Westerwaelder wrote:

jbs2886 wrote:

777ER wrote:

This will be interesting for DL and the viability of their SYD service

I doubt it impacts at all. DL will likely continue to operate to serve its customers; in fact, I think this may create a need for another Aussie flight for DL. Just because it lost a partner doesn’t mean the flight now isn’t viable (DL hasn’t used Virgin Australia during the pandemic and has maintained the flight).

I would say that if DL's single flight had been a financial success, they would hardly beeb keen sharing this 50/50 with Virgin Australia? Yes, they could cover a few more destinations s but a simple code-share could have done? Of course things changed when Virgin pulled their longhaul but for DL to share revenue all the way since feels like a good indicator that a partner on the Australia end is needed?

So do you know the contract and how DL could exit the JV? I doubt it. Moreover I doubt DL could do a quick unilateral exit. The JV existed for nearly a decade, from when DL just entered the SYD market. Finally, a JV isn’t a sign of weakness. JVs are just giving away money. And they aren’t just sharing revenue, they share cost. You seem to not understand the basic tenets of contacts and JVs.

superjeff wrote:

I’m glad somebody finally raised this question. Ansett had been in Star Allliance for a long time before its demise, and, from everything I’ve seen over the years, it was a successful relationship for them, providing domestic Australian feed to AC, SQ, UA, et al through SYD and MEL (and, for SQ at least, through ADL, PER, as well). Qantas gets a good deal of traffic due to its relationship with Oneworld, even where they may compete (I.e., CX to HKG). A Star relationship would probably pay dividends to Bain Capital, who control Virgin Australia, to United particularly, who have lacked an Australian partner (although they’re close with NZ), etc.

What is your definition of "a long time"?

Ansett was in Star Alliance for 27 months, from 3 May 1999 to they went bankrupt on 12 September 2001. Hardly a long time and it certainly didn't save them from their own mistakes, that's for sure.

Do you have any figures from your "Qantas gets a good deal of traffic due to its relationship with oneworld" theory? It's very rare for an airline to divulge alliance statistics - the only one I can remember is when Air New Zealand switched partner and listed they had somewhere between 100,000 and 150,000 passengers (I think the number was 147,000 but I could be wrong) the previous year on their old Trans-Tasman partner. Most of the Qantas traffic is Australians, who are members of the Qantas programme, flying Qantas. It would be the vast majority of their passenger makeup when compared to any feed they get from oneworld partners.

Don't get me wrong, partners are important, 20 people extra on a flight can make a flight go from loss making to profitable, so I'm not making light of it. I was more poking at your generalisations

kavok wrote:

Long story short, the 359 pilot base is remaining, so it probably can be assumed LAX-SYD is remaining.

Honestly, I think this argument has the tail wagging the dog.

Many inputs to airline production (e.g. planes and pilots) are portable. So airlines don't have to endure ongoing losses. It creates more profit possibilities by relocating these based on market shifts.

If SYD was the only naturally-occurring profitable opportunity for 359 flying from LAX, then although it might be unpopular to say so, I think it's most realistic to say the economic soundness of keeping that base open may become questionable.

tinpusher007 wrote:

Josh76040 wrote:

SYD takes two expensive frames. With QF restoring services, DL’s presence in SYD is toast.

For now we are keeping LAX-SYD; that has been stated publicly. The future is anyone's guess.

There are some DL FF's in the contiguous U.S. who would avoid QF, AA, and UA whenever possible, and DL likely needs to continue serving SYD to remain relevant to its FF base in the contiguous U.S.

There are also some connecting opportunities available through LAX on DL, WS, and AM to other destinations in the contiguous U.S., Canada, Mexico, and Central America to support DL LAX-SYD nonstop service.

Chile, Canada, and the U.S. are the only countries in the Americas that have nonstop service out of SYD, whereas there are more nonstop flights to the Americas from Europe, Japan, Mainland China, and South Korea.

DL also has nonstop service out of LAX to some destinations that AA or UA don't currently serve nonstop from LAX.

jbs2886 wrote:

Westerwaelder wrote:

jbs2886 wrote:

I doubt it impacts at all. DL will likely continue to operate to serve its customers; in fact, I think this may create a need for another Aussie flight for DL. Just because it lost a partner doesn’t mean the flight now isn’t viable (DL hasn’t used Virgin Australia during the pandemic and has maintained the flight).

