A330DAT
Topic Author
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Virgin Express And DAT Merger

Thu Jan 17, 2002 12:04 am

You may ask yourself the question: Why would Virgin Express want to merge with the new DAT?

Here in Belgium the name Virgin, unfortunately, has got a very bad reputation. There is no distinction within the general public between Virgin Express and Virgin Atlantic. Virgin is Virgin and it stands for bad service, unprofessional crews and aircraft that are never on time. Again this is the opinion of the general public.

The reality is a whole different story. Certainly there have been problems in the past (who hasn't had problems) but it goes to say how a reputation or how people perceive things, can often turn things around. That is especially true in the airline industry. It was like that for Sabena too. A good example was once given in a comparison between Swissair and Sabena. Swissair, having a good reputation, decides to "improve" the service on the Brussels Zurich route. For the snack they gave an apple to each passenger. The reaction: "Hmmm, very good, it's something fresh, something different and it's healthy. Good idea". The exact same service was then presented on the Sabena flights. Same route, same aircraft. The reaction: Maybe you can guess? "WHAT?? Is this all I get?? That’s cheap. This service sucks!" My point is that a reputation does not always reflect the reality of things.

Virgin Express is a very good airline (as Sabena was) with a very good service, well maintained aircraft and most of all deserves better credit.
And so we come back to the topic of discussion "Virgin in merger talks..."

Solving the "Image" problem with Virgin and DAT (ex-Sabena) is one reason but there are others.
Since the bankruptcy of Sabena, Virgin is beginning to see the true potential for growth out of Brussels. "If we don’t do it, someone else will". With Sabena out of the way, another problem arose. Slots and landing rights. More particularly the 9 daily London Heathrow slots. The landing rights have since been transferred to DAT, which is why it is very important for VEX to maintain good relations with DAT. In the interest of both parties, it was decided, well, "why not merge both companies?" Richard Branson, ambitious as we all know him, and never missing an opportunity when he sees one, knows DAT is in urgent need of cash and invests 25 million Euro in the project, at the same time giving him more say.

Many problems still need to be ironed out. Davignon and Lippens would like to fly with Airbus A319 aircraft, while VEX pilots see it as a threat to their jobs because it would be cheaper to hire (already trained) ex-Sabena pilots with new contracts, than to have VEX 737 pilots go through conversion.

The combination of a good "Business class" product and the popular VEX-style "Economy class" has in my view good chances of success. The main focus: concentrating mainly on European flights. "Air Belgium" seems more and more likely to be the new brand name although even at the top they have not yet made a definite decision.

In the end I am sure both parties will realize the importance it is to be united. (perhaps some day with VG Airlines?) There is enough competition outside Belgium to worry about.

What’s your opinion?  Smokin cool
 
LJ
Posts: 4103
Joined: Wed Nov 17, 1999 8:28 pm

RE: Virgin Express And DAT Merger

Thu Jan 17, 2002 2:43 am

I've been told that a DAT -VEX merger can seriously block an entrance by DAT into an global alliance.

Maybe this is the most important question. Does DAT wan to go low cost. If yes a merger with VEX makes sense. If not, don't do it. If they are going the low cost route they'll probably center the fleet around the B737. If not the Airbus fleet does have a big chance.

Regards
Laurens
 
Guest

RE: Virgin Express And DAT Merger

Thu Jan 17, 2002 2:57 am

Of course, the reality is that low cost airlines make money; 'full service' ones don't (viz Sabena).

Personally, I'd rather invest in a business that was going to be profitable!
 
A330DAT
Topic Author
Posts: 461
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RE: Virgin Express And DAT Merger

Thu Jan 17, 2002 7:59 am

I must admit I am having questions as to where this is going as well. Low cost or not? I would also rather invest in a business that is profitable. I think perhaps a combination of both is possible. On one hand you maintain the low price policy VEX has been using for Economy class, while aiming for the higher yield passengers in the Business class. I'm sure you know that low cost doesn't come from cheaper fares, but rather from the way the airline is run. Sabena used to do everything from A to Z. From the overhaul of jet engines to repairing the secretary's coffee machine. Here it would be simple flight operations, the basics. All the rest being outsourced.

