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JBusworth
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Re: Australian Aviation Thread - April 2020

Thu Apr 16, 2020 12:04 pm

164 return flights with the QF group and 64 return flights with the VA group each week. 228 return flights is much better than what we've been seeing!
 
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eta unknown
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Re: Australian Aviation Thread - April 2020

Thu Apr 16, 2020 12:48 pm

dredgy wrote:
Qantas16 wrote:
dredgy wrote:

And the fact both are set up to operate a particular niche.


Very particular niches in Nauru Airlines case... neither airline has the knowledge, skills, fleet etc in place to launch a fully-fledged domestic airline. Though would be interesting to see passengers being able to fly a Nauru Airlines 737-300 between MEL and SYD!


I'd be down for that!
But yes, I don't think either of those airlines would be the existing carriers to capitalize on a Virginless market - Air New Zealand and Rex are much better situated to do that (not saying they would, just more realistic than Nauru and Alliance).

Agree and all very true, but if you add Air North into the mix, you do have 3 Australian AOC's with jets... would it be cheaper to buy out one of those carriers than to pump money into VA?
 
QF945
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Re: Australian Aviation Thread - April 2020

Thu Apr 16, 2020 2:01 pm

JBusworth wrote:
164 return flights with the QF group and 64 return flights with the VA group each week. 228 return flights is much better than what we've been seeing!


Totally agree - it has a sense of normality to it.

The only surprising gap I see is neither have picked up PER/BNE direct. You can obviously transit via Sydney or Melbourne but I would have thought there would have been a bit of traffic going both ways to the WA/QLD regional networks.
 
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SCFlyer
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Re: Australian Aviation Thread - April 2020

Thu Apr 16, 2020 8:39 pm

https://www.afr.com/politics/federal/pr ... 415-p54jwd

Also states in a related article that one of the proposals from one of the "supposed" suitors is to close down Tiger, International and Regional. Basically concentrating on the trunk routes, although unclear if it was to take the LCC route or a Hybrid (ala Premium Economy from the Brett Godfrey 'Virgin Blue' era).

Either way if a investment firm does eventually takes over VA from the current "misfits" of airlines making up the current VA shareholding registry, the certain thing, IMO, is that VA in its current form will cease to exist. Basically creating a new airline just with the $5B debt from VA, and with the potential change in ownership, the airline name will likely change as well to save $$ on licensing fees to Branson.

Private equity investors circle over Virgin
Phillip Coorey and Jemima Whyte
Apr 16, 2020 – 10.30pm

At least two private consortia are circling to take over Virgin Australia, reducing pressure on the federal government to bail out the ailing airline.
 
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RyanairGuru
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Re: Australian Aviation Thread - April 2020

Thu Apr 16, 2020 10:32 pm

SCFlyer wrote:
https://www.afr.com/politics/federal/private-equity-investors-circle-over-virgin-20200415-p54jwd

Also states in a related article that one of the proposals from one of the "supposed" suitors is to close down Tiger, International and Regional. Basically concentrating on the trunk routes, although unclear if it was to take the LCC route or a Hybrid (ala Premium Economy from the Brett Godfrey 'Virgin Blue' era).

Either way if a investment firm does eventually takes over VA from the current "misfits" of airlines making up the current VA shareholding registry, the certain thing, IMO, is that VA in its current form will cease to exist. Basically creating a new airline just with the $5B debt from VA, and with the potential change in ownership, the airline name will likely change as well to save $$ on licensing fees to Branson.

Private equity investors circle over Virgin
Phillip Coorey and Jemima Whyte
Apr 16, 2020 – 10.30pm

At least two private consortia are circling to take over Virgin Australia, reducing pressure on the federal government to bail out the ailing airline.


On the one hand a JetBlue style hybrid could make sense. Single class with a free snack and non-alcoholic drinks on short haul, two class lie flat business class on transcon.

On the other hand such a business would continue to have the same issues that Virgin Blue had, and Virgin Australia never fully resolved: Qantas will continue to have a dominant position among corporate travel and high yield passengers, and Jetstar will continue to undercut them for price conscious traffic with a much lower cost base.
Worked Hard, Flew Right
 
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Chipmunk1973
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Re: Australian Aviation Thread - April 2020

Thu Apr 16, 2020 11:27 pm

RyanairGuru wrote:
On the one hand a JetBlue style hybrid could make sense. Single class with a free snack and non-alcoholic drinks on short haul, two class lie flat business class on transcon.

On the other hand such a business would continue to have the same issues that Virgin Blue had, and Virgin Australia never fully resolved: Qantas will continue to have a dominant position among corporate travel and high yield passengers, and Jetstar will continue to undercut them for price conscious traffic with a much lower cost base.


What about a virtual approach to that model? Using only a 737-800 fleet, have approx 160 seats as LCC economy, then 8-12 full service business. That could still entice a corporate traveller and potentially have Velocity still as a money maker.
Cheers,
C1973


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zkncj
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Re: Australian Aviation Thread - April 2020

Thu Apr 16, 2020 11:44 pm

dredgy wrote:
Qantas16 wrote:
dredgy wrote:

And the fact both are set up to operate a particular niche.


Very particular niches in Nauru Airlines case... neither airline has the knowledge, skills, fleet etc in place to launch a fully-fledged domestic airline. Though would be interesting to see passengers being able to fly a Nauru Airlines 737-300 between MEL and SYD!


I'd be down for that!
But yes, I don't think either of those airlines would be the existing carriers to capitalize on a Virginless market - Air New Zealand and Rex are much better situated to do that (not saying they would, just more realistic than Nauru and Alliance).


It would probably be the most far playing ground if VA goes under, would be NZ (Since QF already has JQ in the the New Zealand Domestic Market)

NZ could buy the TT or VARA at reduced rate, thinking they would likely go with VARA as resource contracts with the F100s with be away to keep some incoming following at steady rate while the market rebuilds.

The VARA crew would cheaper to employee than the VA 738 crew, which would be another bonus to VARA.

NZ is likely to have a couple of A320CEO's spare that could be transfered to VARA to get the operation back up an running.
 
tullamarine
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Re: Australian Aviation Thread - April 2020

Thu Apr 16, 2020 11:59 pm

zkncj wrote:
dredgy wrote:
Qantas16 wrote:

Very particular niches in Nauru Airlines case... neither airline has the knowledge, skills, fleet etc in place to launch a fully-fledged domestic airline. Though would be interesting to see passengers being able to fly a Nauru Airlines 737-300 between MEL and SYD!


I'd be down for that!
But yes, I don't think either of those airlines would be the existing carriers to capitalize on a Virginless market - Air New Zealand and Rex are much better situated to do that (not saying they would, just more realistic than Nauru and Alliance).


It would probably be the most far playing ground if VA goes under, would be NZ (Since QF already has JQ in the the New Zealand Domestic Market)

NZ could buy the TT or VARA at reduced rate, thinking they would likely go with VARA as resource contracts with the F100s with be away to keep some incoming following at steady rate while the market rebuilds.

The VARA crew would cheaper to employee than the VA 738 crew, which would be another bonus to VARA.

NZ is likely to have a couple of A320CEO's spare that could be transfered to VARA to get the operation back up an running.

I think we can safely say NZ will not enter the AU domestic market. It has neither the capital or the skill to operate such a business. It is basically a government run airline operating its domestic business in a near monopoly situation. Any attempt by it to operate in a competitive environment would be a financial bloodbath ending up in yet another government bail-out.
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ArtV
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Re: Australian Aviation Thread - April 2020

Fri Apr 17, 2020 1:10 am

I think that all the discussions/suggestions about other airlines buying VA (or buying any other airlines around the world) is pure fantasy being dreamed up in aviation enthusiasts minds. Airlines globally are bleeding cash and struggling to manage what they have. They are trying to survive as is, and the suggestions of expanding that pain and bleeding more cash now (whilst asking for government handouts to survive at the same time) is, as mentioned above, pure fantasy.

There may be commercial suitors for troubled airlines, but it won't be (for the foreseeable future) another airline.
 
tullamarine
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Re: Australian Aviation Thread - April 2020

Fri Apr 17, 2020 1:29 am

ArtV wrote:
I think that all the discussions/suggestions about other airlines buying VA (or buying any other airlines around the world) is pure fantasy being dreamed up in aviation enthusiasts minds. Airlines globally are bleeding cash and struggling to manage what they have. They are trying to survive as is, and the suggestions of expanding that pain and bleeding more cash now (whilst asking for government handouts to survive at the same time) is, as mentioned above, pure fantasy.

There may be commercial suitors for troubled airlines, but it won't be (for the foreseeable future) another airline.

