Virgin Australia Out Of Albany-Esperance Tender

[Grahame Hutchison]

From ABC Esperance ...


Eyre MLA Graham Jacobs has accused Virgin Australia of taking advantage of Government regulation to "cherry pick" profitable regional routes.

The carrier's decision to pull out of the tender process for the Esperance-Perth and Albany-Perth routes has raised the ire of leaders in both communities, with the future of flights beyond February next year uncertain.


Full Story (http://www.abc.net.au/local/stories/2015/09/24/4319205.htm)

[Radi K]

It's because all the F50's are leaving I'm told.

[Garry Emanuel]

Much fanfare at the time of entry and boasting of "community commitment" which evaporates very quickly.

I am not familiar with the details of either route and in the past have been "pulled up" for commenting on the VA philosophy. I get it, they are in business to make a profit and I don't expect they would/should continue to operate a route if it is economically unviable.

That said, each time I hear VA are embarking upon a new route, I cringe at their marketing materials that play the communities out to be "fools".

I daresay if QF had entered and then exited this route, the cries would have been far louder, the criticism far more vitriolic and the threats and remonstrations more aggressive. VA does it and it gets passed off as "OK".

I feel for the communities that mirror Esperance and Albany (and there are many of them across this great land !). They have benefits we take for granted in larger cities but they get shafted all too often in cases like this - not just VA, plenty of others do it to them as well.

Fingers crossed for Skippers or REX ! ! ! ! !

[Greg McDonald]

Absolutely agree with everything you've said Garry but as you've also said, at the end of the day they're running a business. If the people in these regions don't/won't use the service, of course it will be taken away. As far as I'm concerned, they also then don't have the right to complain about it!

[Garry Emanuel]

My main gripe is the manner in which the "foray in to these routes" is handled at the outset.

Be much more understanding if they said up front - "this is the model we have used to win this work and if it doesn't come off, we're outta here."

At present, there is a propensity to infer the community is important and central to the decision but as soon as the numbers don't add up, they exit. I get the numbers and as a business operator, I would be doing the same.

That said, integrity is not something VA seems to have at its core and therefore, the piece that is missing for me is the temerity to be open, transparent and up front rather than deceptive and in some ways, duplicitous.

I would love nothing more than to see all of our remote communities with access to reliable flights to their nearest major centre, all of the providers making a profit and everyone happy.

Flip side, to achieve that outcome, there would be a need to spread the profits to cover the losses and at this point, the micro-economic models we operate with in many businesses do not provide scope for that to happen. At present, in circle of business, profit is king whilst capital (cheap) and customer (relatively unimportant) are on the wrong side of the ledger.

[Daniel M]

oh yeh curse Virgin, damn their management cherry picking routes trying to find profitable ones !

after all, businesses and in particular, airlines, should be run as not-for-profit organizations for the benefit of us all !

I look forward to purchasing a brand new $20,000 Lamborghini soon !

[Garry Emanuel]

Perhaps read the post and you will see that I am not inferring they should run at a loss, rather, adopt a more "open" style in the communication which spells out the basis of the decision and the expectations.

Then, when they ultimately opt out or trade up to a different route, the reasons are known and it doesn't fly in the face of their initial messaging about starting on the route.

[Paul F]

I look forward to purchasing a brand new $20,000 Lamborghini soon !Good luck trying to buy a brand new Lamborghini for $20,000 :eek:

[Mick F]

Gary,
As a passenger, I would automatically assume that if an airline can't make a profit on a particular route, then I know they will pull the route, unless it's under a contract like the QLD Government has for several routes.

I think having an airline spell it out for us is stating the obvious isn't it?

Mick

[Daniel M]

Good luck trying to buy a brand new Lamborghini for $20,000 :eek:

ummmm

[Greg McDonald]

ummmm Yeah...funny stuff!!!

[Arthur Boy]

It has nothing to do with the F50's. (just wait till the Saabs or the EMB's come!).

It has everything to do with the CEO of VARA being the most incompetent manager in VA.

How can you not make a profit on a monopoly route??

Dr Jacobs in Esperance and Mr Watson in Albany have also highly contributed to VA pulling out by constantly whingeing about the VA and prior to that, the Skywest service.

Now that VA have pulled the pin, the DoT in WA have also got a massive amount of egg on their faces as well. Once Skippers or Rex get the route the complaining will really start and Messer's Jacobs and Watson will really have something to complain about (should have not been so vocal in in the VA and XR days methinks.....) as they expected champagne on a beer budget.

ME you are right, VA are quite rightly in it for the profits, and why not? the problem is that the DoT and the regionals want it all and give NOTHING to assist in terms of assistance and the airlines are expected to provide all the effort and get very little, in fact NO support, in return. That said, VARA should pull out and good luck to the people of Esperance and Albany as the new operators will be significantly poorer in terms of service operated compared to the Virgin and more particularly the Skywest service.

[Radi K]

It has everything to do with the CEO of VARA being the most incompetent manager in VA.

Agreed. Same manager who lost the Toll freight contract and is in charge of Virgin Cargo, which at present has not signed one major customer since it started.

[Rowan McKeever]

How can you not make a profit on a monopoly route??

If it were possible to make a profit on every monopoly route, there wouldn't be regulated air routes. By definition, these routes only exist because the state government has decided they need to... there is no commercial imperative whatsoever.

[Ellis Taylor]

A lot of the problem is the F50s. Back when Skywest was listed, you would see that, in a good month, their RPT operation made around a 60% load factor. Most of the time it hovered around 50%. That says to me that a 46-seat aircraft was too big, and at best a 36- or 19-seater would have worked. If Ansett hadn't forced Skywest to take the F50s way back in the '90s, and instead they stayed with J32s, it may have been a different story. But that is all moot now.

Word around is that Skywest started to suffer after the last round of regulatory review where they lost Carnarvon and a couple of other routes to Skippers. Prior to that, the network on the whole paid its way, but for them they would never have made it without some of bigger earners subsidising the loss-making routes.

[Rob R]

Spot on re the size of the aircraft, the F50 is too big for the routes, as is the Q300/400 hence QF has not expressed interest in taking over.

Just a small correction re Skywest, they operatd the J31 (not the J32) and they were one of the first operators of the type.

[Arthur Boy]

Correct ET, the beginning of the end was when GET, and then later LEA, were deregulated.

They were XR's cash cows which covered the loss makers.

The WA DoT have no idea how to handle it and have gone from one mess to the next.

Pity the customers will get less service all round.....if you thought VA was ordinary (very!) then wait for Rex and/or Skippers!!! Crappy planes, loads of delays, and the list goes on!

[Stefan Perkas]

Could it be possible that REX may have picked up the Esperance and Albany contracts. They are currently advertising for Airport Coordinators and LAMEs (B1 and B2) for Perth. http://www.rex.com.au/Jobs/JobList.aspx

[Max C]

They are also looking for PER-based Flight and Cabin Crew.

I'd say it's a done deal.