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View Full Version : Virgin Blue 'could fold over fuel costs'


Greg McDonald
5th June 2008, 02:56 PM
From NINEMSN.COM.AU:


Virgin Blue Holdings Ltd faces financial oblivion if jet fuel remains at record prices and the carrier cannot raise fares to cover the increase, an analysis by broker JP Morgan says.

"If jet fuel were to stay at current levels for several years and Virgin Blue could not significantly increase fares, it would not survive," JP Morgan analysts Matthew Crowe and Russell Crichton-Browne wrote in a note.

In some relief to airlines, crude oil for July delivery fell more than $US2 to $US122.30 s barrel overnight.

JP Morgan said if high fuel prices persisted, an equity injection would not help keep Virgin Blue airborne.

"Equity injections would be futile as prices would not cover costs."

The two analysts said that even with $1 billion in equity Virgin Blue would become insolvent under this scenario .

"A five per cent fare rise is not enough to cover fuel costs," they said.

"A $500 million equity injection would buy some time in the hope that fuel costs fall, but if fuel did not fall Virgin Blue, on our analysis, would eventually become insolvent despite the equity injection."

The analysts said two back-to-back five per cent fare rises would save the company and reduce the need for an equity injection.

However, they said the resulting growth profile would not be very attractive, with fiscal 2015 estimated earnings still below fiscal 2007.

"Virgin Blue needs to raise fares to cover the cost of fuel, rather than raise equity.

"To create a profile of strong earnings growth at the current oil price, we estimate Virgin Blue needs to raise fares by 10 per cent and then raise fares 0.5 per cent per annum."

The analysts reduced their December 2008 price target to 85 cents "reflecting cuts to our earnings estimates and current fuel price sentiment".

"Risks to this price target include fuel costs, capacity and further loss-making expansions."

Virgin Blue last lifted its airfares on May 6.

One-way fares on Virgin Blue domestic flights increased by between $5 and $10, based on flight sector length, and its Pacific Blue branded trans-Tasman and short-haul international fares increased by between $5 and $15.

At 1353 Thursday, Virgin Blue was up 3.5 cents, or 5.83 per cent, to 63.5 cents.

Pieter S
5th June 2008, 04:01 PM
I am all for a competitive aviation market, but will not be sad to see them go ... am happy to have a quality flying experience over a cheap fare.

Adrian B
5th June 2008, 04:25 PM
Well thats a quality statement right there. So you are suggesting that the travelling public, especially those who can now afford a trip because of the competition in the industry, should just suck it? Does this also mean that they should close Jetstar as well? oh dear:confused:

It just might be that the quality airline you referred to not only lost, but damaged my luggage last weekend, then complained that it would cost them too much to freight it to where I was staying?

:confused:

Rhys Xanthis
5th June 2008, 04:26 PM
I am all for a competitive aviation market, but will not be sad to see them go ... am happy to have a quality flying experience over a cheap fare.

??

I have ALWAYS had a high quality experience with Virgin Blue?

Clarke P
5th June 2008, 04:42 PM
??

I have ALWAYS had a high quality experience with Virgin Blue?

Usually an amusing experience, too. :p

Montague S
5th June 2008, 04:54 PM
I am all for a competitive aviation market, but will not be sad to see them go ... am happy to have a quality flying experience over a cheap fare.

all well & good for you but what about others that want cheap fares? and believe me, they aren't much cheaper than Qantas.

Pieter S
5th June 2008, 05:38 PM
Wow, my first post and so much controversy!
Cheap Fares in a market as small as Australia was always going, and will continue, to be problematic ...
The simple economic fact, in my increasingly humble opinion, is that the economies of scale are not there ...
Hence my comment to aim for a quality service, over cheap fares ...
But then again, I may be wrong ...

Rhys Xanthis
5th June 2008, 07:05 PM
Wow, my first post and so much controversy!
Cheap Fares in a market as small as Australia was always going, and will continue, to be problematic ...
The simple economic fact, in my increasingly humble opinion, is that the economies of scale are not there ...
Hence my comment to aim for a quality service, over cheap fares ...
But then again, I may be wrong ...

no, i think there is some real economies of scale being achieved.

the whole costs line has been pushed up a lot due to the high price of oil...hence we see new start ups disappearing, only the established stay (and those with decent financial backing).

Greg F
5th June 2008, 07:47 PM
Slightly off track but for some reason, maybe because im tired i found this weird.....

P.S Don't read the story (you most likely have already) look at the Advert....

But seriously I do hope that DJ get thru this....

Pieter S
5th June 2008, 07:57 PM
Rhys,
We have seen the 'second' or third' airline go under various times in Oz of late ...
Surely we cannot blame all of this on the high price of oil?

Greg,
Funny ... very funny ... and weird too ...

