VA - a value proposition?

[mannej]

I don't know if this adds anything to the discussion, but I'll throw it in anyway. Our last trip to CNS (BNE-CNS) ended up with me flying DJ and my wife flying JQ. Not because she wanted to, but because DJ did not have 1 single seat left............JQ had heaps.

footnote: the DJ flight was an E190, but I don't know what the JQ was so that could explain some of the seating difference.

More than likely it would be an A320 (177/180 seats)

 

[Joshua]

To add yet more anecdotal evidence, I have been waiting to use my DJ matched status but every time I find QF to be cheaper. This ranges from 1 week to 3 months out. Even when they had sales their fares were generally greater except for the most undesirable timings.

The lack of prices at the sale fares support my ongoing theory I've had, that QF are not cheaper but the dynamics are different with DJ. DJ may have less inventory on many routes but their yield management provides less inventory in the cheaper buckets. This would align with their more aggressive yield revenue. At least, that is my thinking.

There is no point having sale prices that are $10-30 cheaper than QF when 80%+ of actual availability is $50 more than QF. Their sale and 'base' economy rates are becoming like AirAsia Facebook specials. I'd love to try DJ but I won't be paying a noticeable premium for what is probably at best, equal to QF.

I'm guessing JQ don't do many price matches lately!

 

[MarkD]

Amazing, the comparisons here. Must be route dependant. I have found Virgin of late to be the best value, I have only booked 3 QF sectors the past month, yet booked around 10 VA sectors. My purchase decision is based somewhat on price, as it affects My business's bottom line. I do have to admit though, I would happily pay a small premium for a virgin flight, for the simple fact that You get good seats, priority boarding that works, you are out of the plane quick on arrival (Except the ATR), you can slip into the lounge for a coffee if you so desire, and the biggie, If I finish a meeting, or get where I need to be 8 hours early, they will put me on the first flight out (One flight last month I was booked on 8pm flight, arrived at SYD airport around 1pm (12pm QLD Time) and walked in my Door near Ipswich QLD at 3.20pm). Thats 6 hrs of family time I had, at home, where if I was on QF, I would have spent wasting away in a terminal. How can you even put a $$$$ Value on that. You have to weigh up the good, the bad, and the ugly, and to me, as a gold Virgin offers the best value most of the time, even if their seats are slightly more expensive. Obviously if I had no Status, my view may be different.

 

[oz_mark]

The lack of prices at the sale fares support my ongoing theory I've had, that QF are not cheaper but the dynamics are different with DJ. DJ may have less inventory on many routes but their yield management provides less inventory in the cheaper buckets. This would align with their more aggressive yield revenue. At least, that is my thinking.

After having watched a few routes, I would tend to agree. I make a couple of observations:

1) When the cheap seats are sold out, prices on DJ seem to head north faster
2) If the cheap seats are sold out one day, Qantas is more likely than DJ to add availability of the cheap seats in the weeks leading up to the flight.

So I think that DJ does seem to have less of the cheaper seats, and yield management at QF seems much more dynamic.

 

[esquire]

To add yet more anecdotal evidence, I have been waiting to use my DJ matched status but every time I find QF to be cheaper. This ranges from 1 week to 3 months out. Even when they had sales their fares were generally greater except for the most undesirable timings.

The lack of prices at the sale fares support my ongoing theory I've had, that QF are not cheaper but the dynamics are different with DJ. DJ may have less inventory on many routes but their yield management provides less inventory in the cheaper buckets. This would align with their more aggressive yield revenue. At least, that is my thinking.

There is no point having sale prices that are $10-30 cheaper than QF when 80%+ of actual availability is $50 more than QF. Their sale and 'base' economy rates are becoming like AirAsia Facebook specials. I'd love to try DJ but I won't be paying a noticeable premium for what is probably at best, equal to QF.

I'm guessing JQ don't do many price matches lately!

