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Virgin's LHR-HKG-SYD Services. Will They Last?  
User currently offline6thfreedom From Bermuda, joined Sep 2004, 3323 posts, RR: 20
Posted (9 years 4 months 2 weeks 17 hours ago) and read 8350 times:

VS services on LHR-HKG-SYD are underperforming... BIG TIME!

Will VS continue to operate the sector, or will they look to switch to:
a) another Australian port ie. BNE or MEL; or
b) change the intermediate point for SYD services.

The outlook for HKG-SYD is not great either.

- QF is 18pw, CX already 21pw.
- QF may well put the A380 on the sector in 2006-07.
- Dragonair may enter the route, and it has superior drawing power in mainland China than VS.
- Chinese carriers continue to increase direct services into SYD, meaning the pie for VS HKG traffic is further reduced.

What's the general view on this?

63 replies: All unread, showing first 25:
 
User currently offlineCtang From Australia, joined Jul 2001, 139 posts, RR: 0
Reply 1, posted (9 years 4 months 2 weeks 17 hours ago) and read 8326 times:

I don't think the flights are going that badly. They are the cheapest airline flying this route. They are currently having a sale to HK for just $650. QF is $896. Besides they have an excellent product in all classes.

User currently offlineTimetables From United States of America, joined Feb 2005, 43 posts, RR: 0
Reply 2, posted (9 years 4 months 2 weeks 17 hours ago) and read 8314 times:

It is a new route; you need to give it time to pick up; I'm sure they are doing heavy marketing to let customers know they fly the route...


NO URLS in signature
User currently offlineAvek00 From United States of America, joined Oct 2004, 4349 posts, RR: 19
Reply 3, posted (9 years 4 months 2 weeks 17 hours ago) and read 8306 times:

"VS services on LHR-HKG-SYD are underperforming... BIG TIME!"

Define underperforming "big time". Is VS experiencing weak premium loads/yields, or poor cargo loads? Is the LHR-HKG flight doing well? If so, the profit generated from that flight could well cover any shortfalls from HKG-SYD.



Live life to the fullest.
User currently offline6thfreedom From Bermuda, joined Sep 2004, 3323 posts, RR: 20
Reply 4, posted (9 years 4 months 2 weeks 17 hours ago) and read 8274 times:

both loads are poor, as are premium pax loads.

HKG as a source market for SYD bound pax is difficult, as most premium pax are asia miles members, meaning they get excellent benefits with both CX and QF.

Quoting Avek00 (Reply 3):
Is the LHR-HKG flight doing well? If so, the profit generated from that flight could well cover any shortfalls from HKG-SYD.

If that's the case, why bother having the SYD extension if it isn't generating sufficient revenue/profits??

Quoting Ctang (Reply 1):
I don't think the flights are going that badly. They are the cheapest airline flying this route. They are currently having a sale to HK for just $650. QF is $896. Besides they have an excellent product in all classes.

VS does have excellent product, but the pulling power of the Qantas FF program is a strong marketing tool. Australian originating pax earn points on both CX and QF services. The influence of these programs shouldnt be underestimated.


User currently offlineJakob77 From United Kingdom, joined Sep 2004, 210 posts, RR: 0
Reply 5, posted (9 years 4 months 2 weeks 17 hours ago) and read 8214 times:

Virgin is offering HK$6570 on its website for HKG-SYD.
QF is offering HK$4300.
CX was offering SYD fares as low as just under HK$4000 a few weeks ago.

CX and QF's combined schedule offers upto 4 daily flights between HKG-LHR and 6 daily flights between HKG-SYD. With Asia Miles and QF FFP both being oneworld, flights on either CX or QF earn miles in both programs. It's a no brainer that pax choose CX or QF over VS. KA is entering the market slated this summer and as 6thfreedom pointed out, KA has the mainland China feed and is also an Asia Miles member. It's an uphill battle for VS if they intend to stay.

VS is doing this route more for prestige then for "competition" or profits (perhaps loss if the performance of the route is as rumored). If VS quickly pulls out after, it'd be a big slap in the face for Branson.


User currently offlineAirxLiban From Lebanon, joined Oct 2003, 4507 posts, RR: 53
Reply 6, posted (9 years 4 months 2 weeks 17 hours ago) and read 8218 times:

I was @ SYD last week when VS was there and I remember seeing that VS had arrived from KUL.

I thought that was weird...'coz i know that it comes from HKG.