Joining a global alliance is not an easy task either. Taking a look at the airlines that make up the global alliances (OneWorld, Star Alliance, Skyteam...) you see that every particular airline in each group is contributing, each specializing in one or several areas of the globe.

You would really start to wonder. What could VEX and DAT possibly have to offer a global alliance? Sabena was the market leader when it came to Africa but where do they stand today? I gather there's a lot of work to be done. One big advantage would be to exploit Brussels Zaventem airport. It is in the heart of Europe, smack in between London and Frankfurt, Amsterdam and Paris and with plenty of room (slots) to spare, making it quite interesting for anyone who is not well established in Europe or for someone seeking further expansion.
 Smile/happy/getting dizzy
 
310_engineer
Posts: 163
Joined: Tue Dec 05, 2000 7:16 am

RE: Virgin Express And DAT Merger

Thu Jan 17, 2002 8:09 am

"Virgin Express is a very good airline (as Sabena was) with a very good service, well maintained aircraft and most of all deserves better credit"

Offcourse they are well maintained, they are maintained by Sabena Technics, like the aircraft of Sabena, which was the safest airline.  Big thumbs up

Mike

 
A330DAT
Topic Author
Posts: 461
Joined: Thu Nov 15, 2001 2:21 am

Virgin Express And DAT Merger

Thu Jan 17, 2002 8:14 am

I trusted you many times with my life Mike  Smokin cool
 
airDD
Posts: 367
Joined: Tue Oct 16, 2001 3:06 am

RE: Virgin Express And DAT Merger

Thu Jan 17, 2002 8:18 am

Heard that Virgin group hasnt wired the 24 million euro's to SN Airholding. They are waiting for the results of the merger talks
 
310_engineer
Posts: 163
Joined: Tue Dec 05, 2000 7:16 am

RE: Virgin Express And DAT Merger

Thu Jan 17, 2002 8:20 am

You didn't had that much choice, did you?  Smile/happy/getting dizzy
But it was done with pleasure.
 
A330DAT
Topic Author
Posts: 461
Joined: Thu Nov 15, 2001 2:21 am

RE: Virgin Express And DAT Merger

Thu Jan 17, 2002 8:41 am

Thank you mike but I did have the choice. If I had any doubt of your competence, I would never of flown Sabena. You will never see me on Rynair, trust me. Good job!
 Big thumbs up
 
AirT85
Posts: 1241
Joined: Wed Aug 25, 1999 12:36 am

RE: Virgin Express And DAT Merger

Thu Jan 17, 2002 11:39 am

A good biz class and a cheap economy class can work, look at AirTran. Maybe a VEX/DAt merger could yield something like that? While i know little about either airline, the formula can be profitable.
Tony
Why would God make us all so different, if He wanted us to be the same?
 
AirT85
Posts: 1241
Joined: Wed Aug 25, 1999 12:36 am

RE: Virgin Express And DAT Merger

Thu Jan 17, 2002 11:40 am

A good biz class and a cheap economy class can work, look at AirTran. Maybe a VEX/DAt merger could yield something like that? While i know little about either airline, the formula can be profitable.
Tony
Why would God make us all so different, if He wanted us to be the same?
 