Agree - have been looking at taking some DJ flights as I don't need any more QF SC at the moment (and with DJs double offer) but some of the prices from DJ have even surprised me.

My company has a BFOD flexi policy (except for me ) and the majority of my staff with bookings over the last 2 weeks and ahead 3-4 weeks are on QF flights - even before taking into account DJ luggage and 'food' charges.

Example Sunday 28th NOV afternoon (any flight):
DJ SYD-MEL $299 Saver or $359 flexi
QF SYD MEL $199 Red-e or $219 flexi saver

Also last minute change to project Sunday 19 NOV saw me needing a repositioning flight - ADL-OOL
DJ $545 (via MEL or CBR or early morning direct)
JQ $179 (early evening direct)

 

[AdMEL]

It really depends on what your value proposition is, as to whether VA has any value to you.

Jane and Bob planning their once a year getaway probably won't be too concerned about aircraft type, what's on the menu, how many status credits they get, or how grumpy the flight attendants are known to be. They are very likely to be looking for overall price and convenience of schedule in terms of their holiday plans. In which case the example given in the OP would be relevant for a value proposition based on price. Infrequent leisure travelers very often choose the cheapest overall price, wanting to save money for holiday activities.

But John Platinum who sits on an aircraft for 30% of his life is likely to be highly concerned with all of the above. He's looking not just for the cheapest price but for the best overall experience payoff according to his needs, and how much value he can add to his FF account at the same time. For JP, whether or not the hangars in J class are wood or metal matters.... Having coloured headrests, 36" legroom or a classic understated cabin with the right selection of wines may not drive his decision but they may influence the outcome should price and schedule be quite similar.

This is the basic conundrum of airlines. All airlines are the same in terms of hard product. They all use the same planes, similar seats and very similar layouts. They sell tickets to go from one point to another. They all basically charge similar prices too because there is a fixed cost to providing an airline service that all of them are subject to. The once a year traveller is nice, but they don't regularly pay the rent. Profitability, as demonstrated by QF, comes mostly from people who are repeat travelers. QFF, is qantas' biggest profit centre. The value proposition for the FF is very different to the occassional traveller. Airlines structure their product to accommodate those who travel most often, the price seems less competitive, but it's all the FF trimmings which influence the most profitable passengers one way or the other.

For the leisure traveller, there are sale fares and basic fares which are offered at various points in the forward bookings calendar. It's widely known that airfares are least competitive both very far out from the travel date and very close to it. There's usually a sweet spot for every airline where their fares dip in price to try and stimulate more demand for seats.

I agree with almost everything you've said, except your inference from the comments in bold, being that QFF profitability is mostly driven by repeat travellers, i.e. high status QFF's. This may have been the case a few years ago, but since QF expanded the QFF program a few years ago and particularly since they joined forces with Woolworths and issued significantly more membership cards (at no cost), I would argue that QFF profitability now comes primarily from income from the likes of, and primarily, Woolworths, for points, accrued by many people that will never redeem a reward flight. Clever marketing, but nothing to do with profitability from frequent flyers.

 

[yohy?!]

You're correct, although I was careful to select flight pairings, of many available at this price, which offered full meals on both legs between ADL and CNS, and the return CNS-ADL. Obviously, flights which only offer the refreshment service on Qantas brings the two products much closer together - that's why that info box with aircraft and meal information is so important!

"Full meals" is a term used very loosely these days by airlines nowadays. It shouldnt even affect the equation for dom travel.

sent via carrier pigeon

 

[777]

Maybe everyone's missed it but Qantas have also just had major disruptions and an international PR disaster that have led to mass cancellations of bookings or people choosing to book with the competition for a variety of reasons. If there was ever a time when QF would see the need to price aggressively v. VA and where VA would not need to discount so much due to higher than anticipated bookings now would be it. This comparison is probably best made when things return to something like "normal."