Montague S
5th June 2008, 08:03 PM
Wow, my first post and so much controversy!
Cheap Fares in a market as small as Australia was always going, and will continue, to be problematic ...
The simple economic fact, in my increasingly humble opinion, is that the economies of scale are not there ...
Hence my comment to aim for a quality service, over cheap fares ...
But then again, I may be wrong ...

what...you mean like 24hr plus delays with full service carriers like QF? when there is a 5* Australian carrier offering quality service I'll be sure to try it...but for now we settle for two 3* carriers.

anyone that thinks that Australia should be dominated by a single carrier nation needs their head examined.

Rhys Xanthis
5th June 2008, 08:09 PM
what...you mean like 24hr plus delays with full service carriers like QF? when there is a 5* Australian carrier offering quality service I'll be sure to try it...but for now we settle for two 3* carriers.


They happen.

And the engineers are not helping. They are being ridiculous.

And i wouldnt say qantas is a 3 star airline myself....more like 4 .

They aren't that bad...

Pieter S
5th June 2008, 08:15 PM
Montague,

There is a big difference between ...
' ... thinks that Australia should be dominated by a single carrier ... ' & ...
My opinion ...
Which is that Australia is too small a market to sustain two large carriers ...
Do not think for one minute that I am happy with a natural monopoly ...
But I travel a lot and try to make the best of what I am presented with ...

P

p.s. Rhys, I agree ... Qantas = 4*, Virgin = 3* and Jetsar = 2.5* (domestically)

Montague S
5th June 2008, 08:24 PM
how would you interpret this, Pieter?

I am all for a competitive aviation market, but will not be sad to see them go ... am happy to have a quality flying experience over a cheap fare.


make up your mind...if your not happy seeing them grace our skies then I'd say your in favour of a single major carrier.

Rhys are you Greek or of Greek heritage?

Which is that Australia is too small a market to sustain two large carriers ...

rubbish...its not the passenger numbers that are hurting DJ but the fuel price which in case you hadn't noticed is killing everyone, DJ & QF included. I would like to know your stance should the price of oil drop further, which is what I've predicted will happen and stand by that. I guess still no room for another carrier like DJ? :rolleyes:

But I travel a lot and try to make the best of what I am presented with ...


I do too...and I avoid QF like the plague.

Marty H
5th June 2008, 08:29 PM
what...you mean like 24hr plus delays with full service carriers like QF? when there is a 5* Australian carrier offering quality service I'll be sure to try it...but for now we settle for two 3* carriers.

anyone that thinks that Australia should be dominated by a single carrier nation needs their head examined.

Spot on and also the oil companies themselves have to look at it like this, do they want alot of airlines around the world buying their fuel at a lower price, or due to high fuel prices do they want ALOT less airlines buying fuel at a higher price? Im sure their answer would be the first one.

At the end of the day high oil prices will screw every industry arcoss the world in some way all because of greed by the oil companies, is it really worth it? With airlines grounding planes they wont expand their fleets there fore it flows on the aircraft manufacturers and then they have to lay off staff because they dont have work for them and so on, nobody will win and the sooner the oil companies realise that the better we will be for everyone.

Montague S
5th June 2008, 08:34 PM
Spot on and also the oil companies themselves have to look at it like this, do they want alot of airlines around the world buying their fuel at a lower price, or due to high fuel prices do they want ALOT less airlines buying fuel at a higher price? Im sure their answer would be the first one.



the longer the price stays high the more likely nobody will buy their product, as I said in another thread the price will fall and fall dramatically, I still think by years end too..it can't stay like this forever or those most reliant on oil will be crippled and the likes of BP, Shell etc will start hurting.

Pieter S
5th June 2008, 08:35 PM
Let me be abundantly clear ...
At no point did I say, or could it be inferred/interpreted/surmised from my words, that ...
' ... Australia should be dominated by a single carrier ... ' ...
These are someone else's words ...
I am not a griefer ...
Merely someone with an opinion ...
No one wins the oil game ... no one ...
That horse bolted long ago.

Pieter S
5th June 2008, 08:40 PM
the longer the price stays high the more likely nobody will buy their product, as I said in another thread the price will fall and fall dramatically, I still think by years end too..it can't stay like this forever or those most reliant on oil will be crippled and the likes of BP, Shell etc will start hurting.

There is no choice but to buy ...
Until there is some other economically viable and supported alternative ...
Almost everything runs on oil or a fossil fuel of some kind ....
I agree the price will come back to a more sensible level in the short term ...
But the days of less than USD100 oil are gone ...
Gone like the Dodo, the Grateful Dead and Electric Cars (hmmm, who killed them off in the U.S.) ...

Adrian B
5th June 2008, 08:45 PM
Let me be abundantly clear ...
At no point did I say, or could it be inferred/interpreted/surmised from my words, that ...
' ... Australia should be dominated by a single carrier ... ' ...
These are someone else's words ...
.

