In Reply to: Marketing against Jet* posted by Pak Mungkin on Monday, 9. March 2009 at 11:06 Bali Time:
Just did a search of the "The Age" web-site and found the article. For anyone that wants to read it........
Discounted fares are now the domain of Jetstar and Tiger Airways, writes Clive Dorman.
The flood of cheap discount air fares in Australia has slowed to a trickle and one player, Virgin Blue, has all but officially ruled itself out of the ultra-cheap fares business.
Massive losses caused by last year's surge in jet fuel prices, followed by the contraction in consumer demand caused by the world economic crisis, have left just one big player, Jetstar, in Australia's discount domestic air-fare business, challenged only by the niche low-cost carrier Tiger Airways, which flies to limited destinations from Melbourne and Adelaide.
To use its own terminology, Virgin Blue is "hoarding cash" after its first big loss in Australia - more than $100 million in the second half of last year - and says it can't afford to continue to throw away seats for next to nothing.
Virgin Blue, which has switched its focus in the past three years from backpackers to business flyers, has little left in the kitty after spending $60 million on the launch of its new long-haul airline, V Australia. It has begun flying between Sydney and Los Angeles and will soon link LA with Brisbane and Melbourne.
After introducing a flood of new domestic seats and routes in the past year, Virgin Blue is putting the brakes on its expansion and will begin cutting back its network and frequencies. The airline has invested heavily in the perks required to attract business travellers, such as valet parking, lounges, a frequent-flyer scheme and live in-flight television, but that market has been hit by the global economic crisis.
Even though Virgin Blue still thinks of itself as a low-cost carrier, seats on Virgin Blue are about 20 per cent dearer to operate than those of its once-chief rival, Jetstar.
"At the moment we're very happy to discount but the discounted fares out there will be difficult to sustain with the level of capacity that we have," Virgin Blue's chief executive officer, Brett Godfrey says.
In February, meanwhile, Tiger Airways grounded between a third and half of its regular schedules from Melbourne, creating rumours that the loss-making low-cost carrier was on its knees. But Tiger boss Tony Davis denied the rumours and accused Qantas of starting them. Davis said the flight cutbacks were "seasonal reductions" and its full schedule has been restored. Tiger opened its second base in Adelaide last week and has launched a raft of new services from the South Australian capital.
Jetstar, meanwhile, is adding new flights from Perth and taking over Qantas's domestic operation in New Zealand.
"We are viewing the current environment as a glass half-full," says Jetstar spokesman Simon Westaway. "We think consumer spending power is going to improve if people maintain their jobs. We think that travel is going to remain a part of many people's household budgets."
Regards,
David