Correct, all airlines are on life-support of some sort or other; they are not in acquisition mode, most are actively shrinking.

There are suitors for troubled airlines like VA, typically venture capitalists who have access to cash currently and can afford to buy distressed assets now and sell at a profit when the market recovers in 3-4 years. VA is attractive as it has a 35% share of a duopoly domestic market in a wealthy country. VCs will be keen to see how much debt is eliminated as part of a Scheme of Arrangement. Realistically, it is likely if VA goes through an administration process, up to half its existing debt load will be eliminated. These losses will be transferred principally to bond holders and aircraft lessors. Existing shareholders are wiped out completely in this situation.
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QF742
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Re: Australian Aviation Thread - April 2020

Fri Apr 17, 2020 1:29 am

There is absolutely no airline that could take on such a risk as buying VA now or in the foreseeable future, even with a govt bailout!

More likely VA will be bought out by a private equity firm for a nominal sum, restructured and, when economic conditions improve, be sold off at a handsome profit. That’s if it doesn’t fall into voluntary administration first.

My 2 cents on what VA should become: scrap all international, scrap all wide bodies, scrap TT, scrap business class and just return to domestic trunk and key leisure routes. I think an all economy layout with the first 3-5 rows with extra legroom for corporates and frequent flyers. I think it needs position itself between QF and JQ - essentially the old DJ!

I’m not going to comment on VARA because I don’t follow it closely enough and really not sure if it’s profitable or not?
 
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SCFlyer
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Re: Australian Aviation Thread - April 2020

Fri Apr 17, 2020 2:49 am

https://mobile.abc.net.au/news/2020-04- ... n/12157010

IMO, I'd say the chances of the private firms taking over VA is higher than the last ditch effort to grab a government loan.

Getting the 'successor' back to its DJ roots, regardless if they use either the TT or XR AOCs, while winding up the VA AOC in administration seems to look like the "cheaper option".

(Re)Joining or at least having Interline options with the Low-Cost "Value Alliance" members would also enable the 'VA successor' to re-connect into South East Asia through Scoot and Cebu Pacific for little CapEx.

Virgin Australia chief executive Paul Scurrah has called for "rivalry" to be put aside and for the Federal Government and the community to step in and back Virgin in the national interest.

On Friday morning, with private equity firms circling as part of a possible takeover of Virgin, there were last-ditch pleas from a roundtable with unions, academics, super industry representatives and politicians including former treasurer Wayne Swan, for the Government to help save the struggling airline.
 
NZ516
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Re: Australian Aviation Thread - April 2020

Fri Apr 17, 2020 3:56 am

tullamarine wrote:
zkncj wrote:
dredgy wrote:

I'd be down for that!
But yes, I don't think either of those airlines would be the existing carriers to capitalize on a Virginless market - Air New Zealand and Rex are much better situated to do that (not saying they would, just more realistic than Nauru and Alliance).


It would probably be the most far playing ground if VA goes under, would be NZ (Since QF already has JQ in the the New Zealand Domestic Market)

NZ could buy the TT or VARA at reduced rate, thinking they would likely go with VARA as resource contracts with the F100s with be away to keep some incoming following at steady rate while the market rebuilds.

The VARA crew would cheaper to employee than the VA 738 crew, which would be another bonus to VARA.

NZ is likely to have a couple of A320CEO's spare that could be transfered to VARA to get the operation back up an running.

I think we can safely say NZ will not enter the AU domestic market. It has neither the capital or the skill to operate such a business. It is basically a government run airline operating its domestic business in a near monopoly situation. Any attempt by it to operate in a competitive environment would be a financial bloodbath ending up in yet another government bail-out.


NZ is not a government run airline it is majority government owned but privately run. The government is hands off the day to day running of the airline which is left for the executive and at board level to do. It has competed successfully and profitably in a competitive environment for years already against Jetstar so saying it does not have the skills needed is false.
 
tullamarine
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Re: Australian Aviation Thread - April 2020

Fri Apr 17, 2020 4:04 am

NZ516 wrote:
tullamarine wrote:
zkncj wrote:

It would probably be the most far playing ground if VA goes under, would be NZ (Since QF already has JQ in the the New Zealand Domestic Market)

NZ could buy the TT or VARA at reduced rate, thinking they would likely go with VARA as resource contracts with the F100s with be away to keep some incoming following at steady rate while the market rebuilds.

The VARA crew would cheaper to employee than the VA 738 crew, which would be another bonus to VARA.

NZ is likely to have a couple of A320CEO's spare that could be transfered to VARA to get the operation back up an running.

I think we can safely say NZ will not enter the AU domestic market. It has neither the capital or the skill to operate such a business. It is basically a government run airline operating its domestic business in a near monopoly situation. Any attempt by it to operate in a competitive environment would be a financial bloodbath ending up in yet another government bail-out.


NZ is not a government run airline it is majority government owned but privately run. The government is hands off the day to day running of the airline which is left for the executive and at board level to do. It has competed successfully and profitably in a competitive environment for years already against Jetstar so saying it does not have the skills needed is false.

Competing against a few Dash 8s doesn't prepare NZ for proper domestic competition. NZ would fail spectacularly were it to try its luck in the AU domestic market.
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NZ516
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Re: Australian Aviation Thread - April 2020

Fri Apr 17, 2020 4:22 am

tullamarine wrote:
NZ516 wrote:
tullamarine wrote:
I think we can safely say NZ will not enter the AU domestic market. It has neither the capital or the skill to operate such a business. It is basically a government run airline operating its domestic business in a near monopoly situation. Any attempt by it to operate in a competitive environment would be a financial bloodbath ending up in yet another government bail-out.


NZ is not a government run airline it is majority government owned but privately run. The government is hands off the day to day running of the airline which is left for the executive and at board level to do. It has competed successfully and profitably in a competitive environment for years already against Jetstar so saying it does not have the skills needed is false.

Competing against a few Dash 8s doesn't prepare NZ for proper domestic competition. NZ would fail spectacularly were it to try its luck in the AU domestic market.


Its not just Dash 8s there was a lot more than that VA 737, JQ 320 QF 737, 787s just to name a few on the Tasman. Anyhow they are more focused on running their own business.
 
getluv
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Re: Australian Aviation Thread - April 2020

Fri Apr 17, 2020 4:26 am

NZ516 wrote:
tullamarine wrote:
zkncj wrote:

It would probably be the most far playing ground if VA goes under, would be NZ (Since QF already has JQ in the the New Zealand Domestic Market)

NZ could buy the TT or VARA at reduced rate, thinking they would likely go with VARA as resource contracts with the F100s with be away to keep some incoming following at steady rate while the market rebuilds.

The VARA crew would cheaper to employee than the VA 738 crew, which would be another bonus to VARA.

NZ is likely to have a couple of A320CEO's spare that could be transfered to VARA to get the operation back up an running.

I think we can safely say NZ will not enter the AU domestic market. It has neither the capital or the skill to operate such a business. It is basically a government run airline operating its domestic business in a near monopoly situation. Any attempt by it to operate in a competitive environment would be a financial bloodbath ending up in yet another government bail-out.


NZ is not a government run airline it is majority government owned but privately run. The government is hands off the day to day running of the airline which is left for the executive and at board level to do. It has competed successfully and profitably in a competitive environment for years already against Jetstar so saying it does not have the skills needed is false.


NZ business strategy was to be a transit point. It could consolidate flights from many Australian ports to support daily flights to arrange of NA and Pacific Islands. Unfortunately, many people will not be travelling Internationally until well after there is a vaccine.

NZ's domestic market is also not significant.to sustain long term growth.

It will be a very tough few years ahead for NZ, more so than for QF who does have a significant profitably domestic operation.
I'm that bad type.
 
getluv
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Re: Australian Aviation Thread - April 2020

Fri Apr 17, 2020 4:31 am

SCFlyer wrote:
https://mobile.abc.net.au/news/2020-04-17/virgin-australia-coronavirus-unions-voluntary-administration/12157010

IMO, I'd say the chances of the private firms taking over VA is higher than the last ditch effort to grab a government loan.

Getting the 'successor' back to its DJ roots, regardless if they use either the TT or XR AOCs, while winding up the VA AOC in administration seems to look like the "cheaper option".

(Re)Joining or at least having Interline options with the Low-Cost "Value Alliance" members would also enable the 'VA successor' to re-connect into South East Asia through Scoot and Cebu Pacific for little CapEx.

Virgin Australia chief executive Paul Scurrah has called for "rivalry" to be put aside and for the Federal Government and the community to step in and back Virgin in the national interest.

On Friday morning, with private equity firms circling as part of a possible takeover of Virgin, there were last-ditch pleas from a roundtable with unions, academics, super industry representatives and politicians including former treasurer Wayne Swan, for the Government to help save the struggling airline.


