

Richard Branson' s Virgin Group has finalised its deal to become the second biggest shareholder in Bain Capital's Virgin Australia.

www.afr.com

 

[Sprucegoose]

I must say CNS was a surprise, the logistics of which can’t be too fun to deal with. A business has to always look for growth opportunities, thats what Jetstar did when they started looking at overseas expansion.

It natural to view your/own perspectives first - CNS is logical if you factor the inbound market from JPN over the outbound market from CNS/AUS.

Bain will have done the numbers on a previously tightly locked down Japan.

 

[Gold Member]

I would really like to see this route work for VA, although I don’t hold my hopes too high. This will sound quite pessimistic but realistically, I give it a year or two, or whenever the QLD Govt funding runs dry.

When we have greater visibility of the route’s performance and if the numbers don’t support it’s continuation, I’ve been thinking about making a speculative booking beyond the anticipated operating schedule. If the route is pulled, is Virgin obliged to put me on an alternative fare with one of their partners (eg. ANA or SQ) in “Business”? Or would the fare simply be cancelled and my money refunded? Could be a lucrative opportunity for International grade long haul business to Japan. Earn/crediting would also be interesting.

 

[HS-TQE]

I would really like to see this route work for VA, although I don’t hold my hopes too high. This will sound quite pessimistic but realistically, I give it a year or two, or whenever the QLD Govt funding runs dry.

Typically a AAIF subsidised route is subsidised anywhere between 18 to 24 months. We'll have some idea in 18 months (or 2 years) if the route works out for VA or not. Keeping in mind they do have the NH partnership and codeshare on this route as well.

Although Bain did take advantage of the AAIF agreements, putting most of the responsibility on the Qld Government and the respective local airport (ie our taxes at work).

 

[Bagpuss]

I would really like to see this route work for VA, although I don’t hold my hopes too high. This will sound quite pessimistic but realistically, I give it a year or two, or whenever the QLD Govt funding runs dry.

They're using a B737 MAX which was ordered years ago. The investment is near minimal.

With freight and the ANA partnership, I'd be amazed if it didn't work.

They have a much better chance with the B737 MAX then the A330 HND <> BNE.

 

[pauly7]

QF (and other carriers) can run A330’s and other older aircraft profitably because they have built a premium brand positioning that can extract a higher yield.

Correct. But also don’t forget freight which QF also does very well on and also extracts premiums from, which anyone in logistics can attest to. Although a background player, Qantas Freight has been in huge expansion mode over last 5 years.

Again it would be interesting to hear if @pauly7 is able to share anything

No, not even allowed to talk around the edges on this one regarding strategy. Sorry

But I can say in my PERSONAL opinion that any serious international foray will be a huge gamble and Bain would probably want to sell down significantly / raise debt or get an alternative capital injection to fund this stage…

 

[AustraliaPoochie]

Very most likely they chose CNS as its the nearest airport that the 737max can carry fuel wise(?).

 

[oz_mark]

But I can say in my PERSONAL opinion that any serious international foray will be a huge gamble and Bain would probably want to sell down significantly / raise debt or get an alternative capital injection to fund this stage…

Given Bain's discipline, I doubt they are holding onto the slot just to stop Qantas getting it. I also doubt that the Max service is their main end game. Perhaps we'll see something after they go through whatever divestment plans they have.

 

[jakeseven7]

Given Bain's discipline, I doubt they are holding onto the slot just to stop Qantas getting it. I also doubt that the Max service is their main end game. Perhaps we'll see something after they go through whatever divestment plans they have.

Given pauly7’s experience with the VA1 collapse / fire sale and VA2 resurrection I’d lean towards him being on the money too .

Good to have a more knowledge voice on here amongst all the armchair CEO’s (myself included )

 

[oz_mark]

Given pauly7’s experience with the VA1 collapse / fire sale and VA2 resurrection I’d lean towards him being on the money too .

Good to have a more knowledge voice on here amongst all the armchair CEO’s (myself included )

Well this armchair CEO has a habit of being wrong Still, it doesn't add up to me.

 

[HS-TQE]

Also to add Premier Annastacia is pro-active into getting international service back into Queensland. Keep in mind QF's BNE-HND x3 weekly is also taxpayer-subsidised via the AAIF, so effectively we're (the Qld taxpayer) are also paying for the 'charter' of the A330 by taking the a/c away from QF's original plans which would've been operating daily MEL-HND.

So it's no surprise that Bain and the Queensland Government met up behind the scenes in regards to their (Virgin's) Tokyo-Haneda slot and linking that to the struggling North Queensland tourism industry.

 

[dajop]

Very risky game to add wide bodies. It is an easy way of achieving growth - in revenue - but much more difficult to grow profit at the same time.

Plenty of very successful airlines who operate only narrow bodies, but few have made the successful leap to incorporate wide bodies - some of the successful all narrow body operators are classic LCC’s such as Ryanair and EasyJet (although the lattwr is arguably somewhat value oriented) whilst some are more value oriented, such as JetBlue and Southwest.

The main carrier who seems to have done OK with adding 787 is WestJet. But even then it has been problematic dealing with competition. Their latest strategy would be akin to VA using widebodies exclusively out of Perth (or at a pinch ADL).

WestJet Cancels All Non-Calgary Long-Haul Routes

Every long-haul route is now exclusively from Calgary. Since starting long-haul, WestJet has cut 15 European routes involving seven Canadian airports.

simpleflying.com

Learning from history would suggest wide bodied/long haul flights doom Australian carriers other than QF.

 

[AIRwin]

Learning from history would suggest wide bodied/long haul flights doom Australian carriers other than QF.

And JQ?

 

[dajop]

And JQ?

I stand by my claim. They are part of QF. Would they be successful without the support of their parent?