Tag Archives: V Australia

How Long Can This Go On….Low Airfares

Sale Case

The losses are huge, big, enormous and it has hit every corner of the Travel Market and still it hurts, for the airlines it is Judgement day but for how long?

When Singapore Airlines are doing European specials you know life is bad, People will pay a premium to fly the smile high club so what hope is there for anyone else, British Airways have quickly dropped their premium route fare to nothing just to survive with an AUS$1444.00 fare SYD/LON, so Qantas will have to match that and these three airlines have been the big hitters on this route for decades so for them to drop it has to be the very last resort.

For Qantas their other Premium route SYD/LAX (los Angeles), has been decimated by V Australia’s close to as possible $1000.00 return fares, with United chopping fares as well for market share its going to be banging heads on the table in the offices at Mascot and not before time.

And suddenly as a break into a new market, Delta has already dealt in a sword in the ground deal of  AUD$982.00 from Syd with Air New Zealand’s counter offer of AUD $889.00 (including taxes) from Coolangatta is near as damn soil cheap as you can get.

This is a snapshot of just one aviation market in Oceania/Asia and it is being repeated though out many other markets in every part of the globe, the good side is that it has leveled fares that were overpriced on monopolised routes, Qantas’s SYD/LAX route fare $2000.00 was quite simply Sheriff of Nottingham territory and to have it halved showed the bonuses that flowed though the doors of the Geoff Dixon era, economic crisis or not that still had to happen.

So we are in the shit, so to speak and the few cashed up travellers are having a boom time, it can’t last and it won’t but it will not be all bad news.

The cheap fares are there because most Airlines are over productive with too many planes and the staff that runs them, as the airlines shred older inefficient aircraft they will create a newer tighter business, staff will go because you are not going to go and pickup and then go back to normal when the economy picks up again, today you need to be lean and efficient, and a good old shake out of the mattress will help the restructuring of almost every aspect of the Aviation Business so you can now throw out the old model and send in with the new as for the first time in its history except with a few bumps aviation is faced without its stunning growth year after year and so like any other business it will have to adapt to the current climate changes.

The cheap fares will last this year  but for the rest it should settle back down again which means many fares will rise as they have too because.

1. Airline restructuring will be completed.

2. Airlines are not public services they have to make money, break even at least.

That is the bad news…the good news is they won’t go nowhere near the old prices or will again, this is the new new for the business so SYD/LON should level out at AUS$1600-$1800 and SYD/LAX about AUS$1200 – $1300 which is still brilliant value, most domestic traffic will not push those AUS$1 a seat deals t0o hard and put on an average of AUS$20 per ticket price per sector, really low LCC (Low Cost Carriers) will have to improve their bottom lines as the likes of Ryanair (I’ll charge you), Easyjet et all, will not find profit in expansive growth anymore and will have to fall to the realities of the a real business model, and this is all in cattle class as even more changes will come in business class, but these prices do still depend on very stable Fuel costs going into 2010, if they rise then so will the fares by another 5% to 10%.

The only growth area will be in the International LCC (Low Cost Carriers), many have already failed in this new dimension to travel, but some pioneers are paving the trail like AirAsia and Jestar International but once the model is proven many others will quickly come abroad but don’t expect really stupid low international fares here, they will be cheaper than normal route fares but these carriers will want to survive and there is a boundary limit to how far down you can go down with fares as international travel is a completely different model to domestic and short haul travel (European) as you need infrastructure and personal at the other end of the route.

Another factor if it comes to pass is that many countries like Australia are being pressured to drop or reduce their heavy outbound and inbound airport taxes to encourage more traffic, and its these expensive government add-ons that can really make a biggest difference to an airfare price,and that is even domestically and should be curtailed as why should be the airlines that always have to shoulder the costs, these little termites are in many countries a bigger cancer than anything in a good tourism market and if the governments are scared of lost revenue then that is not the case as visitors will still spend more in the country if they are not robbed at the entry point.

..At the moment fares are too cheap and unsustainable and how long they will last is not very long, my guess is the Christmas/New Year 09 period and will not be as severely discounted going into 2010 as they were in 2009 and maybe a few excellent specials will still crop up in the traditionally really low periods, say March and Oct/Nov next year, so with an economic crisis or not airlines will not survive unless they do so, there is also a chance they could even rise sooner to stop the bleeding quicker and once one large influential carrier does so the rest will quickly follow, so the real push from next year for your dollar will be in super economy class with more leg room and better service and higher profitable fares for the carrier, the deals will be there but they will expect you to pay more for them so you win and you lose at the same time.

So if your going to fly on the cheap then fly now..and book quickly because fares will rise, but not enough to break your credit card limit…….