That seems to me a very desperate, combined with a pause in trading, signs VAH is pretty much dead.

Not a big fan of Scomo, but I have to say I'm impressed by how they have wedged the industry super funds. They actually have the funds to do this. If they won't want to wear the cost why should all Australian tax payers.
I'm that bad type.
 
zkncj
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Re: Australian Aviation Thread - April 2020

Fri Apr 17, 2020 4:49 am

Looking at VARA - as an VA MK II option isn't to bad in the current climate, giving that it will take an year or two for demand to rebuild to an level we are more used too.

Look at VARA fleet - its currently made up of:
6x A320
13x F100

While the F100s are old, fuel is currently cheap (and likely to be for the next little whole as demand is down) and with demand being down for seats, being smaller than the 737/A320 would have some short-term bonuses. Then the new owners will have an chance to review what could be purchased to replace them e.g. A320s etc.

6x A320's could cover more than enough with the basics for routes, during an time that markets are down.

Example
A320 #1: SYD-BNE 5x Daily Returns // BNE-MEL 1x Daily Returns
A320 #2: SYD-BNE 5x Daily Returns // BNE-MEL 1x Daily Returns
A320 #3: SYD-MEL 6x Daily Returns
A320 #4: SYD-MEL 6x Daily Returns
A320 #6: SYD-PER 1x Daily Return // MEL-PER 1x Daily Return
A320 #6: Operational Spare

With the F100s
F100 #1-7: Operational Spares // Mining Contracts
F100 #8: OOL-SYD 4x Daily Returns // OOL-MEL 1x Daily Return
F100 #9: OOL-SYD 4x Daily Returns // OOL-MEL 1x Daily Return
F100 #10: SYD-ADL 2x Daily Returns // SYD-HBA 2x Daily Returns
F100 #11: SYD-CBR 2x Daily Returns // CBR-MEL 2x Daily Returns
F100 #12:BNE-CNS 2x Daily Returns // BNE-NTL 1x Daily Returns
F100 #12:MEL-ADL 2x Daily Returns // ADL-PER 1x Daily Returns
 
81819
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Re: Australian Aviation Thread - April 2020

Fri Apr 17, 2020 5:25 am

QF742 wrote:
My 2 cents on what VA should become: scrap all international, scrap all wide bodies, scrap TT, scrap business class and just return to domestic trunk and key leisure routes. I think an all economy layout with the first 3-5 rows with extra legroom for corporates and frequent flyers. I think it needs position itself between QF and JQ - essentially the old DJ!


There would be a lot of work to get there.

Just some quick numbers.

Excluding operating leases on aircraft, VA has approximately $3 billion in debt. With approximately 130 aircraft and an interest rate of 5%, each VA aircraft has to produce incomes of approximately $1.15 million each year just to service the interest expense.

If we assume an average debt term of 8 years, each aircraft has to produce free cash flows of $3.9 million to service the debt (interest and finance).

To put this into perspective, if we assume each aircraft flies 7 schedules per day, for 6 days a week and 48 weeks of a year with an 85% load factor. each passenger will need to pay $9.50 just to service the debt.

If we consider a post Coronavirus Virgin Australia could be 30% smaller, the ticket price component to service the debt goes up to $13.50.

If we throw into the mix a $1.4 billion dollar loan, but paid over 5 years we than have to add another $7.50 to the sale price of each ticket, meaning the airline will need to charge each passenger $21.00 per ticket to service debt. This equates to nearly $800,000,000.00 per year.

If we go back to the DJ days, they were having problems buying new seat covers for their 737's. Near the end, their terminals were a little on the shabby side.

If we do assume a VAm2 as an LCC, they could loose a ticket premium of 20%. If we assume an average ticket price of $150, they could loose an additional $30 per ticket in revenues.

If we consider 30% of VA's customers are business travelers and assume 50% of those customers could jump ship and fly with QANTAS, VA would be looking down the barrel of being an airline 40% smaller than what it once was.

For this to be viable, VA would need to be restructured. When we consider restructuring = $$$$$, there would be more costs that would need to be absorbed into each ticket sold.

As such, administration is probably the most likely avenue for Virgin Australia. I can't see how VA could be restructured any other way.
 
ArtV
Posts: 150
Joined: Sun Jul 03, 2016 2:29 pm

Re: Australian Aviation Thread - April 2020

Fri Apr 17, 2020 5:52 am

zkncj wrote:
Looking at VARA - as an VA MK II option isn't to bad in the current climate, giving that it will take an year or two for demand to rebuild to an level we are more used too.

Look at VARA fleet - its currently made up of:
6x A320
13x F100

While the F100s are old, fuel is currently cheap (and likely to be for the next little whole as demand is down) and with demand being down for seats, being smaller than the 737/A320 would have some short-term bonuses. Then the new owners will have an chance to review what could be purchased to replace them e.g. A320s etc.

6x A320's could cover more than enough with the basics for routes, during an time that markets are down.

Example
A320 #1: SYD-BNE 5x Daily Returns // BNE-MEL 1x Daily Returns
A320 #2: SYD-BNE 5x Daily Returns // BNE-MEL 1x Daily Returns
A320 #3: SYD-MEL 6x Daily Returns
A320 #4: SYD-MEL 6x Daily Returns
A320 #6: SYD-PER 1x Daily Return // MEL-PER 1x Daily Return
A320 #6: Operational Spare

With the F100s
F100 #1-7: Operational Spares // Mining Contracts
F100 #8: OOL-SYD 4x Daily Returns // OOL-MEL 1x Daily Return
F100 #9: OOL-SYD 4x Daily Returns // OOL-MEL 1x Daily Return
F100 #10: SYD-ADL 2x Daily Returns // SYD-HBA 2x Daily Returns
F100 #11: SYD-CBR 2x Daily Returns // CBR-MEL 2x Daily Returns
F100 #12:BNE-CNS 2x Daily Returns // BNE-NTL 1x Daily Returns
F100 #12:MEL-ADL 2x Daily Returns // ADL-PER 1x Daily Returns


Aren't those aircraft (mostly) used for and necessary for as part of the FIFO mining contracts? Who/what do you suggest will service the mining companies and FIFO needs?
 
ArtV
Posts: 150
Joined: Sun Jul 03, 2016 2:29 pm

Re: Australian Aviation Thread - April 2020

Fri Apr 17, 2020 5:53 am

travelhound wrote:
QF742 wrote:
My 2 cents on what VA should become: scrap all international, scrap all wide bodies, scrap TT, scrap business class and just return to domestic trunk and key leisure routes. I think an all economy layout with the first 3-5 rows with extra legroom for corporates and frequent flyers. I think it needs position itself between QF and JQ - essentially the old DJ!


There would be a lot of work to get there.

Just some quick numbers.

Excluding operating leases on aircraft, VA has approximately $3 billion in debt. With approximately 130 aircraft and an interest rate of 5%, each VA aircraft has to produce incomes of approximately $1.15 million each year just to service the interest expense.

If we assume an average debt term of 8 years, each aircraft has to produce free cash flows of $3.9 million to service the debt (interest and finance).

To put this into perspective, if we assume each aircraft flies 7 schedules per day, for 6 days a week and 48 weeks of a year with an 85% load factor. each passenger will need to pay $9.50 just to service the debt.

If we consider a post Coronavirus Virgin Australia could be 30% smaller, the ticket price component to service the debt goes up to $13.50.

If we throw into the mix a $1.4 billion dollar loan, but paid over 5 years we than have to add another $7.50 to the sale price of each ticket, meaning the airline will need to charge each passenger $21.00 per ticket to service debt. This equates to nearly $800,000,000.00 per year.

If we go back to the DJ days, they were having problems buying new seat covers for their 737's. Near the end, their terminals were a little on the shabby side.

If we do assume a VAm2 as an LCC, they could loose a ticket premium of 20%. If we assume an average ticket price of $150, they could loose an additional $30 per ticket in revenues.

If we consider 30% of VA's customers are business travelers and assume 50% of those customers could jump ship and fly with QANTAS, VA would be looking down the barrel of being an airline 40% smaller than what it once was.

For this to be viable, VA would need to be restructured. When we consider restructuring = $$$$$, there would be more costs that would need to be absorbed into each ticket sold.

As such, administration is probably the most likely avenue for Virgin Australia. I can't see how VA could be restructured any other way.