PARIS, FRANCE...THE BEIRUT OF EUROPE.
User currently offlineUnited Airline From Hong Kong, joined Jan 2001, 9160 posts, RR: 15
Reply 7, posted (9 years 4 months 2 weeks 17 hours ago) and read 8200 times:

VS doesn't fly to KUL. They are codeshare flights

Give it sometime. I am sure VS will do well too on the HKG-SYD run.


User currently offlineAntares From Australia, joined Jun 2004, 1402 posts, RR: 39
Reply 8, posted (9 years 4 months 2 weeks 16 hours ago) and read 8148 times:

6thfreedom,

There is no pulling power in the Qantas FFP program anymore other than of the type that is said to make one go blind.

The scheme has been murdered. Forget it.

The problem for VS is that HKG-LHR is about as full as it can get with people paying about as much at times as those flying all the way between SYD-LHR.

Until VS introduces a larger jet or gets more frequency any losses can be written off a development costs. And it is looking for more 744s.

Antares


User currently offlineScotron11 From United Kingdom, joined Feb 2004, 1178 posts, RR: 3
Reply 9, posted (9 years 4 months 2 weeks 16 hours ago) and read 8128 times:

How are VS doing on the LHR-HKG sector? If they are doing well, how much capacity can they offer UK-Australia without cutting into their HKG traffic?

User currently offlineBill142 From Australia, joined Aug 2004, 8440 posts, RR: 8
Reply 10, posted (9 years 4 months 2 weeks 15 hours ago) and read 8020 times:

Quoting Scotron11 (Reply 9):
How are VS doing on the LHR-HKG sector?

As Antares said HKG-LHR is the problem. Most flights are full and it is quite difficult to get a SYD-LHR ticket with VS. If they start a price war on SYD-HKG they will get killed by CX and QF as they simply have more capacity and frequency on the route.


User currently offline6thfreedom From Bermuda, joined Sep 2004, 3323 posts, RR: 20
Reply 11, posted (9 years 4 months 2 weeks 14 hours ago) and read 7951 times:

Quoting Antares (Reply 8):
Until VS introduces a larger jet or gets more frequency any losses can be written off a development costs. And it is looking for more 744s.

They are oprating a 388 seat A346 on the sector. Unless they put on an A380 'when' it is delivered, could they possibly add any more capacity?

As far as I'm concerned, they are going to bleed. Adding the SYD extension on LHR-HKG was a big mistake. As others have pointed out, LHR-HKG is full, so they always knew that they would have to rely on HKG-SYD. Why bother?

The UK-Australia bilateral is at capacity now (28pw), with BA 14 pw to SYD, daily to MEL, and VS daily to SYD.

My view is that VS should have looked harder at another intermediate point.
They may have needed a little negotiating, but PVG or India were perhaps options, or they could have gone into BKK prior to EK's announcement this year. Better still, VS should have considered Brisbane or Melbourne, as there is less competition. MEL in particular has a relatively big home market, has an excellent catchment area, and is relatively uncrowded compared to SYD for both LHR and HKG. In fact, QF's sole SIN-LHR service (QF9/10) operates at near full capacity year round.

I should point out that I have NO loyalties to another airline, it's just my point of view....


User currently offlineBehramjee From Canada, joined exactly 11 years ago today! , 4756 posts, RR: 43
Reply 12, posted (9 years 4 months 2 weeks 14 hours ago) and read 7907 times:

Usually such long haul routes need around 2 years to mature and show positive results...so give VS some time and knowing their reputation of always being the underdog on heavily contested long haul routes (LHR-JFK/IAD/LAX/SFO/BOS/NRT), they have the capability of turning their revenues around on this route and making a profit 2-4 years down the road.

User currently offlineEmiratesUK From United Kingdom, joined Jan 2005, 288 posts, RR: 0
Reply 13, posted (9 years 4 months 2 weeks 14 hours ago) and read 7890 times:

If I'm not mistaken, VS did say that they didn't expect the route to become profitable for around 3-4 years.....As for operating via India or PVG u.k passport holders would require transit visas regardless if they are leaving the aircraft or not. (China) not sure about India. Why operate via HKG? well SIN would be jumping in on SQ's market (not going to happen) and BKK would have been an even bigger risk as BKK is not currently in VS network which would mean even more marketing & the cost of opening two new bases the list goes on. Give VS time once they get the A380 which is in 4years time I'm sure things will be a little different. It just takes time.


EK A380 Private suite - Here I come!!
User currently offlineSpike From United Kingdom, joined Feb 2004, 1170 posts, RR: 5
Reply 14, posted (9 years 4 months 2 weeks 14 hours ago) and read 7875 times:

This is the problem with HK. Every friggin airline (except VS) is Oneworld and thus they all pretty much operate as Oneairline in pricing. Why doesn't VS drop prices down and steal the market?