Pieter, you are of course entitled to your opinion.

Just to clarify.
You would not be sad to see them go = Virgin?
am happy to have a quality flying experience = Qantas?
over a cheap fare = Jetstar?

Who is left??

Michael Mak
5th June 2008, 08:54 PM
I, for one, would surely hope that Virgin will get through this. Service wise, they are certainly not bad, never had any trouble with them. Imagine if DJ does fold, we will have QF and JQ (which in affect is QF) and Tiger.

The more competitions, the better for the customers.

Montague S
5th June 2008, 08:59 PM
no Pieter, there is a choice and that choice is not to buy the product that is grossly overpriced, personally, I know it will go down because the bubble always bursts...but what I'd really love is for oil to have a higher price and that flow through to the bowser so more people reconsider their lifestyle.

$2.50 p/l is fine with me.

D Chan
5th June 2008, 09:16 PM
what...you mean like 24hr plus delays with full service carriers like QF? when there is a 5* Australian carrier offering quality service I'll be sure to try it...but for now we settle for two 3* carriers.

well all airlines have delays and its not only Qantas that has them - other world-leading airlines also have them from time to time. It is how airlines deal with these situation that is important and what sets them apart e.g. pax rebooked (depends on time of day & flight availability), putting pax to hotel etc.
I've seen plenty of 24 hour delays with UA ex-SYD. I don't see how you can mix the two issues up - 1. with delays, 2. with quality service.

anyone that thinks that Australia should be dominated by a single carrier nation needs their head examined.

Can't agree more. Competition is good for the general public and the overall economy.


I am glad I did not buy Virgin Blue shares. I'd be depressed if I bought them.
I wonder how the Embraers and the V Australia expansion are going to impact DJ - certainly sidetracks them a lot. The V Australia expansion will not be cheap. With regards to the Embraer it will complicate things - for example Jetblue had an all-A320 fleet and then got the E-jets.

Pieter S
5th June 2008, 09:39 PM
no Pieter, there is a choice and that choice is not to buy the product that is grossly overpriced, personally, I know it will go down because the bubble always bursts...but what I'd really love is for oil to have a higher price and that flow through to the bowser so more people reconsider their lifestyle.

$2.50 p/l is fine with me.

^^^ I agree totally in respect to the need for the wealthy quarter of the world to reconsider their lifestyle - this would work wonders in many different areas.

Adam P.
5th June 2008, 09:42 PM
Most interesting thing to watch for mine will be the E-Jets. Virgin have a lot to learn about regional ops (hellooooo, fog season!!) and it is much harder to turn a profit with jets over the shorter stage lengths you get in the regional environment than it is with turboprops. When the going gets tough company-wide, will the Jungle Jets be the first to go?

Michael Morrison
5th June 2008, 10:27 PM
$2.50 p/l is fine with me.

LoL... thats what I was paying in London back in 2006

Andrew M
5th June 2008, 11:11 PM
Of course Virgin will get through this, the "article" in the paper was pretty poor in my opinion.

Of course ANY company could fold if costs stay high and they dont' raise prices to follow.

Heck Qantas would fold too IF oil prices stay high and they didnt' keep increasing fares to cover it.

The FACTS from the article

If jet fuel were to stay at current levels for several years and Virgin Blue could not significantly increase fares, it would not survive,

Two 5% rises would allow the airline to survive.




As it stands now, oil is back down to around $120 a barrel from $135 a week or so ago.

It SHOULD go back down below $100 soon.

As for the QF vs DJ debate, that has been done and dusted on here so many times, so lets stick to the newspaper "article"

Mick F
5th June 2008, 11:26 PM
http://www.wtrg.com/oil_graphs/oilprice1947.gif

Admittedly, that last spike of the graph is a bit more than that spike in the middle, but the spikes are caused by the same events.

That war in Iraq has gotta end one day, just like that spike in oil prices has to end one day too, :rolleyes:.

Mick

D Chan
6th June 2008, 12:30 AM
Most interesting thing to watch for mine will be the E-Jets. Virgin have a lot to learn about regional ops (hellooooo, fog season!!) and it is much harder to turn a profit with jets over the shorter stage lengths you get in the regional environment than it is with turboprops. When the going gets tough company-wide, will the Jungle Jets be the first to go?

adding to what you said Adam, regionals in the US are going to cut back on the regional jet fleet in the 50 seater category. Think prop would be more economic than regional jets (shortage stage length) (e.g. Kendell and their forray into CRJ200s or were they 100s?), at least in the 50 seats or less category anway.

having 2 expansions at the same time really complicates things for them. The international expansion to the US would probably be a VERY costly exercise - new a/c (even if it is leased), new staff, new departments, new products and so on - all of these are $$$$ - they'll need to do really well or else they would be in trouble.