 

[medhead]

A few people have mentioned the loading and re-appearance of sale fares with qantas as being better than virgin. While I somewhat agree that qantas is likely to add more sale fares at various times, I think this is highly dependent on the individual flight. I invariably want to get a 6am flight from ADL every week. What I find is that the cheapest red-e-deal for that route is rarely available. in this case the base fare is $139. Not long (couple of weeks) before the grounding, I checked the price of that flight for every week for the next 12 months. It was $209 until about 9 months out and even then only on occassional weeks was it either $169 or $139. So qantas might be good across a spread of flights, but if you need a peak flight IME you will be flat out getting it on sale, or even on the base fare. Unlike virgin.

"Full meals" is a term used very loosely these days by airlines nowadays. It shouldnt even affect the equation for dom travel.

sent via carrier pigeon

I agree, but so many people keep saying qantas give me a meal.


Sent from my iPhone using Aust Freq Fly app so please excuse the lack of links.

 

[Fruitcake]

To what extent does sheer capacity play a role when it comes to the 'cheap seats' disappearing? For example, I see 33 QF flights SYD-MEL on Mondays, 21 of which are widebodies, two being A330-200s. QF thus has something like 7800 economy seats in the air SYD-MEL each day.

DJ has 30 flights, 27 on 737-700s and three on E190s for about 4000 Y seats in the air. With QF offering nearly twice as many seats, it would seem reasonable that DJ's lowest fares may disappear first? Of course, this doesn't explain the extreme advance purchase examples given elsewhere in this thread, and the capacity difference may not be as stark on a lot of other routes.

 

[Jama]

There is no point having sale prices that are $10-30 cheaper than QF when 80%+ of actual availability is $50 more than QF. Their sale and 'base' economy rates are becoming like AirAsia Facebook specials. I'd love to try DJ but I won't be paying a noticeable premium for what is probably at best, equal to QF.

Given that VA profess to be after the business market, the reality in this statement undermines that strategy. It is the infrequent travelers who are prepared to travel any time to get the best price that will benefit from the discounted fares available from VA not the frequent travelers. I don't see how that is going to get any frequent flyers over the fence.

I seem to recall a statement pertaining to VA. I think it went something like 'keeping the air fair' :!: Maybe we could update that to 'keeping the airfare'

 

[oz_mark]

Given that VA profess to be after the business market, the reality in this statement undermines that strategy. It is the infrequent travelers who are prepared to travel any time to get the best price that will benefit from the discounted fares available from VA not the frequent travelers. I don't see how that is going to get any frequent flyers over the fence.

I seem to recall a statement pertaining to VA. I think it went something like 'keeping the air fair' :!: Maybe we could update that to 'keeping the airfare'

While it is true that Virgin is trying to increase its slice of the business market, they have stated that they will still be targetting the leisure market. Arguably, the happy hour type specials are aimed at this leisure market.

 

[markis10]

As others have said it all depends on the day and route, BNE-SYD on Monday 14th May DJ leave QF and JQ in the dust with $95 fares versus $106 with JQ and a $117 for QF. 20% cheaper is a significant discount!

 

[DJ332]

"Full meals" is a term used very loosely these days by airlines nowadays. It shouldnt even affect the equation for dom travel.

sent via carrier pigeon

I disagree. Considering QF's woes, I think you'd be surprised how quickly people would line up to fly DJ if they threw in a "free" meal with all their fares. To get some sort of main course, dessert and a couple of alcoholic drinks on a flight home can mean a lot even if it's not of great quality. It's one of very few remaining differences between the DJ and QF domestic offerings.

 

[DJ332]

I disagree. Considering QF's woes, I think you'd be surprised how quickly people would line up to fly DJ if they threw in a "free" meal with all their fares. To get some sort of main course, dessert and a couple of alcoholic drinks on a flight home can mean a lot even if it's not of great quality. It's one of very few remaining differences between the DJ and QF domestic offerings.

OK, perhaps a 20g Cadbury dairy milk doesn't count as dessert, but still....