I would say that if DL's single flight had been a financial success, they would hardly beeb keen sharing this 50/50 with Virgin Australia? Yes, they could cover a few more destinations s but a simple code-share could have done? Of course things changed when Virgin pulled their longhaul but for DL to share revenue all the way since feels like a good indicator that a partner on the Australia end is needed?

So do you know the contract and how DL could exit the JV? I doubt it. Moreover I doubt DL could do a quick unilateral exit. The JV existed for nearly a decade, from when DL just entered the SYD market. Finally, a JV isn’t a sign of weakness. JVs are just giving away money. And they aren’t just sharing revenue, they share cost. You seem to not understand the basic tenets of contacts and JVs.

What is it with some members of this forum and their snidy tone? Anyone with a different opinion gets disparaged. I know how a JV works - I was involved in one of the largest one in the industry for several years. If you read my comment and thought about it for a moment, you'd see the argument isn' that far from your "they share cost" point. But screaming someone down is much more fun, particularly when hiding behind some letters...

gaystudpilot wrote:

Just announced.

https://www.executivetraveller.com/news/virgin-australia-delta-united-airlines-partnership

It will be interesting to see if DL keeps LAX-SYD or exits the Australian market completely. They will find it difficult to compete with UA-VA-NZ and AA-QF.

Sorry to point this out late, but NZ/UA and UA/VA are separate agreements, and not as a trio.
The new later agreement between UA and VA doesn't require approval from ACCC and DoT as it's a simple codeshare and FF reciprocation agreement.

Also to add, considering NZ are currently in bed with QF for domestic codeshare agreement, and have been reported to be making 'more revenue than the former 'NZ/VA agreement' pre-pandemic, any chance of NZ and VA getting 'back together' let alone form a 3-way JBA remains extremely low for the foreseeable future.

I wonder if DL will make a push for Air New Zealand like they did with LATAM. AKL-ATL is a doable route.

'902

https://www.executivetraveller.com/news/delta-to-continue-sydney-lax-flights-without-virgin-australia?fbclid=IwAR38iHkqkKUQGYVOHg-pKj0AsLM118OsWOYlsu5vMSEX5u_M-ZRm1yaZMOw

Here is DL's response to the severing of ties with VA...

TWA902fly wrote:

I wonder if DL will make a push for Air New Zealand like they did with LATAM. AKL-ATL is a doable route.

'902

Why would NZ bother? They have a JBA with United, which is presumably working relatively well for both parties. That’s very different to LA, who were left looking for a new partner after their JBA with AA was knocked back twice.

ClassicLover wrote:

superjeff wrote:

I’m glad somebody finally raised this question. Ansett had been in Star Allliance for a long time before its demise, and, from everything I’ve seen over the years, it was a successful relationship for them, providing domestic Australian feed to AC, SQ, UA, et al through SYD and MEL (and, for SQ at least, through ADL, PER, as well). Qantas gets a good deal of traffic due to its relationship with Oneworld, even where they may compete (I.e., CX to HKG). A Star relationship would probably pay dividends to Bain Capital, who control Virgin Australia, to United particularly, who have lacked an Australian partner (although they’re close with NZ), etc.

What is your definition of "a long time"?

Ansett was in Star Alliance for 27 months, from 3 May 1999 to they went bankrupt on 12 September 2001. Hardly a long time and it certainly didn't save them from their own mistakes, that's for sure.

Do you have any figures from your "Qantas gets a good deal of traffic due to its relationship with oneworld" theory? It's very rare for an airline to divulge alliance statistics - the only one I can remember is when Air New Zealand switched partner and listed they had somewhere between 100,000 and 150,000 passengers (I think the number was 147,000 but I could be wrong) the previous year on their old Trans-Tasman partner. Most of the Qantas traffic is Australians, who are members of the Qantas programme, flying Qantas. It would be the vast majority of their passenger makeup when compared to any feed they get from oneworld partners.

Don't get me wrong, partners are important, 20 people extra on a flight can make a flight go from loss making to profitable, so I'm not making light of it. I was more poking at your generalisations

I also don't think Star Alliance membership is needed at all and Bain definitely does not have the power to make membership fees lower because "Star Alliance needs VA more than VA needs Star Alliance".
UA and SQ have new/existing agreements with VA and therefore don't need VA to have Star Alliance Membership. They are the 2 big boys in Star who fly into Australia. Everyone else is relatively minor.