Although interesting, the returns ignore the ancillary revenues that LCC's use to survive - freight, BoB, excess baggage, booking change fees, frequent flyer programme, ..... it is much more complicated than that, and does result in a much lower base seat fare being required.
 
zkncj
Posts: 3892
Joined: Wed Nov 09, 2005 4:57 pm

Re: Australian Aviation Thread - April 2020

Fri Apr 17, 2020 6:12 am

ArtV wrote:
zkncj wrote:
Looking at VARA - as an VA MK II option isn't to bad in the current climate, giving that it will take an year or two for demand to rebuild to an level we are more used too.

Look at VARA fleet - its currently made up of:
6x A320
13x F100

While the F100s are old, fuel is currently cheap (and likely to be for the next little whole as demand is down) and with demand being down for seats, being smaller than the 737/A320 would have some short-term bonuses. Then the new owners will have an chance to review what could be purchased to replace them e.g. A320s etc.

6x A320's could cover more than enough with the basics for routes, during an time that markets are down.

Example
A320 #1: SYD-BNE 5x Daily Returns // BNE-MEL 1x Daily Returns
A320 #2: SYD-BNE 5x Daily Returns // BNE-MEL 1x Daily Returns
A320 #3: SYD-MEL 6x Daily Returns
A320 #4: SYD-MEL 6x Daily Returns
A320 #6: SYD-PER 1x Daily Return // MEL-PER 1x Daily Return
A320 #6: Operational Spare

With the F100s
F100 #1-7: Operational Spares // Mining Contracts
F100 #8: OOL-SYD 4x Daily Returns // OOL-MEL 1x Daily Return
F100 #9: OOL-SYD 4x Daily Returns // OOL-MEL 1x Daily Return
F100 #10: SYD-ADL 2x Daily Returns // SYD-HBA 2x Daily Returns
F100 #11: SYD-CBR 2x Daily Returns // CBR-MEL 2x Daily Returns
F100 #12:BNE-CNS 2x Daily Returns // BNE-NTL 1x Daily Returns
F100 #12:MEL-ADL 2x Daily Returns // ADL-PER 1x Daily Returns


Aren't those aircraft (mostly) used for and necessary for as part of the FIFO mining contracts? Who/what do you suggest will service the mining companies and FIFO needs?


If VA goes into administration, all of the current mining contracts will be going into void. The new VA MK2 would then need to re-tender for these contracts, which there is no guarantee the new VA would get them. Qantas and Alliance both would likely be chasing the mining business to.

Id expect that Qantas would be bidding pretty low on any contacts that came up, after all they want the renvuene just as much right now.

Also I would expect that mining demand will go down, spending will be down globally over the next couple of years. Hence would reduce the requirements for natural resources.
 
tullamarine
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Re: Australian Aviation Thread - April 2020

Fri Apr 17, 2020 6:43 am

If VA goes into administration, all of the current mining contracts will be going into void.

Just because it is a termination event, doesn't mean the contract will be terminated. The mining company could quite happily continue with the existing contrct.

Also I would expect that mining demand will go down, spending will be down globally over the next couple of years. Hence would reduce the requirements for natural resources.

BHP are reporting record demand out of China. There is no indication of a major impending downturn in the mining industry. Governments will be investing massively in infrastructure on the other side of the crisis to reinvigorate their economies. Infrastructure spending is great for mining.

Assuming a VA exiting administration would be about 30% smaller than current; that remains a fleet of 50 aircraft. Most of this would be the existing owned 737 fleet. The remainder would be new leases probably on some of the existing leased 737 fleet. Lessors are about to have a huge number of unwanted planes land back on their doorstep; they will be keen to place as much stock as possible. The MAX orders will lapse though that is probably good since Boeing are struggling to recertify the plane.

The now quite aged F100s are not a candidate for high frequency east coast services. They are cheap to operate but would unlikely to be able to achieve the despatch reliability required for scheduled services.

What will be interesting will be how the airports react to reduced demand from VA. They are likely to end up with a number of unwanted gates. For various reasons QF probably either wouldn't want or wouldn't be allowed to access the abandoned gates. More than likely these gates will remain empty until demand picks up. On the international side, the crisis will mean the airports can throttle back on expansion plans for their international terminals. It will 5 or 6 years before demand approaches 2019 levels so the airport operators, financially stung by the crisis themselves, will probably defer most of what they had envisaged in their last 5 year plans.
717, 721/2, 732/3/4/5/7/8/9, 742/3/4, 752/3, 762/3, 772/E/W, 788/9, 300,310, 319,320/1, 332/3, 359, 388, DC9, DC10, F28, F100, 142,143, E75/90, CR2, D82/3/4, SF3, ATR
 
getluv
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Re: Australian Aviation Thread - April 2020

Fri Apr 17, 2020 6:48 am

QF742 wrote:
My 2 cents on what VA should become: scrap all international, scrap all wide bodies, scrap TT, scrap business class and just return to domestic trunk and key leisure routes. I think an all economy layout with the first 3-5 rows with extra legroom for corporates and frequent flyers. I think it needs position itself between QF and JQ - essentially the old DJ!

I’m not going to comment on VARA because I don’t follow it closely enough and really not sure if it’s profitable or not?


The old DJ was more like JQ, hence why QF threw money at JQ to chase leisure passengers.

DJ was also starting to become less profitable before it became VA.

I'm also not sure the "middle" is that profitable either.
I'm that bad type.
 
tullamarine
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Re: Australian Aviation Thread - April 2020

Fri Apr 17, 2020 7:31 am

getluv wrote:
QF742 wrote:
My 2 cents on what VA should become: scrap all international, scrap all wide bodies, scrap TT, scrap business class and just return to domestic trunk and key leisure routes. I think an all economy layout with the first 3-5 rows with extra legroom for corporates and frequent flyers. I think it needs position itself between QF and JQ - essentially the old DJ!

I’m not going to comment on VARA because I don’t follow it closely enough and really not sure if it’s profitable or not?


The old DJ was more like JQ, hence why QF threw money at JQ to chase leisure passengers.

DJ was also starting to become less profitable before it became VA.

I'm also not sure the "middle" is that profitable either.

Jetstar will be a major issue for QF in the short to medium term. Leisure travel will be slow to return. Short of VA disappearing completely, probably unlikely, it is possible QF will have to shrink its low-cost business. It has contracted new aircraft due to arrive from this year. I wonder if JQ will seek a deferral from Airbus. I doubt the 787s will be back in Jetstar colours though unless mainline take them, they may have to as the widebody market is going to be dire for the next few years.
717, 721/2, 732/3/4/5/7/8/9, 742/3/4, 752/3, 762/3, 772/E/W, 788/9, 300,310, 319,320/1, 332/3, 359, 388, DC9, DC10, F28, F100, 142,143, E75/90, CR2, D82/3/4, SF3, ATR
 
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CraigAnderson
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Re: Australian Aviation Thread - April 2020

Fri Apr 17, 2020 7:47 am

Private investors circle Virgin Australia for take-over
A leaner and more competitive Virgin Australia could emerge in the wake of a dramatic 'take-over and turn-around' manoeuvre.


https://www.executivetraveller.com/news ... ent-122488

There's an interesting part of this article about how a restructured and relaunched Virgin Australia might look.

It’s been suggested this could take the form of a domestic-only airline pared back to fewer planes and routes – but also fewer staff – while adopting a ‘hybrid’ mid-market model to compete against Qantas’ full-service offering and Jetstar’s hold on the low-cost segment.


I really hope this is the way it shakes out because I think this is Virgin's best chance of survival.

Firstly, international is a huge drain on Virgin, it's an expensive operation and on the AU-LAX routes it competes agains QF, AA and UA, plus its own partner DL.

Maybe Tasman could remain in place but with limited flights, no local crew base, just fly SYD-AKL and do a turn and come back. Or maybe take advantage of Borghetti and Luxon both being gone and get that VA-NZ partnership back. Forget the Pacific flying except maybe DPS but you are still going up against both QF and JQ.

I think a domestic-only Virgin with less planes would make more sense. A shame if the A330s went because Virgin would be less competitive against Qantas for east-west business class though, and this is where the 737MAX and its rumoured flatbed business class would have helped square things up.

Secondly, Virgin Blue was an LCC so it went up against Jetstar but the leisure market can really fluctuate and right now the LCC market in particular might be the last to recover, although domestic travel within Australia will return well ahead of international travel. One of Borghetti's justifications for moving from Virgin Blue's LCC model to Virgin Australia was that business travel was more reliable. Now this may just have been Borghetti trying to justify his grand plan but I can see some sense in what he says. I just don't think that there's room for two full-service airlines in Australia and especially not now.

So for Virgin Australia to be positioned in the middle of the market between JQ and QF, and really just focus on being the best domestic airline it can be under that model, would be its best chance to finally get ahead and be itself, not an old LCC or\Borghetti's 'Qantas Lite'.
 