User currently offlineSQNo1 From United Kingdom, joined Sep 2004, 687 posts, RR: 1
Reply 15, posted (9 years 4 months 2 weeks 14 hours ago) and read 7866 times:

I thought once the codeshare agreement with Malaysian Airlines ends sometime soon, I believe that they are going to either move the sydney flight to KUL or do a second sydeny flight via KUL daily.
It would be a good idea as MH has the monopoly on both of the sectors.

With Regards,
SQno1


User currently offlineIntheKnow From , joined Dec 1969, posts, RR:
Reply 16, posted (9 years 4 months 2 weeks 14 hours ago) and read 7838 times:

6thFreedom,

388 seats on our 346......wrong! Have done three 9 day SYD trips since launch and loads are picking up. Cargo is doing very well though.

ITK


User currently offlineVHXLR8 From Australia, joined Feb 2005, 500 posts, RR: 3
Reply 17, posted (9 years 4 months 2 weeks 14 hours ago) and read 7827 times:

I'm sure that when Lauda Air started flights to SYD and MEL there was similar thoughts as to the sustainability of the services, yet they are still flying between MEL/SYD and VIE today, and doing quite well.
Similarly, back when Emirates first started flying to MEL with A310s, people probably thought it'd never work, yet as we all know now.....
With possibly a little more media/advertising exposure, VS will go on to do quite well on their Australian services. AUS-UK is up there as one of the most lucrative in the world. I'm sure VS will benefit soon.


User currently offlineJakob77 From United Kingdom, joined Sep 2004, 210 posts, RR: 0
Reply 18, posted (9 years 4 months 2 weeks 14 hours ago) and read 7819 times:

Quoting Spike (Reply 14):

As Bill142 said, CX and QF simply have tremendous amount of capacity and upto 6x daily frequency. Any price war started by VS will get themselves slaughtered. CX has all the feed it needs @ HKG and QF has its domestic network at the other end.


User currently offlineBestWestern From Hong Kong, joined Sep 2000, 7090 posts, RR: 57
Reply 19, posted (9 years 4 months 2 weeks 13 hours ago) and read 7765 times:

This was only discussed last week. LHR HKG is a star performer for VS and every airline, resulting in no capacity for london originating passengers flying to SYD.

VS needs to go x2 daily to HKG, to free up capacity for SYD.



The world is really getting smaller these days
User currently offlineCXoneWorld From Australia, joined Aug 2004, 315 posts, RR: 0
Reply 20, posted (9 years 4 months 2 weeks 13 hours ago) and read 7746 times:

Quoting SQNo1 (Reply 15):
I thought once the codeshare agreement with Malaysian Airlines ends sometime soon, I believe that they are going to either move the sydney flight to KUL or do a second sydeny flight via KUL daily.
It would be a good idea as MH has the monopoly on both of the sectors.

No, I'd rather see it as a complete withdrawal from KUL. To launch any new service via KUL will only mean more long haul airframes, which are indeed in great shortages at present. Keeping the codeshare with MH on the other hand adds strain to the SQ/VS equity partnership...

Anyway, much has been said about CX and QF's edge over VS by virtue of the oneworld FFP scheme, but don't VS customers accrue points to the Krisflyer too? Enlighten me please, SQ is kinda big Down Under...

[Edited 2005-03-21 11:04:12]


oneworld alliance revolves around you
User currently offlineBill142 From Australia, joined Aug 2004, 8440 posts, RR: 8
Reply 21, posted (9 years 4 months 2 weeks 12 hours ago) and read 7643 times:

Quoting 6thfreedom (Reply 11):
My view is that VS should have looked harder at another intermediate point.

Your right in suggesting this. Qantas wanted to go through HKG to LHR for years but could never get the rights. Branson knew Qantas were close to getting rights to LHR and thought he could get them first. Essentially the decision to go through HKG was more bragging rights then business sense. Particularly when HKG-LHR is so booked up you cannot carry passenger through to LHR from SYD.

Quoting Jakob77 (Reply 18):
CX has all the feed it needs @ HKG and QF has its domestic network at the other end.

VS have DJ, although at the moment I'm not sure if their are any codeshares or collaboration going on. But when you can't carry the pax through to LHR whats the point unless they want to goto HKG.

Quoting CXoneWorld (Reply 20):
Anyway, much has been said about CX and QF's edge over VS by virtue of the oneworld FFP scheme, but don't VS customers accrue points to the Krisflyer too? Enlighten me please, SQ is kinda big Down Under...

