Cheaper business class fares are good news for business travellers, but Virgin Australia CEO John Borghetti says that the current price war between Virgin Australia and Qantas is good for his own business too.
Speaking on ABC TV’s Inside Business programme this weekend, Borghetti takes the credit for a claimed drop of “around 25 percent” in business class fares after his newly-invigorated airline went after the premium travel market.
“For more than 10 years whilst economy fares and promotional fares at the leisure end have dropped significantly – in fact on some routes it’s halved because of the competition at the low end – there was no competition at the top end since Ansett stopped flying” John Borghetti told Inside Business host Alan Kohler.
“So we deliberately entered that market and we know that the fares were very high and we could bring competition at lower fares with better service, and that's exactly what we've done.”
However, Borghetti ducked the issue of how profitable Virgin’s business class cabin can be at those lower fares.
“I think you have got to look at the profitability of the business as a whole, and people forget that, you know, there is the halo effect of the product and the brand that brings profitability as well.”
There’s less question on the impact of partnerships with Air New Zealand, Etihad, Singapore Airlines and Delta.
“In terms of on carriage onto our domestic business, since we formed this alliance … the amount of money that we are getting on our domestic network has more than doubled. In fact it's almost trebled.”
Borghetti also reports that Virgin Australia is well ahead of where he expected it to be at this stage of his three-year ‘Game Change’ plan.
“We set ourselves a target of achieving certain goals within three years. We’ve just entered the third year and we've almost, almost, achieved all of them. So, I'm pretty pleased with the progress. But the issue with this is that you don't sit on your laurels.”
You can watch the full interview at Inside Business.
David Flynn is the Editor-in-Chief of Executive Traveller and a bit of a travel tragic with a weakness for good coffee, shopping and lychee martinis.
19 Jul 2012
Total posts 13
When DJ starts providing consistent service and not cheese platter vs hot meal depending on mood of flight attendants, when DJ start supplying the PAX hot meals vs feeding the pilots and cabin crew down the back of the plane the hot meals while offering the Business Class cabin a cheese platter... when the cabin crew realise they should not put their own bags in the overhead bins in business and finally stop greeting pax with "G'day John", then perhaps they might stand a chance in this "war"!
Qantas - Qantas Frequent Flyer
03 Jul 2011
Total posts 187
I travelled on DJ in business ADL-SYD less than a month a go and apart from the dismal lounge in ADL the service was excellent. I was greeted with a Good Afternoon Mr Steven, thankyou for travelling with us. The meal choice was better than I expected (a vegitarian option without having to pre-order 48 hours before). Sadly the IFE is still something they need to work on - but it was only ADL-SYD.
Based on my experience that flight I'd be happy to fly with them again.
QF
10 Jul 2012
Total posts 3
I flew with them recently. Qantas didn't fly to my destination so I thought it was a good chance to try them out.
They are, for the time being, in a different league to Qantas. It really felt like the old Virgin Blue in most ways. The upgraded Virgin Australia cabin coming back didn't have the Live2Air screen, and being a short flight they didn't bother with any IFE. Ordering some wine and cheese was an inconvenience to everybody, as was booking the flights initially (seiously, no BPAY?).
Comparing the Flexi fare with Saver, I can't imagine anybody paying $80 (at least) extra for a sandwich and $12 worth of checked in luggage. Comparing a full service Qantas sale fare and Virgin Flexi, Qantas is often far cheaper, has the same inclusions, and a much much better overall experience.
Qantas
10 Sep 2011
Total posts 162
Agree the lack of BPay or Direct Debit is a serious annoyance. None of my banks and credit unions work with their Direct Debit system. Hence I use Expedia, which reduces the credit card fee, but doesn't get rid of it.
23 May 2011
Total posts 33
They do offer paypal and POLi to pay using your bank account rather than a credit card. And although POLi doesnt work for Mac users if you phone the contact centre they will honour the internet rates without the credit card fee.
Qantas
10 Sep 2011
Total posts 162
Unless I misread the conditions, Paypal has the same fees as Credit Card. Interesting about the call centre - so you can call them and avoid the fee by stating you are calling upfront as a Mac User or with a non-POLi friendly bank? Good for the consumer. Maybe things will change once Sabre has kicked in.
09 Nov 2011
Total posts 88
Let's look at the comments here. Cheese platter?? - the crew on Virgin are more than happy to get any food you need in Business class. The crew taking up overhead bin space? - Qantas allow Economy passengers to jam bags into Business class overheads as I realised when I boarded a flight recently. Feeding the pilots is normal and a requirement. Comparing on board entertainment - Virgin are about to launch an entirely new entertainment system, apart from the fact that you get a Samsung Tablet in Business class already. On Qantas, you would more than likely have a drop down screen on a 737-800. Quite commonly however, you will have the old portable TV drop down from the centre ceiling on a very old 737-400 or a large single cabin screen on the equaly old 767. Let's not forget the tattered old sets on these aircraft - especially the convertable economy to business class jobs on the 737.400's - ewww. As for the on board food choices - has everyone forgotten the Qantas paper bag for putting your biscuit wrapper or apple core in after paying around $300 one way for a SYD - MEL economy flexi - welcome Virgin for bringing back the competition and getting Qantas to actually start paying attention.
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