Qantas CEO bullish against new challengers Rex, Virgin Australia 2.0

but what share of golden triangle will Qantas be left with ? That's where the money is.

Doubt if Rex will be rushing jets onto thin regional routes except maybe in non-peak Mon-Fri, Sat & Sun am.

Great to see some larger aircraft back on domestic routes, I was a regular on the 767 DRw-BNE for many years, hopefully routes like these can have some larger aircraft, even if it’s just for a while. 

Nice work AJ, putting widebodies out and about. Make hay while the sun shines.

I'm a number 2 guy, I never normally go with the market leader. The issue with Qantas is they don't always fly where I want to go weekly and they put you on a Jetstar flight which is late or they give your seat to holiday makers when you need to make a meeting. Talking to a lot of Virgin regular flyers that was the main reason they flew VA rather then Qantas. 

So I am assuming in due course there will be an along the lines of Virgin/Rex CEO bullish against incumbent Qantas?

Like I have said in a previous post if Rex thinks Qantas is going to do nothing about the competition they are gravely mistaken, they have the ability to raise more capital, have vastly more capacity, and different aircraft to put onto this or any sector if the need arises than Rex and we all remember the all-out war several years ago with Virgin and Qantas flooding the market place with extra domestic seating capacity and sharp pricing that was insane as the two Ceo's had a pissing contest to see who could outdo the other for the most passengers. So I think Alan Joyce will want to retain the same percentage of capacity in the business class market and market share or slightly improve it.  The next year or two is going to be a wild ride as all four domestic carriers go to battle to win our dollars and our backside on their aircraft's seat. Will Rex survive this challenge as it enters the capital city market?

Alan might be confident .. but, for me, a little too confident. Remember, Virgin forced the QF group to a nominal 66% share, which was in some respects, closer to 63-64%.

Rex has already declared it's Business fares - and has been canny enough to market 3 highly visible J Class fare buckets - all of which are significantly below QF's mainline J offering. QF has been content to actively market their full retail J product for years, but discounted domestic J promotions have been thin on the ground for years. 

Why is this important? For a few reasons.

1. Rex has effectively trapped QF into the high-end, corporate fares market.

2. The corporate. high end J market is usually on contract-negotiated discounted J fares, which are different to and lower than full retail. ie: lower yield than full (QF) business.

3. Rex has the advantage here - it has attacked QF's SME market quite cleverly. Small businesses without the scale to sign corporate contracts. That will pull loyalty through lower, affordable J Class fares, lounge entitlement and fresh service.

4. Jetstar suddenly looks a little bare, in the domestic J market - as a Rex J non-competitor.

5. It will be difficult for QF to try predatory tactics with REx. since the ACCC has already stated it will be watching the market and QF intently. Rex won't grab a huge share of the J market initially, but every mainline destination it can add will certainly nibble some percentage points away from QF. And with lower costs, it can capture a reasonable J Class share.

6. Virgin has been left at the starting gate, with punters wondering if it has a J Class strategy. Once again, REx has shown it's hand early and limited where Virgin can sit in the J market (midway between Rex and QF, but closer to QF so far). The fact that Virgin thought it was being strategic, by taking it's time to announce / reveal it's J product pushes it into the irrelevant basket, for the time being.

7. Clearly, Tiger and Jetstar (domestic) were not a factor in the old QF/Virgin J class scenario. But now, March will present the start of a new J Class era - with Rex, Virgin and QF all vying for J market share. About to get really, really interesting.

To me, Rex has played its hand extremely well and has clearly moved to define the J market. REx's product might not be quite as polished and shiny as the QF product, but if Rex J is half way decent (as I believe it will be), it will prove that a good 'basic' J product can win market share and respect on the sub-3 hour routes, without extortionate pricing. And with a new / revamped Rex FF program to reveal, it will keep the market engaged. Now, let's see what Virgin will announce for J.

ozpeke

Rex will take market share from both Qantas & Virgin on the triangle.