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CraigAnderson
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Re: Australian Aviation Thread - April 2020

Fri Apr 17, 2020 7:52 am

tullamarine wrote:
Jetstar will be a major issue for QF in the short to medium term. Leisure travel will be slow to return. Short of VA disappearing completely, probably unlikely, it is possible QF will have to shrink its low-cost business. It has contracted new aircraft due to arrive from this year. I wonder if JQ will seek a deferral from Airbus. I doubt the 787s will be back in Jetstar colours though unless mainline take them, they may have to as the widebody market is going to be dire for the next few years.


I wouldn't be surprised to see JQ push back a bit on the A321LRs, they were supposed to be able to do DPS as well as local and let JQ free up some 787s for deployment elsewhere. It all depends on how quickly international travel resumes and also how confident people feel about going to places like Bali if it doesn't have COVID19 under control. Only two were due for delivery by Christmas 2020 and the rest through to 2022, so pushing the first few back into 2021 would be very feasible.
 
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a36001
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Re: Australian Aviation Thread - April 2020

Fri Apr 17, 2020 7:56 am

NZ516 wrote:
tullamarine wrote:
NZ516 wrote:

NZ is not a government run airline it is majority government owned but privately run. The government is hands off the day to day running of the airline which is left for the executive and at board level to do. It has competed successfully and profitably in a competitive environment for years already against Jetstar so saying it does not have the skills needed is false.

Competing against a few Dash 8s doesn't prepare NZ for proper domestic competition. NZ would fail spectacularly were it to try its luck in the AU domestic market.


Its not just Dash 8s there was a lot more than that VA 737, JQ 320 QF 737, 787s just to name a few on the Tasman. Anyhow they are more focused on running their own business.


Great.... good for them they are doing a fine job! Let them continue to do that and keep out of the Australian domestic airline market.They have had two shots at it and both attempts didn't end all that well...one was what could only be described as a disaster!
 
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CraigAnderson
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Re: Australian Aviation Thread - April 2020

Fri Apr 17, 2020 7:56 am

https://www.reuters.com/article/us-heal ... SKCN21X3JF

According to this article, Air New Zealand "is licensed to operate in the Australian domestic market" but says it has no plans to swoop in and replace Virgin as a domestic airline.

I think NZ has some of the best product sets around with its 'seats to suit' approach and this is definitely something Virgin should look at mimicking in future, starting with an Economy Basic fare of just a seat and a cabin bag, no meal or snacks.
 
QF742
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Re: Australian Aviation Thread - April 2020

Fri Apr 17, 2020 8:03 am

getluv wrote:
QF742 wrote:
My 2 cents on what VA should become: scrap all international, scrap all wide bodies, scrap TT, scrap business class and just return to domestic trunk and key leisure routes. I think an all economy layout with the first 3-5 rows with extra legroom for corporates and frequent flyers. I think it needs position itself between QF and JQ - essentially the old DJ!

I’m not going to comment on VARA because I don’t follow it closely enough and really not sure if it’s profitable or not?


The old DJ was more like JQ, hence why QF threw money at JQ to chase leisure passengers.

DJ was also starting to become less profitable before it became VA.

I'm also not sure the "middle" is that profitable either.


The DJ of the early 2000s that I remember was not so much like JQ now - it had a much more edgy vibe with a real focus on great service. While leisure will take some time to resume, it will still be there. A new VA can also appeal to many corporates by being cheaper than QF and attracting businesses that will be reluctant to spend a lot on travel. VA have struggled to differentiate its brand post DJ. To be successful I think they need to carve their niche and have an actual value proposition (rather than just being the Qantas alternative).
 
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SCFlyer
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Re: Australian Aviation Thread - April 2020

Fri Apr 17, 2020 8:41 am

[twoid][/twoid]
CraigAnderson wrote:
https://www.reuters.com/article/us-health-coronavirus-virgin-australia/virgin-australia-suspends-trading-as-talks-over-rescue-package-remain-incomplete-idUSKCN21X3JF

According to this article, Air New Zealand "is licensed to operate in the Australian domestic market" but says it has no plans to swoop in and replace Virgin as a domestic airline.

I think NZ has some of the best product sets around with its 'seats to suit' approach and this is definitely something Virgin should look at mimicking in future, starting with an Economy Basic fare of just a seat and a cabin bag, no meal or snacks.


NZ's model was later adopted by Scoot. Proved moderately successful for them.

On another note, if the AFR paywall articles are to go by, it suggest one of the firms interested in VA could convert the 'successor to' VA back to its LCC domestic only roots, while dropping Regional, Tiger and International entirely.

Either way, whoever the purchaser is and whether they go 'full LCC'or hybrid, The VA successor should look at (re)joining the Value Alliance, and position themselves for the Asian traffic once things pick up again post COVID-19.

There will likely be limited FSC partnerships once the SQ/EY/et al influence has either been reduced or (forcibly) removed through voluntary administration.
The 'remnants' of the then SQ management at the time should just bite their pride on the Australian Dom market, concentrate on their Indian JV with Vistara (which was making more money before COVID-19), and just renew their basic QF interline, whilst also sorting out a basic interline with the 'VA successor' regardless if its a LCC or a hybrid.
 
factsonly
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Re: Australian Aviation Thread - April 2020

Fri Apr 17, 2020 8:46 am

Apr 17, 2020: On its way to SYD:

- KLM827 NRT 10.08 - SYD 20.54 B77W PH-BVO

https://www.flightradar24.com/KLM827/245e9cfc
 
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CraigAnderson
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Re: Australian Aviation Thread - April 2020

Fri Apr 17, 2020 8:59 am

SCFlyer wrote:
On another note, if the AFR paywall articles are to go by, it suggest one of the firms interested in VA could convert the 'successor to' VA back to its LCC domestic only roots, while dropping Regional, Tiger and International entirely.
Either way, whoever the purchaser is and whether they go 'full LCC'or hybrid, The VA successor should look at (re)joining the Value Alliance, and position themselves for the Asian traffic once things pick up again post COVID-19.
There will likely be limited FSC partnerships once the SQ/EY/et al influence has either been reduced or (forcibly) removed through voluntary administration.
The 'remnants' of the then SQ management at the time should just bite their pride on the Australian Dom market, concentrate on their Indian JV with Vistara (which was making more money before COVID-19), and just renew their basic QF interline, whilst also sorting out a basic interline with the 'VA successor' regardless if its a LCC or a hybrid.


I wouldn't like to see Virgin Australia go fully LCC but ditching Tiger? Yes, has to be top of the list. I think this was one of Borghetti's biggest vanity plays and worst indulgences, the way he rushed in to have his own JQ. Ditching international? Yes, domestic-only or domestic plus a little short-haul like NZ.

Regional would be interesting, don't know if they could sell it off in parts to resource companies so they could own their own mini airline? But this is why I don't want the government to have money in Virgin Australia and then have equity when Virgin can't repay, because they'd try to drop unprofitable or barely profitable regional routes but have the local MPs screaming "No, you can't do that, my voters want you to stay!".

I think Virgin Australia could also, but only if it remains hybrid and not LCC, look at joining Star Alliance, as long of course as the overhead isn't too high in compatible systems and annual fees. Being a Star Alliance member here would carry a lot of weight with frequent flyers who do a lot of international travel and help sway those people from QF.
 
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CraigAnderson
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Re: Australian Aviation Thread - April 2020

Fri Apr 17, 2020 9:02 am

Cathay Pacific making plenty of cuts, closing US crew bases not relevant here but this is, "129 Australian pilots (Airbus) will be furloughed"

https://twitter.com/JournoDannyAero/sta ... 3205733378

More at https://www.reuters.com/article/us-heal ... SKBN21Z0H5

The airline said it was standing down 129 Airbus SE (AIR.PA) pilots in Australia from May 1 until around June 30, although the end date could change. “Australia-based pilots are encouraged to bring forward their leave or apply for Cathay Pacific’s reduced salary scheme,” it added.


Has Qantas made any announcements about its pilot training academies? I realise those are very much about 'forward planning' and we all hope that by the time the pilots graduate things will be back to normal or close to that, but in the short term and probably medium term there's surely got to be a lot less demand for new pilots owing to reduced number of flights.
 