On top of that, 80% of Australian population lives in the 5 big cities. SQ, CX, EK and QR fly direct to all 5 from their own hub, so no domestic connection is needed. If you take Brisbane, Sydney and Melbourne, you have about 70% of the population and UA flies to all 3. If you need to go direct to one of the smaller cities from overseas (or reverse), you are most likely Australian and prefer to fly QF. If you are a business flyer, high likelihood that end destination is SYD or MEL and your needs are covered.

If you are a tourist, it is cheaper to go online and buy a cheap QF/VA domestic ticket directly from their website instead of combining it with your international ticket as that is much more expensive.

Star membership is not needed unless VA builds a proper Asia network first and I can not see that happening.

UA currently doesn't fly to BNE on their own metal and is unlikely to do so in the short term (domestic codeshare on VA will suffice for now).

Although BNE/Queensland is the other 'loser' (apart from DL) in the new UA/VA codeshare, there is also a chance that the Queensland State Government may step in with (taxpayer) subsidies for UA to start BNE in that short term (Taxpayers effectively paying for the lease/charter of UA a/c) for the sake of 'tourism and competition'' in Qld.

SCFlyer wrote:

gaystudpilot wrote:

Just announced.

https://www.executivetraveller.com/news/virgin-australia-delta-united-airlines-partnership

It will be interesting to see if DL keeps LAX-SYD or exits the Australian market completely. They will find it difficult to compete with UA-VA-NZ and AA-QF.

Sorry to point this out late, but NZ/UA and UA/VA are separate agreements, and not as a trio.
The new later agreement between UA and VA doesn't require approval from ACCC and DoT as it's a simple codeshare and FF reciprocation agreement.

Also to add, considering NZ are currently in bed with QF for domestic codeshare agreement, and have been reported to be making 'more revenue than the former 'NZ/VA agreement' pre-pandemic, any chance of NZ and VA getting 'back together' let alone form a 3-way JBA remains extremely low for the foreseeable future.

Thanks for pointing this out, especially the NZ-QF codeshare.

While separate agreements, I believe the value proposition (business and customer) is stronger for UA-VA-NZ than a stand alone DL even without a JV.

RyanairGuru wrote:

TWA902fly wrote:

I wonder if DL will make a push for Air New Zealand like they did with LATAM. AKL-ATL is a doable route.

'902

Why would NZ bother? They have a JBA with United, which is presumably working relatively well for both parties. That’s very different to LA, who were left looking for a new partner after their JBA with AA was knocked back twice.

Agree. The likelihood of NZ joining up with DL is about as likely as QF leaving AA for DL. Zero.

jplatts wrote:

tinpusher007 wrote:

Josh76040 wrote:

SYD takes two expensive frames. With QF restoring services, DL’s presence in SYD is toast.

For now we are keeping LAX-SYD; that has been stated publicly. The future is anyone's guess.

There are some DL FF's in the contiguous U.S. who would avoid QF, AA, and UA whenever possible, and DL likely needs to continue serving SYD to remain relevant to its FF base in the contiguous U.S.

When DL started SYD, I remember a story about how they did they did their research, using the numbers flyers who used Delta to get to LAX, and who then continued on to Australia on (usually QF) other airlines. If I recall correctly, that number averaged more almost 175 per day; ergo, their management decided to fly the route themselves.

Coupled with their aggressive courting of the cargo market, I doubt - post-Covid - those numbers would be any lesser, not to mention the additional traffic their entry may have brought to the market. If anything, I could see Delta adding another Australian destination, rather than retreating from the continent.

AngMoh wrote:

ClassicLover wrote:

superjeff wrote:

I’m glad somebody finally raised this question. Ansett had been in Star Allliance for a long time before its demise, and, from everything I’ve seen over the years, it was a successful relationship for them, providing domestic Australian feed to AC, SQ, UA, et al through SYD and MEL (and, for SQ at least, through ADL, PER, as well). Qantas gets a good deal of traffic due to its relationship with Oneworld, even where they may compete (I.e., CX to HKG). A Star relationship would probably pay dividends to Bain Capital, who control Virgin Australia, to United particularly, who have lacked an Australian partner (although they’re close with NZ), etc.

What is your definition of "a long time"?