I don't think this worries the price concious passenger. VS' hands are tied due to their lack of capacity and frequency. Virgin Atlantic are walking on egg shells, Qantas and Cathay Pacific can counter any move by VS to gain more of the market.


User currently onlineHB-IWC From Greece, joined Sep 2000, 4498 posts, RR: 72
Reply 22, posted (9 years 4 months 2 weeks 12 hours ago) and read 7593 times:

Do a search. Right from the very announcement of the route, there has been skepticism here on A.net. Virgin has basically put a tag onto a route where there was no need for such a tag as it was doing just fine on its own. What's even worse, Virgin has not accomodated this expansion by a single extra seat on the LHR-HKG route. All indications are that, as a result of lack of available seats for SYD-bound pax, the HKG-SYD runs are bleeding money.

I believe VS should have either put a B744 on the route -but apparently all of those aircraft are tied up on other routes- or picked a different transit point altogether. PVG or India would be undersirable candidates for visa requirements and because it would be hard to be obtain fifth freedom rights from those transit points. SIN would be unlikely because of the SQ/VS relationship. So that would leave us with BKK, or, even better KUL.

A new SYD route, via a new transit station KUL, would not have been such a crazy idea. VS' relationship with MH is coming to an end soon, the London-Malyasia market is strong, and BA is not currently operating the LHR-KUL route. Furthermore, KUL is very accomodating towards new airlines and fifth freedom rights wouldn't have been a problem.

I believe VS have lost a tremendous opportunity here. Instead of blindly focusing on being the first to serve the Kangaroo via Hongkong, they should have grabbed the opportunity to open up a completely new route, and beat BA by effectively taking over their role as the UK's national carrier at KUL. Meanwhile, the HKG station would have been performing just fine on its own.


User currently offlineCornish From United Kingdom, joined Feb 2005, 8187 posts, RR: 54
Reply 23, posted (9 years 4 months 2 weeks 11 hours ago) and read 7578 times:

Quoting HB-IWC (Reply 22):
I believe VS have lost a tremendous opportunity here. Instead of blindly focusing on being the first to serve the Kangaroo via Hongkong, they should have grabbed the opportunity to open up a completely new route, and beat BA by effectively taking over their role as the UK's national carrier at KUL. Meanwhile, the HKG station would have been performing just fine on its own.

I suspect that Branson's image and desire for publicity got his way ahead of the VS planners on this one - not for the first time.

Branson has long coveted the Australia market, especially post-Virgin Blue, but it was nevcer going to work with such a limited frequency and a complete lack of seats left on the LHR-HKG sector for anyone going on to SYD. VS can't add any frequency to LHR-HKG-SYD so trying somewhere different would have been a wise move.

Having said that, perhaps KUL might have been a bit too close to SIN for SQs liking and they would have tried to block such a move.



Just when I thought I could see light at the end of the tunnel, it was some B*****d with a torch bringing me more work
User currently offlineAntonovman From United Kingdom, joined Mar 2001, 720 posts, RR: 1
Reply 24, posted (9 years 4 months 2 weeks 11 hours ago) and read 7551 times:

its not the only VS route doing badly
i recently flew DEL - LHR on an A340 and there was a max of 40 pax onboard
Also the IFE was useless almost across the whole cabin
i changed seats 4 times before i got one of the tiny little screens to work