DragonRapide
Posts: 133
Joined: Thu Sep 27, 2001 6:59 pm

RE: Virgin Express And DAT Merger

Thu Jan 17, 2002 3:45 pm

Business class at high prices and economy class at give away prices will not work.
I will tell you why. Companies (and that's companies in general not just those linked in aviation), who send out their sons all over the world have to pay fo the tickets. The last 1 to 2 years you see more and more business people who where used to fly business all the time (also for 30 minute flights) to take economy seats. Why? Pure and simple: it is 10 times cheaper (literally). Since companies (and economy in general) are all shouting that it is crisis time and everyone has to cut on expenses, many companies hrew out business class. The only disadvantage with the cheepest economy tickets is that you can't change you're flight. But, you don't always change your flight and if you do it is often still cheeper to buy a new ticket than have a full fare business ticket from the start.
Now, given that a company has a choice to buy a ticket on an airline that brings his employee with the same aircraft on the same time from point A to B, but the C class costs the company for a return say 750,- € and the Y return ticket 100 or 200,-€, what do you think companies will buy?
So, no it will not work. They'll have to think again.
And there's another thing. About two years ago, many business passengers were fed up booking SN flights to London and then find themselves cramped into VEX charter seating style seats. Because of the many complaints, VEX adapted its seating pitch in C-class. However many business passengers have remembered that and still refuse to fly VEX. I for one prefer Y in bmi over C in VEX.
So if they merge, they will a completely new rebranding and a lot of convincing to do to win back passengers.
 
Freya
Posts: 40
Joined: Wed Dec 19, 2001 9:19 am

RE: Virgin Express And DAT Merger

Thu Jan 17, 2002 6:35 pm

Does not DragonRapide address the fundamental problem in the industry especially in Europe? For years now the shibboleth in airline sales and marketing has been to extract the maximum amount from the business traveller on the grounds that his/ her company will pay? It is simply not true any more - my own employer - a major multinational - will not authorise Business Class for less than 5 hours flight duration and it's impossible to justify otherwise. An example - one route formerly operated by DAT/SN was GLA - BRU. Sector time around 1hr 15 mins. The two present operators charge around GBP500 return standard business fare. The low fare competitor charges less than GBP100 - accepting that the comparison is not like with like. There needs to be an urgent rethink on marketing philosophy ( it all started with a guru by the name of Perento who came up with the theorem that 80% of the revenue derives from 20% of the passengers). But times have changed, have they not?
 
WunalaDreaming
Posts: 189
Joined: Tue Aug 28, 2001 4:44 pm

RE: Virgin Express And DAT Merger

Thu Jan 17, 2002 6:43 pm

I had already posted this one, with a link to teh BBC news article.

http://www.airliners.net/discussions/general_aviation/read.main/707336/
 
DragonRapide
Posts: 133
Joined: Thu Sep 27, 2001 6:59 pm

RE: Virgin Express And DAT Merger

Thu Jan 17, 2002 6:43 pm

Yes Freya they have.
Airlines (that is national type airlines) are still doing business the old way, while the public and the companies are not spending their money anymore in the old way meaning: budgets are thighter for everyone.
I also work for an international multinational and the rule is: all internal EU flights are in Y, everthing that is intercontinental is C. the company I work for is earning record braking profits year after year. Still, why throw the money out of the window on 1 hour C class flights?
Well, as much as I like C-class, I don't have an answer to it. So the national style airlines better rethink their strategy for short (and medium) haul routes.
 
Guest

RE: Virgin Express And DAT Merger

Thu Jan 17, 2002 7:38 pm

DragonRapide and Freya are spot on. Until more of the 'full service airlines' realise that for them to charge €500 when the low cost airlines are charging €20 it's a one way ticket to bankruptcy.

What do you get from a 'full service' airline? If you pay full fare, then you get flexibility to change your travel arrangements (but then you also get that when you pay full fare on a low cost airline as well - so no benefit there).

You get a meal on board (sometimes - though it tends to range from BA's 'All Day Deli Bag' to carriers like DAT that don't even provide a cup of coffee for their Y pax).

You get frequent flyer points which you can use to fly yourself and/or friends and family on vacation - if you have enough of them!

You have a business class cabin which costs even more money, and although you might have a better seat with more legroom on some carriers, the reality is that in Europe airlines use flexible dividers so you end up with the same seat (but better catering) as everyone else.

