Virgin Australia is still not making money

31 replies

crwilkins

Qantas

Member since 02 May 2016

Total posts 29

Get rid of Borghetti, time is up. Also I query the benefit of their partners other than the equity/cash they bring, SQ bring their own pax on their own metal into and out of every Australian capital city, so what's there for VA, DL have great coverage in NA but are a tiny player on the Pacific behind QF/AA and UA so again I question the level of pax feed to make any real difference and lastly Etihad is the same, long way behind EK, QF and SQ on flights to Europe so again questionable pax feed imo. With no alliance participation they are not able to truly articulate a better value proposition than the competition apart from leisure travellers and the occasional mix of premium.....they are on a dead end strategy in my view, need new CEO and new ideas

Mjudd

Qantas - Qantas Frequent Flyer

Member since 14 Dec 2016

Total posts 57

A great route idea for VA is Perth-Tokyo. They would have the market to themselves.

Not only would it cater for passengers wanting to fly to Tokyo or vice-versa, it would also create a great one stop connection to the US and Europe with VA partner airlines.

pkjames

Qantas - Qantas Frequent Flyer

Member since 21 Jan 2017

Total posts 43

Maybe SYD - SZX which is a HNA hub. I'd take VA anyday rather than CZ to CAN.

John Phillips

QF

Member since 03 Jul 2015

Total posts 1

Just wondering when Virgin will run out of excuses for not making a profit?


By now, they must have used every excuse known to mankind?

abudhabi1

Thai Airways International - Royal Orchid Plus

Member since 15 Jan 2013

Total posts 70

I agree there.SQ putting people onto VA for onward connections for cities and smaller places not served in their own right makes sense such as Hamilton Island,Cairns,Townsville,Launceston and Hobart to use some examples.But what I don't get is why say for Adelaide or Canberra they need to Codeshare with them to Melbourne and Sydney except for the handful of us who can't get on the direct flights and have to connect elsewhere.I am a leisure traveller and my income forces me to fly Virgin unless someone else is paying for me.The only advantage this brings is better connections in many cases.I would rather get the SQ6000 series of flights operated by VA to Melbourne ex ADL to connect onto SQ228 for instance due to the fact I can leave late morning out of my home town arrive lunchtime to get the onward flight arriving into Singapore just before 10pm at night.The Nonstop is too early for me.

StudiodeKadent

Member since 20 May 2015

Total posts 109

"Another quarter and Virgin losing millions again while qantas domestic posting record profits. What does Virgin need to do to turn things around, and can they do it?"

1. They need to simplify their fleet drastically. My personal recommendation is that they adopt one narrowbody type and one widebody type. The widebody type should obviously be the A350-900 since it would be more comfortable than Qantas' offering whilst also allowing Virgin to have its 3.5 classes of service without being as expensive to operate as the 777s. This could do all the LAX routes, as well as HKG (which frankly needs the 3.5 classes of service and bigger jet) and also the mainland China route. As for the narrowbody type, I'd suggest they get the Bombardier C-Series and operate it in two configurations... one for international and transcontinental routes with fully flat business class/direct aisle access, 2-2 Premium, Econ Space Plus and Economy. The other configuration would top out at 2-2 Premium seating (sold as short-haul business class on domestic non-transcon routes). 

2. The 40 737-8s are the difficult issue though, and stands in the way of a C-Series adoption. I'd presume 20 of these jets will go to Tigerair and replace the entire Tigerair fleet. The remaining 20? Perhaps they'd be used as a capacity bandaid for the transition period (or as a backup plan in case Bombardier never make a CS500), or maybe Tigerair's fleet will double in size, who knows? Or perhaps VOz will use them on the short capital-city-shuttle routes that need the higher capacity (BNE-SYD, MEL-SYD, BNE-MEL).


So... fleet simplification/streamlining to result in more commonality benefits and less staffing costs. This seems to be an absolutely critical step. 

But can/will VOz do it? I hope so. Obviously the widebody simplification would be easier and is probably going to happen sooner. Narrowbody, well Tigerair should get an entirely new fleet of 737-8s to start with, but I think mainline Virgin Australia could benefit from using the CSeries instead of 737s or A320s.


tm_smile

Qantas - Qantas Frequent Flyer

Member since 12 Jun 2011

Total posts 15

To be honest, the amount of money that VA has been losing on international, they should just cut that arm all together.


Simplify fleet to just 737s for mainline domestic (as they are already doing) and perhaps do away with Business except for trunk capital cities. Business on leisure routes are expensive to operate, don't generate revenue and take up capacity that could be sold otherwise. Another reason why they do so badly is their costs. JQ destroys them cost wise and QF soaks up all the revenue from high value pax while being almost equal in cost base.


There is nothing wrong being a purely domestic/regional South Pacific carrier, If they leveraged their codeshare and JV partners, they would be profiting from international without the overhead costs of operating those flights. What is the point of operating AU-LAX or MEL-HKG if you're not making money. 


I also don't get the preference for DL over UA as a partner in a business sense. If VA was to codeshare with UA, that would add almost 500 more pax than DL per day that potentially could be connecting to other VA domestic services.

Last editedby tm_smile at May 22, 2017, 10:39 AM.

Bob Greenberg

Virgin Australia - Velocity Rewards

Member since 08 May 2017

Total posts 1

Virgin has lost the plot recently with the changes to our Virgin Money cards on top of The Economy X mess which will only make their bottom line worse due to the loss of loyal clients. Major stuff up !!!!