Don't think Rex will even want to fly to Cairns or Townsville etc.

Rex is not going to compete with unreliable Jetstar.

Qantas needs to be a bit less arrogant. Looking at some of its pricing in Business reflects this. For most flights in December, Sydney-Perth on a 737 is $3771 ONE way. 

Cannot wait for Rex to start flying and Virgin to declare their hand to bring some sensible pricing in Business back.

VA have been effectively emasculated in the Business Class market and all caused by their indecisions regarding the standard of service, even AJ has said that this is a big reason for Corporate Customers jumping ship and believe me as a private individual I will be doing the same thing as will many others.

Bain and co. whilst not gaining full control until mid November have had many months to work out a strategy and type  for their Business Class Service  but as one poster has said " they have been well and truly left at the starting gate " due to their procrastinations.

Losing 25 +large corporate customers to Qantas is catastrophic for VA's Business Class and will be regretted for as long as VA's Business Class  survives which may not be too long unfortunately. If their current wiz kid cant make decisions until next year on J class service then there's something very wrong with her capability and judgement. Not a very good start at all!!!

AJ must be overjoyed for the gift VA has handed him!! Fancy being handed so much business due to the ineptitude of your rival- very sad indeed.

Why would anyone fly on a B737 transcontinental with an unknown service standard when one can soon fly on a B787 Dreamliner with full top service.

RIP  VA Business Class Previously High Class Standard.

There are enough commentators here who seemed to want to stay with VA even though it is clear the business class product will never be anything like 2019, and probably not like QF J class even in the pandemic mode; any excuses and hope just to avoid using QF and conceding to AJ.

But corporate doesn’t take this kind of emotional self deception, and they sure weren’t going to pay any premium for a product that is still not well articulated by its CEO nor inspire confidence in the lack of communication. In the meantime VA Mk II attempt to attract more economy class business by all these rolling sales, where the regular punter is not much wiser and is more price sensitive than care about the experience, and assume the new VA mantra will not affect them that much (and they are largely correct in that expectation)

What is surprising is that the new VA corporate don’t seem to have done enough to stop the haemorrhaging and if that is partly intentional then it doesn’t loom well for those what still want a decent J class product.

Not dancing on VA Mk 1 grave here since QF product did improve because of competition and certainly the premium support services cutback bode future realignment of standards for QF product in absence of a full service competitor.

i am hoping sydney-adelaide services even if only temporary get an upgrade to a330's.they ran those and before that 767's when the adelaide to singapore services existed for many years as basically a domestic sector of an international flight.better than what the competition was offering even if the schedules did not always work in ones favor for qantas.i am not sure what kind of model the new virgin is going to look like but basically they need to be more like australia's version of america west(when they existed)amongst others.

This beggars belief that an Airline can advertise and sell a Business Class seat yet have the gall to to present their Business Class Passengers with such an appalling and disgraceful offering that they call a meal!!

Are the new VA management so arrogant that they won't address this issue now before too much more damage is done or don't they care at all?

There is quite a lot of adverse publicity about the atrocious so called snack box so why don't they try and provide a far better meal option until they make up their minds???

Surely VA Management or their staff would read comments such as these and make it known to the Bosses of the considerable disquiet amongst what was Loyal VA customers .

Maybe it's a cunning ploy of VA to ditch Business Class in January by saying it's all too hard and we have lost too many Business Class people so it's no longer viable so bye bye J Class VA.

Either way the damage has been well and truly done but some of it could be saved by improving meals until the final decision.

There is very little or NO loyalty left for VA by it's once happy Business Class Flyers and this disgraceful service or lack thereof is the final nail in the coffin!!

A once very proud and high service Airline is now reduced to a service standard below that of economy train travel.

The new Management have only themselves to blame as they have had plenty of time whilst the takeover was being finalised to at least draw up a decent contingency plan but they have failed miserably!