With regard to oil, I still reckon it is a bubble. What goes up must fall down again. Just like the 70s oil shock. Oil prices went down after that.
Probably will in say 5 yrs time... but probably closer to the $80-100 US barrel range. People are blaming China but I did read somewhere that their consumption has actually decreased last few years - they might be stockpiling oil though.

I don't think the flying public has much to worry about. If one airline leaves the scene another will fill the void. Just like how Virgin Blue filled Ansett's departure. All we should worry about is the company staff and their jobs.

Rhys Xanthis
6th June 2008, 12:42 AM
I cant help but think that Virgin Blue's market doesnt really exist.

They are trying to get more business customers and have been for quite a while.

Full Service? Qantas
Budget? Jetsar, Tiger.

Now, Virgin is no tiger or jetstar. They appeal to a higher market, and also charge (although slightly) larger prices.

I can see them being squeezed out of the market. But, i think you guys may be underestimating the power of VAustralia. While it will take time and money, i think that VAustralia will save the Virgin Blue group if it comes down to it.

my 2c

Michael Morrison
6th June 2008, 08:24 AM
they still have around $700-800 million cash in the bank - even if oil prices stay this high and they make a feared $200M loss in 08/09 they still have a couple of years of liuquidity.

These articles are a bit too much doom and gloom spin

Response from Godfrey

http://www.news.com.au/business/story/0,23636,23819581-14334,00.html

David D
6th June 2008, 10:32 AM
I have been trying to lobby Virgin Blue to provide a decent am schedule from Coffs Harbour to Sydney during the week, rather than arriving at 9:35am after the business day has started.

There are a heap of us here in Coffs who have to purchase outrageous fares on the morning Qantas service and then again in the evening after work, often a return fare of over $400 AUD for such a short haul.

If Virgin was more open to its schedules and put some though behind what they are trying to achieve on key regional routes, they could really cash in big.

It amazes me why Virgin simply does not match the times of Qantas to this city and cash in on some of the commuter business market.

Kent Broadhead
6th June 2008, 11:45 AM
I have been trying to lobby Virgin Blue to provide a decent am schedule from Coffs Harbour to Sydney during the week, rather than arriving at 9:35am after the business day has started.

David - need I say SYD capacity restrictions. Or even fleet utilisation? It may make sense, but it's more valuable to the company to fly a full plane from Melbourne than an 80% full plane from Coffs.

As for DJ's survival, I second those who've expressed the view that if your input costs (e.g. fuel) increase, you need to increase prices to remain profitable. And yes, 10% is significant, but it's not 100%!

And, as I've suggested elsewhere, the Government (of whatever colour) would be actively encouraging a new market entrant if DJ fell over oor (less likely) regulating QF fares. A monopoly would have too significant an impact on the Aust economy, given the amount of MEL-SYD-BNE business travel...

Kent

Michael Morrison
6th June 2008, 05:36 PM
I'd expect them to send back some 738's and replace them with the new E190's that are coming - especially on routes into Tasmania and thinner routes...

Anyways looks like the main stream media were doing some typical sensationalising with this story

JP Morgan have issued a press release to state they dont think virgin will become insolvent and that they actually think they will rebound.

http://news.smh.com.au/business/jpmorgan-rejects-virgin-insolvency-talk-20080606-2moa.html


Mr Crowe wrote in a client note that "press reports incorrectly interpreted one of several scenarios featured in a research report as suggesting Virgin Blue is at risk of insolvency".



"This scenario does not represent our view of Virgin Blues future earnings," he said.




"The scenario in question reflected an unlikely combination of factors, including permanently high fuel prices and no increase in airfares or any other revenue or cost saving measures," the finance house said.

"Our actual forecast for Virgin Blue, which form the basis of our neutral recommendation, reflect very different assumptions including higher air fares over several years and lower jet fuel costs."





JPMorgan expects Virgin Blue to report fiscal 2008 profit of $82 million, followed by $19 million in fiscal 2009 before rebounding almost 600 per cent to $133 million in fiscal 2010.

Adrian C
6th June 2008, 06:34 PM
Any fears of a monopoly being held by anyone - particularly Qantas - can be squashed on the head here and now.

Sure Virgin could fold over fuel costs. So could Qantas, which is why they're taking the knife to things right at this very moment. There might be ulterior motives as well, but hey, everyone's tightening their belts at the moment.

Keep an eye on the third airline sitting in the wings - the little Tiger that could. Who's the majority shareholder? Singapore Airlines and Temasek Holdings (ie: Singapore Government) with 60%. SQ is fully aware of the lack of a second two-class airline in the Australian market, but obviously jumping in boots and all is too much of an economic risk. Tiger has the AoC in place, and probably two different game plans should the right conditions emerge.