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SCFlyer
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Re: Australian Aviation Thread - April 2020

Fri Apr 17, 2020 9:15 am

CraigAnderson wrote:
SCFlyer wrote:
On another note, if the AFR paywall articles are to go by, it suggest one of the firms interested in VA could convert the 'successor to' VA back to its LCC domestic only roots, while dropping Regional, Tiger and International entirely.
Either way, whoever the purchaser is and whether they go 'full LCC'or hybrid, The VA successor should look at (re)joining the Value Alliance, and position themselves for the Asian traffic once things pick up again post COVID-19.
There will likely be limited FSC partnerships once the SQ/EY/et al influence has either been reduced or (forcibly) removed through voluntary administration.
The 'remnants' of the then SQ management at the time should just bite their pride on the Australian Dom market, concentrate on their Indian JV with Vistara (which was making more money before COVID-19), and just renew their basic QF interline, whilst also sorting out a basic interline with the 'VA successor' regardless if its a LCC or a hybrid.


I wouldn't like to see Virgin Australia go fully LCC but ditching Tiger? Yes, has to be top of the list. I think this was one of Borghetti's biggest vanity plays and worst indulgences, the way he rushed in to have his own JQ. Ditching international? Yes, domestic-only or domestic plus a little short-haul like NZ.

Regional would be interesting, don't know if they could sell it off in parts to resource companies so they could own their own mini airline? But this is why I don't want the government to have money in Virgin Australia and then have equity when Virgin can't repay, because they'd try to drop unprofitable or barely profitable regional routes but have the local MPs screaming "No, you can't do that, my voters want you to stay!".

I think Virgin Australia could also, but only if it remains hybrid and not LCC, look at joining Star Alliance, as long of course as the overhead isn't too high in compatible systems and annual fees. Being a Star Alliance member here would carry a lot of weight with frequent flyers who do a lot of international travel and help sway those people from QF.


As the successor may not actually be called "Virgin Australia", and the financial resources of the succesor will not likely have the deep pockets of the middle east owners. Any "full service" alliance, let alone *A will likely be out of the question for the foreseeable future.

The new "VA mk II" airline (if it took the Hybrid model) at most would be considered for "Star Alliance Connecting Partners" with only limited benefits to the carrier and its sponsors, like Thai Smile and Juneyao was. Being a full member of any alliance would be a lot more costly and will likely require a proper 'domestic' Business Class on 'certain routes', something the proposed VAH successor will not likely to be taking.

However, the VAH successor will have limited FSC partners to even consider Star Alliance Connecting Partners for the most part. SQ will not likely be around to "control" or have a stake in the "VA mk II" entity, let alone codeshare on it. At most SQ may sort an interline with "VA mk II"
 
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Velocity7
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Re: Australian Aviation Thread - April 2020

Fri Apr 17, 2020 9:58 am

QF742 wrote:
The DJ of the early 2000s that I remember was not so much like JQ now - it had a much more edgy vibe with a real focus on great service. While leisure will take some time to resume, it will still be there. A new VA can also appeal to many corporates by being cheaper than QF and attracting businesses that will be reluctant to spend a lot on travel. VA have struggled to differentiate its brand post DJ. To be successful I think they need to carve their niche and have an actual value proposition (rather than just being the Qantas alternative).


You make a valid point. When DJ went 'up market' to become VA, IMO they absolutely had the service elements nailed, the long haul soft and hard product nailed and the wide body transcon nailed but what they have still been unable to do is have effective and simple to understand alliances with other carriers, antiquated and frustrating digital platforms that have limited integration and a food offering in domestic Y that feels very LCC. These are all the things that people need/want/expect in a FSC and as regular corporate travellers, both domestically and internationally. I guess many may feel they didn't get what was on the tin?
I feel they are 'half pregnant' where they are now and as I have said before on this forum, I hope they can decide what they want to be when they grow up.

I like VA and truly hope they can emerge stronger with a clear value proposition. Is something aligned to the JetBlue model relevant/workable?
 
Captdasbomb
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Re: Australian Aviation Thread - April 2020

Fri Apr 17, 2020 11:50 am

CraigAnderson wrote:
Cathay Pacific making plenty of cuts, closing US crew bases not relevant here but this is, "129 Australian pilots (Airbus) will be furloughed"

https://twitter.com/JournoDannyAero/sta ... 3205733378

More at https://www.reuters.com/article/us-heal ... SKBN21Z0H5

The airline said it was standing down 129 Airbus SE (AIR.PA) pilots in Australia from May 1 until around June 30, although the end date could change. “Australia-based pilots are encouraged to bring forward their leave or apply for Cathay Pacific’s reduced salary scheme,” it added.


Has Qantas made any announcements about its pilot training academies? I realise those are very much about 'forward planning' and we all hope that by the time the pilots graduate things will be back to normal or close to that, but in the short term and probably medium term there's surely got to be a lot less demand for new pilots owing to reduced number of flights.


They will have an abundance of cheaper 2nd Officers to use on long haul flights
 
IndianicWorld
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Re: Australian Aviation Thread - April 2020

Fri Apr 17, 2020 12:20 pm

I tend to think many have short memories really about DJ/VA.

Back when it made the decision to move to its VA full service model, it was lauded as a great idea as the hybrid space that DJ had seemed to gravitate to was seen as a confusing brand position.

There were numerous comments at the time suggesting there was no value in what DJ were offering, with no clear understanding of what they were aiming for. This gave QF and JQ a chance to squeeze them from both sides, leaving them with a very limited corporate travel appeal and a leisure market that was moving away to JQ. It was t a move they made lightly.

The purchase of TT also was seen as a good move by most at the time as it gave VA a chance to focus on its key market position goals, but somehow They were unable to find a balance that worked.
 
sierrakilo44
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Re: Australian Aviation Thread - April 2020

Fri Apr 17, 2020 12:30 pm

CraigAnderson wrote:

Has Qantas made any announcements about its pilot training academies? I realise those are very much about 'forward planning' and we all hope that by the time the pilots graduate things will be back to normal or close to that, but in the short term and probably medium term there's surely got to be a lot less demand for new pilots owing to reduced number of flights.


No announcement, but the first course wouldn’t be due to graduate until the end of this year, the second would graduate around this time next year. I believe about 34 in total. Assuming most will pass they can be used in several ways. The Q400, 737, 787 and A330 would be back to their existing capacity at that stage. Q400 FO is probably the likely destination for academy graduates. I don’t think the 747 or 380 will be back flying at their existing capacity by that stage so their excess pilots would have first dibs on any group job, but I don’t think they’d be likely to take a Q400 First Officer job. Or the Academy graduates are used as flying instructors at the academy. Takes several months to do the instructor training and then they instruct the next course of students at the academy. Those students don’t graduate until mid 2022, and I’d assume Coronavirus won’t be issue by then. Another destination for academy graduates could be Second Officer 787/A350 if it arrives by then. Just a guess, but everyone’s guessing at the moment.

I’m fairly sure that there’s no recruitment for new trainees for the academy at the moment, but that’s probably due to most administration staff who would be doing the recruitment taking leave at the moment.
 
81819
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Re: Australian Aviation Thread - April 2020

Fri Apr 17, 2020 12:48 pm

IndianicWorld wrote:
I tend to think many have short memories really about DJ/VA.

Back when it made the decision to move to its VA full service model, it was lauded as a great idea as the hybrid space that DJ had seemed to gravitate to was seen as a confusing brand position.

There were numerous comments at the time suggesting there was no value in what DJ were offering, with no clear understanding of what they were aiming for. This gave QF and JQ a chance to squeeze them from both sides, leaving them with a very limited corporate travel appeal and a leisure market that was moving away to JQ. It was t a move they made lightly.

The purchase of TT also was seen as a good move by most at the time as it gave VA a chance to focus on its key market position goals, but somehow They were unable to find a balance that worked.


If we can remember back 12-14 years Paul Little and Toll (majority shareholder of DJ at the time) had no strategic plan. If I remember correctly there were not buyers for their share of the company and as such they simply gave their shareholding in DJ to their shareholders by issuing them with DJ shares.

I think the VA strategy was the correct move, I just think starting a regional airline and expanding their international operations at the same time was a bit too much for the airline to successfully undertake.

If we look at VARA and the subsequent purchase of E-Jests and ATR's (36 aircraft in total), VA essentially started a whole new airline to only shut it down 6 years latter. International has never been a success story.

If we assume International has lost $600 million over ten years and VARA has lost close to $700 million, there alone are substantial amounts shareholder value.

If we consider the 777's and A330's probably represent close to $400-500 million of VA's current debt, again we would have a very different company than what we have now.

If we consider $2 billion in losses and subsequent debt has a servicing cost in the range of $100 million per year, five years represents $500 million.

