6thfreedom From Bermuda, joined Sep 2004, 3345 posts, RR: 20 Posted (10 years 1 month 1 week 1 day 19 hours ago) and read 8593 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.
Ctang From Australia, joined Jul 2001, 139 posts, RR: 0
Reply 1, posted (10 years 1 month 1 week 1 day 19 hours ago) and read 8569 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.
Avek00 From United States of America, joined Oct 2004, 4447 posts, RR: 20
Reply 3, posted (10 years 1 month 1 week 1 day 19 hours ago) and read 8549 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.
6thfreedom From Bermuda, joined Sep 2004, 3345 posts, RR: 20
Reply 4, posted (10 years 1 month 1 week 1 day 19 hours ago) and read 8517 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.
Jakob77 From United Kingdom, joined Sep 2004, 210 posts, RR: 0
Reply 5, posted (10 years 1 month 1 week 1 day 19 hours ago) and read 8457 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.
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.
6thfreedom From Bermuda, joined Sep 2004, 3345 posts, RR: 20
Reply 11, posted (10 years 1 month 1 week 1 day 16 hours ago) and read 8194 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....
Behramjee From Canada, joined Aug 2003, 4949 posts, RR: 45
Reply 12, posted (10 years 1 month 1 week 1 day 16 hours ago) and read 8150 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.
EmiratesUK From United Kingdom, joined Jan 2005, 288 posts, RR: 0
Reply 13, posted (10 years 1 month 1 week 1 day 16 hours ago) and read 8133 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.
SQNo1 From United Kingdom, joined Sep 2004, 690 posts, RR: 1
Reply 15, posted (10 years 1 month 1 week 1 day 16 hours ago) and read 8109 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.
VHXLR8 From Australia, joined Feb 2005, 500 posts, RR: 3
Reply 17, posted (10 years 1 month 1 week 1 day 15 hours ago) and read 8070 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.
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.
CXoneWorld From Australia, joined Aug 2004, 319 posts, RR: 0
Reply 20, posted (10 years 1 month 1 week 1 day 15 hours ago) and read 7989 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...
Bill142 From Australia, joined Aug 2004, 8481 posts, RR: 8
Reply 21, posted (10 years 1 month 1 week 1 day 14 hours ago) and read 7886 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.
HB-IWC From Indonesia, joined Sep 2000, 4539 posts, RR: 71
Reply 22, posted (10 years 1 month 1 week 1 day 13 hours ago) and read 7836 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.
Cornish From United Kingdom, joined Feb 2005, 8187 posts, RR: 53
Reply 23, posted (10 years 1 month 1 week 1 day 13 hours ago) and read 7821 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
Antonovman From United Kingdom, joined Mar 2001, 725 posts, RR: 1
Reply 24, posted (10 years 1 month 1 week 1 day 13 hours ago) and read 7794 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
: India has NO transit visa requirements for passengers remaining in airside transit and the India-UK bilateral already grants designated UK carriers o
: 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
: 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
: 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
: 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.
: 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
: Do they have the slots to do that at present? Especially as they will be increasing India services.
: umm..india v. Australia: i think the oz flights may take some priority.
: 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
: 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
: 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
: 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
: 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
: 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
: 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
: 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
: 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
: 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
: 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
: 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
: 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 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
: 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
: 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
: 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
: 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
: 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
: 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
: 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 '
: (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
: 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
: 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
: That and finding appropriate slots at Heathrow of course. Optimal departure time from HKG is around mignight local time. However, such a flight entai
: 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