Plan A sees Virgin Blue looking to either sell out or merge with Tiger. In this situation SQ calls the shots and keeps Tiger as the low-cost arm, folding in some aspects of the Virgin Blue operation. At the same time it can very quickly source a two-class fleet of its choosing, announce to the world that there's a relaunch in six months time and keep Virgin Blue flying in the meantime. In that six months they tie up proper interline deals with Rex and Alliance, and either talk with Skywest or move the ERJs to Perth and rattle some cages.

Plan B sees Tiger waiting for Virgin to fall over completely and then stepping in to fill the void either solely with Tiger, or keeping Tiger low-cost and starting a two-class airline from scratch.

Singapore sees Australia as a market ripe for the plucking, and they'd love nothing more than to take it up to Qantas. Maybe it'll never happen, but who'd have said Ansett would go bung 15 years ago?

Greg McDonald
6th June 2008, 10:45 PM
You've put up quite a convincing (and conceivable) argument there Adrian.

Andrew M
6th June 2008, 11:06 PM
they still have around $700-800 million cash in the bank - even if oil prices stay this high and they make a feared $200M loss in 08/09 they still have a couple of years of liuquidity.

These articles are a bit too much doom and gloom spin

Response from Godfrey

http://www.news.com.au/business/story/0,23636,23819581-14334,00.html

Yep as I said a rubbish article.

Even Qantas without fare hikes could go broke!

Expect another rise in fares of around 3-5% now and another towards the end of the year if prices stay the same

That's your 10% rise :)

$20 on an $200 airfare is no big deal, if that is make or break between taking your holiday, I suggest NOT taking a holiday

Michael Morrison
7th June 2008, 07:54 AM
You've put up quite a convincing (and conceivable) argument there Adrian.

Except it all circles around Tiger and SQ doing something with Virgin Blue...

Can't see it happening to be honest - they have already got 1 bad Virgin investment - why would they want a second?

As for Tiger destroying Virgin - can't see it happening - I think Virgin would have a much more loyal customer base....

Adrian C
7th June 2008, 09:32 AM
Michael I didn't say anything about them destroying Virgin Blue.

Simple fact is if fuel costs etc remain high, Tiger have the capability via their sources of finance - Singapore Airlines and the Singapore Government - to absorb the costs and wait for Virgin to go to the wall.

Now, I don't think that will happen for a second. But I also think your notion of DJ customers having loyalty is misguided. There's a perception in the market that standards of service in Australia have slipped since Ansett's demise. Should a second two-class airline re-enter the market, offering corporate travel services and frequent flyer points and a consistently good standard of service, and with guaranteed support via an airline with an international reputation like SQ (thus assuring people booking tickets that the airline won't be broke in six months), there'd be business/government accounts queuing at the door to see what they were offering in comparison to the deal they're already getting.

Sadly there were accrued inefficiencies and debts that formed part of Ansett's demise, along with the issues with the 767s that eroded public confidence and ultimately their load factors. But what they offered - two class service, corporate travel, interlining etc - remains a sound business product for a second airline in Australia. And it's a product only one airline is really offering at the moment.

Marty H
7th June 2008, 10:02 AM
And it's a product only one airline is really offering at the moment.

Thats the biggest pile of rubbish Ive ever read, do your homework Virgin Blue offerr all of that now:rolleyes:

Do you know how many airlines Virgin Blue interline with? off the top of my head the following: United Airlines, Eithad, Virgin Atlantic, Thai, Malaysia, Air Maurtius and Hawaiian, connecting bags through any port anywhere is Australia, Ive seen bags connect from BME through to AKL via PER, MEL and BNE before.

Philip Argy
7th June 2008, 10:28 AM
Quote

... do your homework Virgin Blue offerr all of that now

Unquote

Hmm - which of DJ's aircraft are fitted out for J class? Is my homework that bad that I overlooked this?

Marty H
7th June 2008, 10:38 AM
Quote

... do your homework Virgin Blue offerr all of that now

Unquote

Hmm - which of DJ's aircraft are fitted out for J class? Is my homework that bad that I overlooked this?

All apart from three aircraft are offering a Premium economy product, do your homework.

Rob H
7th June 2008, 10:44 AM
Just found this on PPRUNE.

"Tiger are currently standing down or asking pilots to take leave without pay. Some senior FO's have been asked if they would go to Singapore.

Looks like the fuel costs are starting to hit them.

I also hear Lion have delayed their plans to enter Australia."

It would appear Tiger are heading into trouble.

Marty H
7th June 2008, 11:13 AM
Just found this on PPRUNE.

"Tiger are currently standing down or asking pilots to take leave without pay. Some senior FO's have been asked if they would go to Singapore.

Looks like the fuel costs are starting to hit them.

I also hear Lion have delayed their plans to enter Australia."

It would appear Tiger are heading into trouble.

No airline is going to be immune for this and anyone is kidding themselves if they think otherwise.