Updated 18th Nov 2009…..
I noted in the above issue that the fare to Europe would be AUS$1600.00 – $1800.00, the recent Fares for early 2010 are AUS$1685.00, and will be basically around AUS$1750.00 late 2010, but we are having the problem of very high fares coming  (USA/European Summer) to try to pull back some profit see current issue Airline passengers are back-so lets get back to work, as this is a cash in to pull back profit it won’t work except maybe in the early (May/June 2010) period, but it will scare more away than bring passengers back into their seats….

V Australia..About time?

Let the Pacific war begin

Let the Pacific war begin

V Australia in their opening up of the Pacific Routes from a monopoly which will have the greatest impact on Australian Aviation since Virgin Blue created the lower prices that stayed around for more than a few months (Impulse, Compass) , and will give Tourism Australia finally a reason to smile, Protectionism of this immensely profitable route will be a real head holding time for Qantas at Mascot, but the reality is Qantas has been a real thorn in the side of Australian Tourism in its approach of profitability on the Pacific Routes both ways, and shows that overly protecting a national Icon can really hurt the the very thing it upholds.

I was far more expensive to fly to Los Angeles and San Francisco than to go to London or Paris, with these gateway costs so high, a return fare to New York was astronomical, it was cheaper to get a around the world ticket than have a return fare to NYC, or fly to London and go across the Atlantic then return was the same price, in other words it was ridiculous.

Qantas has held the country to ransom and knew what it was doing, and the Politicians in Canberra are to take most of the blame in letting the Airline do so. Tourism Australia should have also banged it’s drum far louder than it did and showed more in its mettle in doing what was right and not what monopoly’s can get away with, but Australia has a history of such head in the sand approach, its Two Airline agreement reigned for years until it was finally buried.. again to the benefit of Qantas but not so to Ansett which went south, but since the demise of the policy the local Australian Aviation has thrived like no other with excellent LCC carriers and good fares, And Qantas even benefited too as Jetstar has been a success they could only dream of..

So why get in such a lava over all of this, well not only did Australians pay way over barrier than what they should like in the Two Airline Policy days, but In that it also made Australia a very expensive country to visit, it is far enough away from prime travel markets as it is, but this was keeping arrivals at far lower levels than they should have been and certainly for years and years this has cost Australian Tourism millions and millions in lost revenue to give Qantas a few extra bucks in the bank, in fact Qantas should apologise for its behaviour and give the Australian Traveller a better deal to make up for all its callousness and greed.

Qantas finally only when forced has the Airline has finally dropped its prices from Aus$ 2000 + to around $1200.00 return to counter V Australia’s prices to date of average $1199.00,(both include taxes) that is in some cases a $850.00 drop (or Profit which ever way you look at it), that is a big drop by any Airline standards, but the benefits for the country will now certainly be apparent, but is it a little too late, today with the economic crisis going at full speed the Americans don’t anymore have the spare cash to pop downunder, one benefit though is the exchange rate is well balanced in the USofA’s favour making Australia an excellent value destination, and it almost always tops the most “I want to go there” lists, But for Australians its a bugger of a bad deal, offset only by the cheaper fare.

Qantas has another problem is the 777’s V Australia is using is very competitive on the routes, only the newly minted A380 Airbus’s came just in time to save the day in efficiency and high load factors, Virgin’s product is usually very good too, there are always accolades on their service and the niceys they throw around, if Qantas only had their 747.400’s still running the line, Qantas would have had a small disaster on their hands, old equipment, old service, expensive to run over the same distance, the Airline would have lost money on every takeoff from Mascot if they had matched the new prices, the only saving grace would have been lower fuel costs, but even that would have helped V Australia more than Qantas..

LA – Sydney is first on the 27th February, Followed by LA-Brisbane April 8th, LA-Melbourne Follows in September, worse for Qantas is the Sydney – Johannesburg SA routes have also been applied for, another cash cow gone, so is all of this fair to Qantas?

The answer is no, they should have rationalised the routes years ago, they have to do it now because they simply have too, if the fares had been fair there would have been no competition needed to show the discrepancy of the high fares people have been paying, Qantas will of course state this or that reason of why the fare were slated so high, but the real reason is two fold, inefficient equipment and good profit, now they will be well behind the ball mostly on the Aus-SA route, with the Boeing 787 coming in sometime in the never never.

There is no doubt it will be a tough year for the boys at Mascot, but for everyone else and mostly for the country it should give V Australia a helping hand in doing something Qantas should have done years ago, give the country and its tourism industry a fair go price wise to one of the worlds largest travel markets, so …good onya mate!


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