As such, if VA had paced themselves they would probably be $2-2.5 billion better off today. They would actually be in pretty good shape.
 
getluv
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Re: Australian Aviation Thread - April 2020

Fri Apr 17, 2020 2:10 pm

CraigAnderson wrote:
SCFlyer wrote:
On another note, if the AFR paywall articles are to go by, it suggest one of the firms interested in VA could convert the 'successor to' VA back to its LCC domestic only roots, while dropping Regional, Tiger and International entirely.
Either way, whoever the purchaser is and whether they go 'full LCC'or hybrid, The VA successor should look at (re)joining the Value Alliance, and position themselves for the Asian traffic once things pick up again post COVID-19.
There will likely be limited FSC partnerships once the SQ/EY/et al influence has either been reduced or (forcibly) removed through voluntary administration.
The 'remnants' of the then SQ management at the time should just bite their pride on the Australian Dom market, concentrate on their Indian JV with Vistara (which was making more money before COVID-19), and just renew their basic QF interline, whilst also sorting out a basic interline with the 'VA successor' regardless if its a LCC or a hybrid.


I wouldn't like to see Virgin Australia go fully LCC but ditching Tiger? Yes, has to be top of the list. I think this was one of Borghetti's biggest vanity plays and worst indulgences, the way he rushed in to have his own JQ. Ditching international? Yes, domestic-only or domestic plus a little short-haul like NZ.

Regional would be interesting, don't know if they could sell it off in parts to resource companies so they could own their own mini airline? But this is why I don't want the government to have money in Virgin Australia and then have equity when Virgin can't repay, because they'd try to drop unprofitable or barely profitable regional routes but have the local MPs screaming "No, you can't do that, my voters want you to stay!".

I think Virgin Australia could also, but only if it remains hybrid and not LCC, look at joining Star Alliance, as long of course as the overhead isn't too high in compatible systems and annual fees. Being a Star Alliance member here would carry a lot of weight with frequent flyers who do a lot of international travel and help sway those people from QF.


Joining Star Alliance would be the last thing the successor would be willing to spend the money on. Those integrations are prohibitively expensive. I’m also not sure NZ and UA will be opening their arms for VA to join.
I'm that bad type.
 
xiaotung
Posts: 1087
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Re: Australian Aviation Thread - April 2020

Fri Apr 17, 2020 2:21 pm

CraigAnderson wrote:
SCFlyer wrote:
On another note, if the AFR paywall articles are to go by, it suggest one of the firms interested in VA could convert the 'successor to' VA back to its LCC domestic only roots, while dropping Regional, Tiger and International entirely.
Either way, whoever the purchaser is and whether they go 'full LCC'or hybrid, The VA successor should look at (re)joining the Value Alliance, and position themselves for the Asian traffic once things pick up again post COVID-19.
There will likely be limited FSC partnerships once the SQ/EY/et al influence has either been reduced or (forcibly) removed through voluntary administration.
The 'remnants' of the then SQ management at the time should just bite their pride on the Australian Dom market, concentrate on their Indian JV with Vistara (which was making more money before COVID-19), and just renew their basic QF interline, whilst also sorting out a basic interline with the 'VA successor' regardless if its a LCC or a hybrid.


I wouldn't like to see Virgin Australia go fully LCC but ditching Tiger? Yes, has to be top of the list. I think this was one of Borghetti's biggest vanity plays and worst indulgences, the way he rushed in to have his own JQ. Ditching international? Yes, domestic-only or domestic plus a little short-haul like NZ.

Regional would be interesting, don't know if they could sell it off in parts to resource companies so they could own their own mini airline? But this is why I don't want the government to have money in Virgin Australia and then have equity when Virgin can't repay, because they'd try to drop unprofitable or barely profitable regional routes but have the local MPs screaming "No, you can't do that, my voters want you to stay!".

I think Virgin Australia could also, but only if it remains hybrid and not LCC, look at joining Star Alliance, as long of course as the overhead isn't too high in compatible systems and annual fees. Being a Star Alliance member here would carry a lot of weight with frequent flyers who do a lot of international travel and help sway those people from QF.


Isn't it ironic that the new Virgin if survives would be extactly what Christopher Luxon wanted the airline to be? A pure domestic airline along with Velocity that is profitable and sustainable with the help of feeding its many strategic partners. I do think it will find its place in Star Alliance but that will be years down the track. In current environment alliances are really irrelavent. I am almost sure Star Alliance won't leave the crisis with 26 members as it currently stands.
Last edited by xiaotung on Fri Apr 17, 2020 2:22 pm, edited 1 time in total.
 
xiaotung
Posts: 1087
Joined: Fri Jan 06, 2006 7:58 pm

Re: Australian Aviation Thread - April 2020

Fri Apr 17, 2020 2:21 pm

xiaotung wrote:
CraigAnderson wrote:
SCFlyer wrote:
On another note, if the AFR paywall articles are to go by, it suggest one of the firms interested in VA could convert the 'successor to' VA back to its LCC domestic only roots, while dropping Regional, Tiger and International entirely.
Either way, whoever the purchaser is and whether they go 'full LCC'or hybrid, The VA successor should look at (re)joining the Value Alliance, and position themselves for the Asian traffic once things pick up again post COVID-19.
There will likely be limited FSC partnerships once the SQ/EY/et al influence has either been reduced or (forcibly) removed through voluntary administration.
The 'remnants' of the then SQ management at the time should just bite their pride on the Australian Dom market, concentrate on their Indian JV with Vistara (which was making more money before COVID-19), and just renew their basic QF interline, whilst also sorting out a basic interline with the 'VA successor' regardless if its a LCC or a hybrid.


I wouldn't like to see Virgin Australia go fully LCC but ditching Tiger? Yes, has to be top of the list. I think this was one of Borghetti's biggest vanity plays and worst indulgences, the way he rushed in to have his own JQ. Ditching international? Yes, domestic-only or domestic plus a little short-haul like NZ.

Regional would be interesting, don't know if they could sell it off in parts to resource companies so they could own their own mini airline? But this is why I don't want the government to have money in Virgin Australia and then have equity when Virgin can't repay, because they'd try to drop unprofitable or barely profitable regional routes but have the local MPs screaming "No, you can't do that, my voters want you to stay!".

I think Virgin Australia could also, but only if it remains hybrid and not LCC, look at joining Star Alliance, as long of course as the overhead isn't too high in compatible systems and annual fees. Being a Star Alliance member here would carry a lot of weight with frequent flyers who do a lot of international travel and help sway those people from QF.


Isn't it ironic that the new Virgin if survives would be extactly what Christopher Luxon wanted the airline to be? A pure domestic airline along with Velocity that is profitable and sustainable with the help of feeding its many strategic partners. I do think it will find its place in Star Alliance but that will be years down the track. In current environment alliances are really irrelavent. I am almost sure Star Alliance won't leave the crisis with 26 members as it currently stands.
 
getluv
Posts: 594
Joined: Thu Jun 11, 2015 12:11 pm

Re: Australian Aviation Thread - April 2020

Fri Apr 17, 2020 2:24 pm

QF742 wrote:
getluv wrote:
QF742 wrote:
My 2 cents on what VA should become: scrap all international, scrap all wide bodies, scrap TT, scrap business class and just return to domestic trunk and key leisure routes. I think an all economy layout with the first 3-5 rows with extra legroom for corporates and frequent flyers. I think it needs position itself between QF and JQ - essentially the old DJ!

I’m not going to comment on VARA because I don’t follow it closely enough and really not sure if it’s profitable or not?


The old DJ was more like JQ, hence why QF threw money at JQ to chase leisure passengers.

DJ was also starting to become less profitable before it became VA.

I'm also not sure the "middle" is that profitable either.


The DJ of the early 2000s that I remember was not so much like JQ now - it had a much more edgy vibe with a real focus on great service. While leisure will take some time to resume, it will still be there. A new VA can also appeal to many corporates by being cheaper than QF and attracting businesses that will be reluctant to spend a lot on travel. VA have struggled to differentiate its brand post DJ. To be successful I think they need to carve their niche and have an actual value proposition (rather than just being the Qantas alternative).


I think the “great” service was just young blond flight attendants which were also prominent in their advertising. I think this freshness and youthful vibe was fresh at the beginning and then it wasn’t.

If VA enters Administration it will certainly be a shadow of its former self. Reduced schedule and fleet. No lounges. Velocity point balances at zero. There’ll be nothing attractive about VA. Hence why I think VA is struggling to find someone who cares.

QF bargains really hard for corporate contracts, and will probably be doing the same with a restructured VA if there is one.
I'm that bad type.
 