Members of the carrier's loyalty programme can also access (in some airports) CIP lounges - though the majority of business passengers try to minimise the amount of time they spend at airports so those tend to be used by comparatively few.

So, you have FFPs and a meal for your €480.

Not really a good deal, is it?

Take a large multinational, and multiply that €480 by say 10,000 trips a year. That's €4,800,000 they could save.

Now, what does the business traveller need?

1) Frequency of flights
2) On time performance
3) Value for money

The low cost carriers lead in all of those areas. The solution is therefore clear: any merged DAT/VEX needs to follow a VEX rather than DAT approach to have any chance of success.
 
Guest

RE: Virgin Express And DAT Merger

Thu Jan 17, 2002 10:46 pm

From today's ATW Online:

DAT said it will draft a business plan to submit to its and Virgin Express's shareholders by the end of the month before deciding whether to consider a merger between the carriers. "A merger might be a great opportunity," new DAT Executive Chairman Rob Kuijpers said at a news conference in Brussels, although he stressed that no decision has been made. The airline, which expects to employ about 1,500 people initially, probably will be renamed, but only after merger talks with Virgin Express are concluded, he said. On Tuesday DAT secured its official launch after Sabena Interservice Centre creditors agreed to forfeit €59 million ($52.8 million) of the airline's €109 million debt and convert the remainder into shares. The company has secured €180 million in capital from private and public investors (ATWOnline, Jan. 16).
 
OO-AOG
Posts: 1395
Joined: Mon Dec 11, 2000 1:24 am

RE: Virgin Express And DAT Merger

Thu Jan 17, 2002 11:20 pm

Heard from contact at VEX that the merger is more than likely to happen.
Falcon....like a limo but with wings
 
DragonRapide
Posts: 133
Joined: Thu Sep 27, 2001 6:59 pm

RE: Virgin Express And DAT Merger

Thu Jan 17, 2002 11:51 pm

Although dat just had to happen (because of the political pressure) there are still many uncertainties:
1/ Part of the 180 million € 'ready' by investors contains 25 million € of VEX. There seems to be some disagreement / confusion if VEX still has to invest if they don't merge...
2/ The fleet of both companies is judged incompatible.
3/ VEX pilots are worried that dat might include Airbuses for the medium haul destinations since that would mean it would be cheaper to hire ex-Sabena crew than retrain VEX pilots (who fly 737s).
4/ The number of employees was set at 1500 for a European network but it is unclear if this means 1500 after the merger with VEX (today dat employs about 1000). If it does mean 1500 after the VEX merger, it actually represents a further couple of hundred of redundancies since VEX employs lots more than 500 people today.
5/ The business plan is non existent but the basic target is profitability with a European network only. African destinations will be flown only if they can be started up with minimal investment. Bet, SIC and the investors were not happy to hear that since they were talked into this adventure with the business plan that dat would need an African network and at least 2 US destinations in order to be able to be profitable also in Europe.

All of this could be read in various Flemish newspapers this morning. I must say, I agree with most (if not all) of the points made.
 
LJ
Posts: 4103
Joined: Wed Nov 17, 1999 8:28 pm

RE: Virgin Express And DAT Merger

Fri Jan 18, 2002 2:58 am

Yes Dronrapide I read the articles also. The investors must feel themselvers a little bit betrayed by those who said there was a business plan. Also interesting to see both DAT and VEX claiming they don't need eachother.

I believe the 1,500 was after the merger. Anyway this number goes down day by day. I wonder how many people will be employed once the new DAT takes the sky.

On a side note. The enw DAT also said they wouldn't do the aircraft handling inhouse. This must be a blow for all the former SN-employees.

Regards
Laurens
 
Guest

RE: Virgin Express And DAT Merger

Fri Jan 18, 2002 9:52 am

What is it with Belgian airlines not wanting (or capable) of producing business plans? Or is it rather a case that they did the sums - and they don't work?

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