Philip Argy
7th June 2008, 11:29 AM
All apart from three aircraft are offering a Premium economy product, do your homework.

My case rests :rolleyes:

Andrew McLaughlin
7th June 2008, 12:09 PM
I also hear Lion have delayed their plans to enter Australia."[/B]

Lion delayed their Australian plans because, since Adam Air went bust, Lion need all the capacity it can get in Indonesia for now, so the six 737-900ERs which were slated for Skyairworld will be employed in Indonesia until things start to ease there.

Rob H
7th June 2008, 12:22 PM
You cannot compare Virgin with the Ansett collapse. Ansett had cash flow problems for years leading up the collapse, plus they had CASA problems with the grounding of the B767 fleet at times.

Here’s my take on what Virgin Blue might do:

Virgin currently owns 22-23 aircraft, including all the E-jets. They have some 737 leases that are due to expire over the next 12months. They have another 20 odd E-jets on order plus another 3-5 737’s
They could return these older leased aircraft now, defer the order for the new B737’s and slow the delivery rate of the E-jets (ie 1 aircraft every 2 months).

The E-jets could be used to replace the returned leased B737 aircraft and deploy them on the following routes:
SYD-HVB
SYD-CFS
SYD-PPP
SYD –BNA
SYD-MKY
SYD-ROK
SYD-BNE (some off peak flights only)
SYD – MEL (some off peak flights only)
MEL –HBA (off peak flights only)
MEL-LST (off peak flights only)
MEL – ADL (off peak flights only)
ADL-HBA
BNE-ROK
BNE –TVL (off peak flights only)
BNE –MKY (off peak flights only)

Delay the introduction of further regional routes with the E-jets until the price of fuel drops (if ever); however SYD-TMW could do with some competition (maybe twice daily E170).

Deploy 3-4 E190's to NZ to replace the B737's currently operating domestic flights and make greater usage of the E190's on flights to the pacific islands.


Changes to Premium Economy, ie drop the price (by about 20-30%), give free Live-to-air and free food and drinks. This will entice a larger customer base.

That’s my thoughts, but I guess by this time next week we all will know their plans.

Clarke P
7th June 2008, 01:55 PM
Virgin currently owns 22-23 aircraft, including all the E-jets. They have some 737 leases that are due to expire over the next 12months. They have another 20 odd E-jets on order plus another 3-5 737’s
They could return these older leased aircraft now, defer the order for the new B737’s and slow the delivery rate of the E-jets (ie 1 aircraft every 2 months).

I thought I recalled a special livery for their 50th 737??

Wikipedia also says they have 52 737's and 5 e-jets...

So your statistics (or theirs & mine!) might be off.

But I like your idea, however I don't know if they'd consider it.

It would make their premium economy a full-service product.. direct competition with Qantas that hasn't been seen on a lot of routes for ages.

However I don't know how it would work thus i'm keeping my output to a minimum. ;)

Rhys Xanthis
7th June 2008, 02:17 PM
Virgin Blue operates a fleet of 53 Next Generation Boeing 737 and Embraer aircraft. Below is technical information on all of the aircraft flown by Virgin Blue, Pacific Blue and Polynesian Blue.

http://virginblue.com.au/AboutUs/OurFleet/index.htm

no info about numbers of e-jets though.

Adam P.
7th June 2008, 02:54 PM
Clarke,

Virgin currently owns 22-23 aircraft,(my bolding).

They LEASE the rest....

Daniel M
7th June 2008, 03:01 PM
Changes to Premium Economy, ie drop the price (by about 20-30%), give free Live-to-air and free food and drinks. This will entice a larger customer base.


Preceisely what I have been talking to a few people about the last week or so...its ridiculous...we send out planes every day and 90% of them have no pax, or perhaps 1 or 2 at the most, in Premium Economy. And that is no exaggeration. It literally is not selling, to/from Melbourne anyway. Granted you get a bit more leg room, some extra width, extra baggage (what corporate travellers are going to be lugging ~32kg of stuff with them?), access to the blue room...but what about in flight? As you mentioned Rob...how hard would it be to offer free Live2Air, free coffee/alcohol and some food...

Interesting times ahead...

Clarke P
7th June 2008, 03:03 PM
Clarke,

(my bolding).

They LEASE the rest....

My apologies, I should've read more carefully.

Radi K
8th June 2008, 01:11 PM
http://sunday.ninemsn.com.au/sunday/feature_stories/article_2475.asp

Malcolm Parker
9th June 2008, 08:27 AM
VIRGIN Blue is considering charging passengers more to check in luggage in a bid to recoup costs as fuel prices continue to skyrocket.

The airline's CEO, Brett Godfrey, hinted yesterday a fee for check-in baggage was imminent.

"With checked bag screening and the amount of security and handling of a bag, a bag actually costs more to put through on to the aeroplane than it does a passenger," he said.