Chris Chamberlin

Member since 24 Apr 2012

Total posts 1,114

Bob:

Despite the name on the front of the cards, the Virgin Money credit cards are issued and controlled by Citibank as a 'white label' product, so it's Citibank that has changed the earn rate (and is blocking government spend) - not Virgin Money or Virgin Australia.

Dredgy

Qantas - Qantas Frequent Flyer

Member since 02 Apr 2017

Total posts 167

I think Virgin has a lot of potential, and I think their international division can work too. There's always a way out, it will just take the right mind at the top. I think Virgin's biggest mistake was rebranding into a full service airline - Virgin was always the preferred low cost airline over Jetstar, now Virgin is playing second to Qantas as a full service airline AND Tiger is playing second to Jetstar in the LCC field.


That said, Virgin's product is really good. They eat Qantas for breakfast on some regional routes - namely ROK to Brisbane where they operate 737s with seatback IFE as opposed to Q400s and they're usually cheaper. Their 777s have a nicer economy cabin then Qantas' A330s and 747s though I can't say for business.

If I was them I would reposition slightly to focus on underserved routes out of Brisbane, where Qantas has an abysmal international presence. Virgin already has some unique, convenient routes - BNE to DUD for instance, and that's usually got solid load factors, as well as regional routes. They're based in Brisbane, so they should expand there. Also see room for growth out of OOL - no Perth route on a full service carrier and even MCY which is crying out for links to Townsville, Cairns or Rockhampton.

Trying to compete against Qantas and every other carrier in SYD and MEL is not a fight Virgin can win with its current strategy. 

tm_smile

Qantas - Qantas Frequent Flyer

Member since 12 Jun 2011

Total posts 15

They eat Qantas for breakfast on some regional routes - namely ROK to Brisbane where they operate 737s with seatback IFE as opposed to Q400s and they're usually cheaper. Their 777s have a nicer economy cabin then Qantas' A330s and 747s though I can't say for business. 


VA don't have seatback IFE on any 737, E190s or ATRs. Only on the A330 and 777.

Also, the routes operated by the 777 are in competition with the A380 and 747, both of which are comparable (if 747 is refurbished). Business has the advantage where people prefer direct access to the aisle, though for those not fussed, the space around the skybed is great.

Last editedby tm_smile at May 29, 2017, 10:40 AM.

simiguelito47

Asiana Airlines - Asiana Club

Member since 09 Feb 2017

Total posts 5

Although the alliance-joining (and as a subset of that, Star Alliance-joining) question has become a cliche, it's worth noting that bespoke bilateral codeshares don't have a good track record. Malaysia Airlines haemorrhaged money in the mid-2000s; Etihad failed to make a profit for its first 5 years of operation straight and with Air Berlin and Alitalia, its equity subsidiaries can hardly be spoken of; and we don't even need to start on where Virgin Atlantic is heading.


Needless to say the domestic network is a key gap that Star Alliance ought to fill given how many Aussie KrisFlyers there are. That, and how the launch of Hong Kong flights (if VA succeeds) would fill a key point-to-point gap for Aussie Star Alliance members. Add Shanghai to that too (not counting CA - need to fly a route every day to seriously contend for business travel) and a VA-Star matchup would fit quite neatly.

Dredgy

Qantas - Qantas Frequent Flyer

Member since 02 Apr 2017

Total posts 167

They eat Qantas for breakfast on some regional routes - namely ROK to Brisbane where they operate 737s with seatback IFE as opposed to Q400s and they're usually cheaper. Their 777s have a nicer economy cabin then Qantas' A330s and 747s though I can't say for business. 

VA don't have seatback IFE on any 737, E190s or ATRs. Only on the A330 and 777.

Also, the routes operated by the 777 are in competition with the A380 and 747, both of which are comparable (if 747 is refurbished). Business has the advantage where people prefer direct access to the aisle, though for those not fussed, the space around the skybed is great.

Last edited by tm_smile at May 29, 2017, 10.40 AM.

They phased the last of them out reasonably recently I think. They still offer streaming, and they're replacing their ATR services from ROK with 737s. Compared to Qantas which has no entertainment options or jet service (I miss the 717!), it is a huge advantage. My general point was, they should focus on areas that Qantas underserves - and there is a lot of those. 

tm_smile

Qantas - Qantas Frequent Flyer

Member since 12 Jun 2011

Total posts 15

Qantas either have seat back entertainment, wifi streaming (on all 717s, some A330s and 737s) or overhead monitors. Granted there are no options on Dash8s, in this day and age, I'd rather quickly download some netflix eps rather than rely on the limited options, particularly on VA's streaming service. At least on QF's streaming service there is something I'm interested in every now and then.


QF is hardly going to be sitting back on areas which could make money because they choose not to. This would have been a fantastic opportunity when VA had a far lower cost base. Now that the advantage is gone, its backs them into a corner where its very difficult to compete and open up new routes.

andyf

Virgin Australia - Velocity Rewards

Member since 07 Dec 2014

Total posts 47

Not going to pretend I'm across their financial position, but at what point do they run out of money? Obviously they have had recent equity injections from the Chinese buy-ins, but eventually something has to give. My recent flights (domestic east coast) have all been pretty full ... are they pricing below cost, or are other routes poorly patronised?

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