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SCFlyer
Posts: 613
Joined: Tue Oct 23, 2018 11:14 pm

Re: Australian Aviation Thread - April 2020

Fri Apr 17, 2020 2:25 pm

getluv wrote:
CraigAnderson wrote:
SCFlyer wrote:
On another note, if the AFR paywall articles are to go by, it suggest one of the firms interested in VA could convert the 'successor to' VA back to its LCC domestic only roots, while dropping Regional, Tiger and International entirely.
Either way, whoever the purchaser is and whether they go 'full LCC'or hybrid, The VA successor should look at (re)joining the Value Alliance, and position themselves for the Asian traffic once things pick up again post COVID-19.
There will likely be limited FSC partnerships once the SQ/EY/et al influence has either been reduced or (forcibly) removed through voluntary administration.
The 'remnants' of the then SQ management at the time should just bite their pride on the Australian Dom market, concentrate on their Indian JV with Vistara (which was making more money before COVID-19), and just renew their basic QF interline, whilst also sorting out a basic interline with the 'VA successor' regardless if its a LCC or a hybrid.


I wouldn't like to see Virgin Australia go fully LCC but ditching Tiger? Yes, has to be top of the list. I think this was one of Borghetti's biggest vanity plays and worst indulgences, the way he rushed in to have his own JQ. Ditching international? Yes, domestic-only or domestic plus a little short-haul like NZ.

Regional would be interesting, don't know if they could sell it off in parts to resource companies so they could own their own mini airline? But this is why I don't want the government to have money in Virgin Australia and then have equity when Virgin can't repay, because they'd try to drop unprofitable or barely profitable regional routes but have the local MPs screaming "No, you can't do that, my voters want you to stay!".

I think Virgin Australia could also, but only if it remains hybrid and not LCC, look at joining Star Alliance, as long of course as the overhead isn't too high in compatible systems and annual fees. Being a Star Alliance member here would carry a lot of weight with frequent flyers who do a lot of international travel and help sway those people from QF.


Joining Star Alliance would be the last thing the successor would be willing to spend the money on. Those integrations are prohibitively expensive. I’m also not sure NZ and UA will be opening their arms for VA to join.


Also to repeat in a previous post, any rebranded VA will be either a 1-class LCC, or 1-class Hybrid. Which doesn't meet some of the criteria for full Alliance membership (on any Full-Service Alliance) in general. At most, a one class Hybrid carrier would qualify for "connect/ing partners" level, which is of limited benefit and will be pointless.

You could probably add SQ to the no list in the Star Alliance, regardless if any of the equity firms gets the VA purchase signed off (either with or without VAH filing voluntary administration).

SQ has clearly stated no to any equity or hands-on involvement in VA for the foreseeable future and will likely be writing off their VAH investment regardless if VAH enters administration or not.
 
getluv
Posts: 594
Joined: Thu Jun 11, 2015 12:11 pm

Re: Australian Aviation Thread - April 2020

Fri Apr 17, 2020 2:30 pm

tullamarine wrote:
getluv wrote:
QF742 wrote:
My 2 cents on what VA should become: scrap all international, scrap all wide bodies, scrap TT, scrap business class and just return to domestic trunk and key leisure routes. I think an all economy layout with the first 3-5 rows with extra legroom for corporates and frequent flyers. I think it needs position itself between QF and JQ - essentially the old DJ!

I’m not going to comment on VARA because I don’t follow it closely enough and really not sure if it’s profitable or not?


The old DJ was more like JQ, hence why QF threw money at JQ to chase leisure passengers.

DJ was also starting to become less profitable before it became VA.

I'm also not sure the "middle" is that profitable either.

Jetstar will be a major issue for QF in the short to medium term. Leisure travel will be slow to return. Short of VA disappearing completely, probably unlikely, it is possible QF will have to shrink its low-cost business. It has contracted new aircraft due to arrive from this year. I wonder if JQ will seek a deferral from Airbus. I doubt the 787s will be back in Jetstar colours though unless mainline take them, they may have to as the widebody market is going to be dire for the next few years.


JQ will probably running on a reduced fleet at first but offer a few $9 sales around the time a vaccine is announced and people will slowly forget. JQ is mainly domestic as well, which is where most people will want to be travelling.
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SCFlyer
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Re: Australian Aviation Thread - April 2020

Fri Apr 17, 2020 3:10 pm

xiaotung wrote:
CraigAnderson wrote:
SCFlyer wrote:
On another note, if the AFR paywall articles are to go by, it suggest one of the firms interested in VA could convert the 'successor to' VA back to its LCC domestic only roots, while dropping Regional, Tiger and International entirely.
Either way, whoever the purchaser is and whether they go 'full LCC'or hybrid, The VA successor should look at (re)joining the Value Alliance, and position themselves for the Asian traffic once things pick up again post COVID-19.
There will likely be limited FSC partnerships once the SQ/EY/et al influence has either been reduced or (forcibly) removed through voluntary administration.
The 'remnants' of the then SQ management at the time should just bite their pride on the Australian Dom market, concentrate on their Indian JV with Vistara (which was making more money before COVID-19), and just renew their basic QF interline, whilst also sorting out a basic interline with the 'VA successor' regardless if its a LCC or a hybrid.


I wouldn't like to see Virgin Australia go fully LCC but ditching Tiger? Yes, has to be top of the list. I think this was one of Borghetti's biggest vanity plays and worst indulgences, the way he rushed in to have his own JQ. Ditching international? Yes, domestic-only or domestic plus a little short-haul like NZ.

Regional would be interesting, don't know if they could sell it off in parts to resource companies so they could own their own mini airline? But this is why I don't want the government to have money in Virgin Australia and then have equity when Virgin can't repay, because they'd try to drop unprofitable or barely profitable regional routes but have the local MPs screaming "No, you can't do that, my voters want you to stay!".

I think Virgin Australia could also, but only if it remains hybrid and not LCC, look at joining Star Alliance, as long of course as the overhead isn't too high in compatible systems and annual fees. Being a Star Alliance member here would carry a lot of weight with frequent flyers who do a lot of international travel and help sway those people from QF.


Isn't it ironic that the new Virgin if survives would be extactly what Christopher Luxon wanted the airline to be? A pure domestic airline along with Velocity that is profitable and sustainable with the help of feeding its many strategic partners. I do think it will find its place in Star Alliance but that will be years down the track. In current environment alliances are really irrelavent. I am almost sure Star Alliance won't leave the crisis with 26 members as it currently stands.


If the 'new' Virgin does survive regardless if VAH files voluntary administration or not will likely be a 1-class domestic LCC or 1-class domestic Hybrid at most. This will fail the criteria for full membership of any full service alliance in general. Not that Alliances are relevant right now, or for the foreseeable future.
Connecting Partner levels are pretty much of limited benefit, pointless and the successor will not likely have many FSC friends apart from bare interlines.

So basically yes, 'VA mk II' will be a domestic carrier in the foreseeable future as Luxon allegedly wanted, but more forming alliances with fellow LCCs in the Asian region. It may even open the sucessor to possibly (re)join the Value Alliance to team up with Scoot, Jeju Air and Cebu Pacific doing the feeding for the VA successor flying into the Asian region once demand recovers from COVID.

Velocity will also likely be sold-off if the investor that gets the VAH assets at administration decides to go the pure domestic LCC route. SIA or Westfarmers may acquire Velocity for the pure reason of absorbing their customer base into Krisflyer or Flybuys with the later having a partnership to the successor before closing Velocity down for good.
 
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Re: Australian Aviation Thread - April 2020

Fri Apr 17, 2020 3:34 pm

But wait.. there's still more. According to the News Corp media, now other Chinese Government owned carriers are rumoured to get involved. CZ and CA were named in the (paywalled) article as the parties "rumoured" to be in 'discussions' to "buy VA", although no formal offer was lodged.

This move won't be "popular" politically in light of the recent events worldwide.

Source (Paywall) https://www.couriermail.com.au/business ... c4e6c91ba8
 
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JBusworth
Posts: 182
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Re: Australian Aviation Thread - April 2020

Fri Apr 17, 2020 3:47 pm

Any VA MkII will need to go to one class LCC or Hydrid and go back to exactly what it was best at, being squeezed at the bottom by JQ and at the top by QF but making a small tidy profit on a sensible domestic network. The owned 738s (if they aren't lost due to receivers swooping on behalf of creditors) would surely be a good place to start. Gold Coast, Sunshine Coast and Ballina traffic will surely pick back up quickly after COVID is over. the new VA will need to be more like DJ than VA. Hopefully they will be more successful than Ansett MkII.

International flying has never been VAs strong suit and it needs to ditch it in a restructure. Selling the owned 77Ws for scrap metal to pay off some debts isn't the worst idea ever. A330s need to go as well. If they must have international, Fiji and Queenstown holiday crowd is their best bet.

QF may get its third Haneda slot after all...
 
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eta unknown
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Re: Australian Aviation Thread - April 2020

Fri Apr 17, 2020 4:09 pm

NAN & VLI could also be sustainable- at least compared to DPS in terms of yields.

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