Mr Godfrey said up to three flight routes had been earmarked for reduced services should fuel prices continue to rise, but he maintained staff numbers would not be cut.

Fuel prices were now $43 a ticket, compared with $8 when the airline launched in 2000, Mr Godfrey said.

"People may have to accept that if they want to fly they're going to have to pay a bit more," he said.

In February, rival Jetstar introduced fares that allow customers to travel for $10 less domestically and $20 less internationally if they do not check in baggage.

Source: Herlad Sun 09Jun

I guess it seems like ther won't be any routes being exed but just a few reductions, nothing major. I guess we'll find out in the next couple of days. I'd say their right on the money about charging for luggage.

Adrian C
9th June 2008, 10:45 AM
Thats the biggest pile of rubbish Ive ever read, do your homework Virgin Blue offerr all of that now:rolleyes:

Do you know how many airlines Virgin Blue interline with? off the top of my head the following: United Airlines, Eithad, Virgin Atlantic, Thai, Malaysia, Air Maurtius and Hawaiian, connecting bags through any port anywhere is Australia, Ive seen bags connect from BME through to AKL via PER, MEL and BNE before.

Bzzzt! Wrong Marty!

I could fly between Burnie/Wynyard and Sydney on the Ansett network, visit one website to make a complete booking, AND if my MEL-SYD flight left 30 minutes after the Kendell BWT-MEL flight landed, no problemo! The bags were checked through and made the connection. Was I taking a dog or a cat? No problemo, they could be transferred too.

Nowadays I need to book one flight on Rex, then make sure the Virgin Blue flight leaves at least 60 minutes after the Rex flight arrives in Melbourne, otherwise no connection. As for the bags, minimum 45 minutes. Can pets transfer between Rex and Virgin Blue flights? Nope, can't be done.

Can I visit the DJ website and book a through flight all the way from Sydney to Burnie where it automatically calculates the best fare options and connection times? No, I can't.

Can I fly business class? No, I can't. Premium economy? Wowwwww. So I'm sitting in the third premium row from the front and some uncontrollable child in the regular economy seat behind me is kicking the seat back constantly. But it's a full flight! What can I do, Marty?

Don't get me wrong, I like Virgin and the product they offer. But are they a proper two-class airline with proper interlining? No, they're not. Qantas is, Ansett was - hence, right now, there's only one genuine two-class airline in the market.

And next time, don't give me this 'rolls eyes' crap either. I treat fellow posters with respect for their opinions. What you did was just a) rude and b) ignorant.

Adrian

Marty H
9th June 2008, 12:02 PM
Well do you expect you can do all that when REX and Virgin Blue are two seperate airlines????? Ansett and Kendell were the same airline so hell I would be able to expect to book the whole lot in one go.

When you check in for your flight in SYD to get to MEL then to BWt they will see that and have your bag connected so whats the difference?

Cry me a river buddy:rolleyes:

Anthony T
9th June 2008, 12:08 PM
Grab your cat and go down the road to Launceston and get on a real airplane:p

Lukas M
9th June 2008, 12:08 PM
Looks like SYD-OOL is going to slashed

Virgin Blue could be the next airline to cancel domestic routes in a bid to save money.
A spokeswoman for the airline says rising fuel costs have forced the company to review the amount of flights into places like the Gold Coast.
She says Virgin increased flight capacity to Coolangatta by 40 per cent in the last 12 months, which could now be unviable.
The airline is also considering charging a luggage tax.
The spokeswoman says heightened security screening means it now costs more to check in luggage than it does to check in people.
The Queensland Government announced a $4 million rescue package after Qantas said last week it will cut Jetstar flights to Japan and halve the number of Qantas flights to Tokyo.
Virgin will make an announcement on luggage charges by the end of the week.
ABC online

Andrew M
9th June 2008, 12:29 PM
http://www.news.com.au/travel/story/0,26058,23831480-5014090,00.html


VIRGIN Blue is set to whack the beleaguered tourism industry with a double whammy, flagging a new luggage tax for passengers and cutting flights to Queensland's Gold Coast.

Virgin Blue chief executive Brett Godfrey yesterday said skyrocketing fuel prices and greater security-screening processes had combined to severely increase check-in costs.

The budget carrier has also put Coolangatta services on the chopping block only days after the State Government delivered a $4 million rescue package when Qantas and Jetstar revealed flights between Cairns and Japan would be slashed.

"A bag costs us more to put through an aeroplane than a passenger," Mr Godfrey told Channel Nine.

"There's markets such as Coolangatta that has seen a 40-odd per cent increase (in) capacity this year, so even though that has been a profitable route for us in the past, maybe we have too much in there."

His comments came as Queensland Premier Anna Bligh stepped up her calls for national help as she labelled the issue one of "national significance" given the visitors Queensland attracts who travel elsewhere around Australia.