25 B747-437B : India has NO transit visa requirements for passengers remaining in airside transit and the India-UK bilateral already grants designated UK carriers o
26 HB-IWC : In other words, the ego of one man has prevailed over the common sense of his route planners and analysts. I expect that, when the route was first an
27 6thfreedom : Lauda commenced services in 1991 from memory (may have been 1995), in a totally operating environment, so let's compare apples with apples in today's
28 Chrisrad : According to what I have read the MH/VS agreements will be in place until October while negotiations take place, for possible renewal of the codeshare
29 Aa777jr : This topic shows up about every 3-4 weeks like a bad rash It's still too early to tell if this is gonna make money for VS. Regards.
30 Spike : If VS has any sense, it would fly via Macau to SYD at half the cost for everyone. Plus twice the fun.
31 United Airline : Heard that Virgin has plans to increase HKG-LHR to double daily. Perhaps they should do that. Or send a B 747-400 on that route so that they can carry
32 Cornish : Do they have the slots to do that at present? Especially as they will be increasing India services.
33 Spike : umm..india v. Australia: i think the oz flights may take some priority.
34 HB-IWC : That's an interesting note. I didn't know that. However, a LHR-BOM-SYD flight would suffer from the same problem as the current setup. LHR-BOM should
35 Cornish : Actually the India flights have far more potential than Australia - both in terms of filling the seats and in terms of yields. VS have been crying ou
36 Post contains images Vs25 : Don't underestimate the selling power than Virgin Atlantic's partner, Virgin Holidays have at selling seats. OZ is a big destination for us Brits, and
37 Monkeyboi : I think SYD could be a problem for an airline with limited capacity. Here's why: Fares on the route don't justify the costs. For example, a return LHR
38 6thfreedom : Spike... Macau?? Are u Richard Branson by any chance?? ; ) Vs25. That's exactly my point. No matter how good Virgin Holidays is, there are very limit
39 Bill142 : Why? Lauda operate the route daily just like VS do and Lauda isn't doing to bad at all. Perhaps VS should look at another port as Hong Kong in the lo
40 6thfreedom : Bill, I think Monkey was referring to limited capacity on the LHR-HKG sector for Australia bound pax. Lauda's position is quite different. On both th
41 Bill142 : I see you point 6thfreedom. The simple fact is if VS want to make SYD work they will either have to stop at a different port or increase capacity on H
42 Malb777 : Any of you guys think price might be a factor. I was looking for a flight Sydney - london return for 17/4/05 QF quoted me $1923.00+$446.92 tax =$2369.
43 The Coachman : Price is not the problem Malb777. The problem is that HKG-LHR is often booked solid, so VS can't offer people in SYD flights to LHR. So VS is basicall
44 Post contains links 6thfreedom : Malcolm... BINGO! Your point confirms that while VS may have capacity SYD-HKG, there are not enough seats between HKG-LHR! Just had a quick look at p
45 VHXLR8 : How about in 'today's environment' let's not be so condescending. I was merely entering into a discussion over a particular topic; and yes, I do have
46 HB-IWC : As said before, a solution to this obvious problem will only be found by either upgrading the aircraft to B744, adding an extra LHR-HKG flight (even i
47 BestWestern : Why dont VS operate the route the other way round LHR LAX SYD.... if only they could get the stupid Transit situation at LAX sorted out, it could be a
48 Post contains images The Coachman : Sorry, I should have clarified. The point about lack of seats on the SYD-HKG-LHR trip because of HKG-LHR demand *is* related to price...supply/demand
49 Cornish : Interesting idea, but would the number of passengers on the LAX service mean that there still wouldn't be that many seats left for LHR-SYD passengers
50 Jetstreamer : I seem to recall not too long ago that the "prophets of doom" were predicting that Virgin would never fly to Australia (even up to the day of the inau
51 Post contains images 6thfreedom : Mate, take a chill pill. I was in no way being condescending. I was simply stating a fact. Trying to compare the aviation environment today with a de
52 Post contains images VHXLR8 : 6thfreedom, I do apologise, I must have interpreted your post wrong. I guess that's the problem with written communication, manner cannot always be ex
53 Post contains images Pixuk : I agree, Virgin bashing seems to be a popular sport on here, even though they are a profitable and expanding airline. Sadly there are far too many ar
54 Lufthansa : We'll for one folks, I HOPE VS STAYS! I welcome them to Australia, and if they wanted to start a Second service to Australia, one via LAX or SFO would
55 The Coachman : Jetstreamer, I don't think many are trying to bash VS here, but it is mighty bizarre in today's climate to see 346's in SYD with 30-50 pax total on th
56 Post contains images 6thfreedom : the argument has never been about VS being welcome. I am sure all of Australia is pleased to have VS flying here, applying pressure on the oneworld '
57 Chinaeastern : (not for other airports in china) but transiting PVG, most nationals are given 24 hours free transit while UK passport holders and Aussies as well as
58 Bill142 : It could well be a long term strategy and thats fine. But if the capacity between LHR-HKG cannot be increased then any strategy for SYD is useless. S
59 CXoneWorld : Nothing really stops VS from operating an extra flight between LHR-HKG than its own aircraft shortages. The current bilateral with Hong Kong allows f
60 HB-IWC : That and finding appropriate slots at Heathrow of course. Optimal departure time from HKG is around mignight local time. However, such a flight entai
61 VS045 : Give it some time! And will people please stop posting stuff about how badly the HKG-SYD route is doing! There always seems to be one at some point du
62 Timetables : Agreed, only time will tell...
63 Wunala : I know that we are not the 'press', but bad publicity does affect an airline. Look what happened to AN. I am a QF flyer, but, please give VS a go. Don
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