V Australia cuts LA fare to $579

[Ryan N]

V Australia cuts LA fare to $579
By Geoff Easdown
Herald Sun
July 21, 2009 07:58am

VIRGIN Blue slashed fares on its V Australia services to Los Angeles to $579 as rumours persist about the carrier's finances.
The super cheap one-way tickets are 70 per cent below what V Australia's nearest competitor is charging for a single one-way economy fare between Australia and Los Angeles, reports the Herald Sun.

Virgin Blue chief executive Brett Godfrey said the initiative was another example of V Australia remaining open and adaptable to new ideas and championing change for consumers.

He said the ticket would be ideal for students and backpackers who were uncertain of how long they might want to stay in the US.

Virgin said the new fare could only be bought online and was valid for travel from this week until November 30.

But neither Mr Godfrey nor anyone else at Virgin would confirm or deny reports that a Middle East airline was looking at taking equity in the airline.

BusinessDaily, however, did confirm that neither Emirates nor Etihad were interested in buying a stake in Virgin Blue, which is struggling with an 88 per cent debt-to-equity burden and incurring huge losses with V Australia and its Pacific Blue subsidiary in New Zealand.

Read the full report in the ay tickets are 70 per cent below what V Australia's nearest competitor is charging for a single one-way economy fare between Australia and Los Angeles, reports the Herald Sun.

[David Ramsay]

They've been selling AKL-LAX return via SYD on V Australia for 899.00 kiwi (about 720.00 aussie).

One way fare to US may result in some problems with US immigration if you don't have a return ticket.

[Daniel F]

I think this is suicidal. Considering loads are poor, their margins would already be extremely thin with current yields.

This is a one-way fare though... so it is more profitable (or less loss making)than the $900 return airfares they were selling.

[Lukas M]

Andrew is right, whats the point?
In most cases, it means less money for VA, as you really do need to buy a return ticket to get past US immigration. It will only be at VA's expense if pax are denied entry. So I assume that the pax are wanting to fly QF/DL/UA back otherwise they would have bought a return ticket with VA, yet the others dont sell these cheap one way fares. So who are they catering for here...people moving back home? Not many I assume..

[Michael Morrison]

It will only be at VA's expense if pax are denied entry. ..

Which should be fine as the check in staff should be checking for their return travel. It is the same for any country... NZ, Fiji etc all palces the DJ group currently fly to.

I DONT see the big deal... Jetstar already offer one way pricing to Honolulu, USA so why can't VA offer it to Los Angeles, USA... same country.... same rules....

Also UA/QF/DL ALL sell one way airfares to the USA.

[Michael Mak]

What's the problem with the one-way fare sales? You can also book SYD-LAX one-way on QF. If the passengers intend on coming back, they will book the return leg.

People are attracted to the cheaper one-way fares and in return they will also book the return leg on a higher priced fares. Considering the loading is low, the seats would otherwise be unoccupied. By filling those seats, VA is losing less money, or just earning less on those seats.

VA attracts many passengers otherwise would not fly. Those who fly with VA on those cheaper fares might fly again in the future, or tell their families and friends about their (hopefully) positive experience on VA. A good way to build loyalty base.

yet the others dont sell these cheap one way fares.
Just did a dummy booking on QF SYD-LAX-SYD for August. They are selling SYD-LAX for $863 to $1471 and LAX-SYD for anything from $462 to $890.

[Michael Morrison]

. it could cost more the carry that person/s.


Considering the new o/w fare is still more than 50% of the return fare I can't see the issue really... if they are willing to sell them at that return price, why not o/w at a slightly higher rate.

Thsi is a great way for VA to attarct pax that may have enough QF points to fly QF one way and want a cheap ticket back with another airline.

[Montague S]

VA attracts many passengers otherwise would not fly.

or its being piggy-backed by its parent...

[chrisb]

If it's cheap, it would encourage me to think about things like VAust to LA, then random carrier to HNL and JQ home, assuming I wanted to visit HNL as part of my holiday and was on a budget. This is much more flexible than having to enter and exit through LAX to make use of VA.

I'd say this will only get more people onto Virgin Australia, not less.

[Anthony T]

as you really do need to buy a return ticket to get past US immigration.

Since when?

The only requirement is an a ticket to a destination outside the US, the US don't insist that you return to your country of origin.

ie VA SYD-LAX o/w ticket then any other airline/ship/rail/bus ticket to anywhere else on the planet.

Anthony T

[Greg McDonald]

From news.com.au:

THE low-fare bonanza across the Pacific is set to continue, with United Airlines vowing to keep protecting its patch by matching any discounts offered by competitors V Australia, Qantas and Delta Airlines.

United vice-president Pacific James Mueller yesterday said he expected the fare wars to continue into the foreseeable future and that United would not back down from challenging any competitor's initiatives, The Australian reports.

”United is determined and committed to matching the initiatives of other carriers and we'll compete aggressively on price if that's what's required for us to protect our business here,” Mr Mueller said in Sydney.

”In terms of the question of how it's going to play out in the future, and are these fares sustainable, my view on that is ultimately it's supply and demand that are going to determine what the prevailing market prices are.

”Certainly, as long as we see this level of capacity, relative to the fundamental market demand, there's going to be a lot of pressure on prices.”
Related Coverage

* V Australia cuts LA fare to $579NEWS.com.au, 21 Jul 2009
* Flying and cruising on the cheapDaily Telegraph, 20 Jul 2009
* Air fares plummet to record lowsNEWS.com.au, 6 Jul 2009
* $39 fare signals Tiger's arrivalNEWS.com.au, 3 Jul 2009
* Delta launches Australian route, fares cutNEWS.com.au, 2 Jul 2009

Consumers have in recent months been the big winners from the doubling of capacity on routes between Australia and the US mainland, with return economy fares falling to less than $1000 and cuts in premium tickets of up to 40 per cent.

V Australia this week offered one-way economy fares to Los Angeles for $579, an estimated 70 per cent discount on usual one-way fares.

But the fare wars have taken their toll on profitability, with Qantas and V Australia admitting they are losing money on flights to the US.

Mr Mueller would not say whether United was losing money on the route, but noted that Australia was one of the places where the airline's business had held up relatively well, particularly compared with other parts of its network.