The State Government has been criticised over the past week after the Tourism Queensland budget was cut by $3 million before the rescue package emerged.

Federal Tourism Minister Martin Ferguson yesterday refused to comment on suggestions the Commonwealth was planning an assistance package for tourism operators.

But he said: "The problems facing the Queensland and Australian tourism sector are significant and require a serious, properly considered, strategic response rather than a knee-jerk reaction."

Ms Bligh insisted national help was needed given the "ripple effect" the state's tourism had across the nation.

"There has been discussions with the Federal Government (and) I expect we will hear something from Canberra in the not-too-distant future," Ms Bligh said.

"This is of national significance. This is not just an issue for Queensland."

Mr Ferguson said key stakeholders would meet with Tourism Australia and Queensland Tourism this week to work on a response.

Queensland Tourism Council chief executive Daniel Gschwind said tourism was a shared responsibility between states and the Commonwealth.

Nick W.
9th June 2008, 01:16 PM
Looks like SYD-OOL is going to slashed



Not slashed, just reduced. I imagine not a huge call for such a route in the winter, and it will be these excess services which will be altered first.

D Chan
9th June 2008, 01:55 PM
Do you know how many airlines Virgin Blue interline with? off the top of my head the following: United Airlines, Eithad, Virgin Atlantic, Thai, Malaysia, Air Maurtius and Hawaiian, connecting bags through any port anywhere is Australia

well I know for a fact that even though DJ has interline agreement with UA, they don't have baggage agreements. So passengers still have to collect their bags after their DJ domestic flights and drag them over to the international terminal and recheck them in the line. Meanwhile if you come off a Qantas flight domestically and fly on UA transpac the bags can be checked all the way through (meaning pax don't have to collect their bags after their QF domestic flight), they just have to collect their boarding pass.

btw with interline were you referring to codeshare?

Marty H
9th June 2008, 02:00 PM
well I know for a fact that even though DJ has interline agreement with UA, they don't have baggage agreements. So passengers still have to collect their bags after their DJ domestic flights and drag them over to the international terminal and recheck them in the line. Meanwhile if you come off a Qantas flight domestically and fly on UA transpac the bags can be checked all the way through (meaning pax don't have to collect their bags after their QF domestic flight), they just have to collect their boarding pass.

btw with interline were you referring to codeshare?

No interline as in connecting pax/bags from domestic to international carriers.

Bob S
9th June 2008, 02:08 PM
I am all for a competitive aviation market, but will not be sad to see them go ... am happy to have a quality flying experience over a cheap fare.

Although I do love Qantas my last three trips on VirginBlue were a hell of a lot better than QF.

Bob

Montague S
9th June 2008, 02:34 PM
well I know for a fact that even though DJ has interline agreement with UA, they don't have baggage agreements. So passengers still have to collect their bags after their DJ domestic flights and drag them over to the international terminal and recheck them in the line. Meanwhile if you come off a Qantas flight domestically and fly on UA transpac the bags can be checked all the way through (meaning pax don't have to collect their bags after their QF domestic flight), they just have to collect their boarding pass.

btw with interline were you referring to codeshare?

and then you arrive in the US and it doesn't matter a turd who your connecting with because EVERYONE must collect their bags and re-check them.

I don't see what the big deal is.

D Chan
9th June 2008, 05:04 PM
No interline as in connecting pax/bags from domestic to international carriers.

I don't see what the big deal is.

my point is that it is not true, at least for UA. Despite the interline agreements between the two, their bags don't connect from DJ to UA (meaning you have to collect and re-check). There probably was some sort of baggage agreement before, but it doesn't exist anymore.

On a few rare occasions, some of the DJ ground staff aren't aware of this. They check the bag all the way through to LAX. The pax in turn think that they do not have to collect their bags after arriving in SYD on their DJ domestic flight, and then proceed to the International Terminal, only to be told (and much to their surprise) they have to dash back over to the domestic to get their bags.

Of course when you come in from the US you'll have to collect bags to go through customs anyway.

and then you arrive in the US and it doesn't matter a turd who your connecting with because EVERYONE must collect their bags and re-check them.

If say you are flying SYD-LAX-DEN, your bag should be checked all the way through - Yes, you do have to collect it at LAX to have your bags with you when going through US customs. However after that point there is a drop-off area for bags. You don't have to recheck the bags (at check-in counters) because your bag tag should read DEN and the tag should still be with your suitcase (unless the carrier on your next sector doesn't have a baggage agreement with the airline e.g. Southwest etc.).

Alec Goldfinch
9th June 2008, 08:37 PM
Righto, time for Qantas to retire the 737-400's and the remaining 747-300's not to mention a couple of their older 767-300's.
Then cut flights from CNS to NRT sending that area into financial recession.
Next, introduce a levy on hand luggage and get rid of those bloody peanuts!!!:p