Ansett was in Star Alliance for 27 months, from 3 May 1999 to they went bankrupt on 12 September 2001. Hardly a long time and it certainly didn't save them from their own mistakes, that's for sure.

Do you have any figures from your "Qantas gets a good deal of traffic due to its relationship with oneworld" theory? It's very rare for an airline to divulge alliance statistics - the only one I can remember is when Air New Zealand switched partner and listed they had somewhere between 100,000 and 150,000 passengers (I think the number was 147,000 but I could be wrong) the previous year on their old Trans-Tasman partner. Most of the Qantas traffic is Australians, who are members of the Qantas programme, flying Qantas. It would be the vast majority of their passenger makeup when compared to any feed they get from oneworld partners.

Don't get me wrong, partners are important, 20 people extra on a flight can make a flight go from loss making to profitable, so I'm not making light of it. I was more poking at your generalisations

I also don't think Star Alliance membership is needed at all and Bain definitely does not have the power to make membership fees lower because "Star Alliance needs VA more than VA needs Star Alliance".
UA and SQ have new/existing agreements with VA and therefore don't need VA to have Star Alliance Membership. They are the 2 big boys in Star who fly into Australia. Everyone else is relatively minor.

On top of that, 80% of Australian population lives in the 5 big cities. SQ, CX, EK and QR fly direct to all 5 from their own hub, so no domestic connection is needed. If you take Brisbane, Sydney and Melbourne, you have about 70% of the population and UA flies to all 3. If you need to go direct to one of the smaller cities from overseas (or reverse), you are most likely Australian and prefer to fly QF. If you are a business flyer, high likelihood that end destination is SYD or MEL and your needs are covered.

If you are a tourist, it is cheaper to go online and buy a cheap QF/VA domestic ticket directly from their website instead of combining it with your international ticket as that is much more expensive.

Star membership is not needed unless VA builds a proper Asia network first and I can not see that happening.

UA has no flights to BNE, only MEL AND SYD.

jbs2886 wrote:

ltbewr wrote:

tullamarine wrote:

This has nothing to do with VS. VA and VS have no relationship except Branson holding a minority shareholding in both.

Oops, my bad. Is the DL and VS JV also falling apart ?

Huh? He just said no relationship. And no, in fact, it just confirmed DL will maintain 49% ownership.

Delta is maintaining their 49% ownership in Virgin Atlantic, not Virgin Australia.

rbavfan wrote:

jbs2886 wrote:

ltbewr wrote:

Oops, my bad. Is the DL and VS JV also falling apart ?

Huh? He just said no relationship. And no, in fact, it just confirmed DL will maintain 49% ownership.

Delta is maintaining their 49% ownership in Virgin Atlantic, not Virgin Australia.

I didn’t say Virgin Australia. I responded to a poster on the DL-VS JV, stating it would maintain the 49% ownership. Nowhere did I reference VA.

AngMoh wrote:

ClassicLover wrote:

superjeff wrote:

I’m glad somebody finally raised this question. Ansett had been in Star Allliance for a long time before its demise, and, from everything I’ve seen over the years, it was a successful relationship for them, providing domestic Australian feed to AC, SQ, UA, et al through SYD and MEL (and, for SQ at least, through ADL, PER, as well). Qantas gets a good deal of traffic due to its relationship with Oneworld, even where they may compete (I.e., CX to HKG). A Star relationship would probably pay dividends to Bain Capital, who control Virgin Australia, to United particularly, who have lacked an Australian partner (although they’re close with NZ), etc.

What is your definition of "a long time"?

Ansett was in Star Alliance for 27 months, from 3 May 1999 to they went bankrupt on 12 September 2001. Hardly a long time and it certainly didn't save them from their own mistakes, that's for sure.

Do you have any figures from your "Qantas gets a good deal of traffic due to its relationship with oneworld" theory? It's very rare for an airline to divulge alliance statistics - the only one I can remember is when Air New Zealand switched partner and listed they had somewhere between 100,000 and 150,000 passengers (I think the number was 147,000 but I could be wrong) the previous year on their old Trans-Tasman partner. Most of the Qantas traffic is Australians, who are members of the Qantas programme, flying Qantas. It would be the vast majority of their passenger makeup when compared to any feed they get from oneworld partners.

Don't get me wrong, partners are important, 20 people extra on a flight can make a flight go from loss making to profitable, so I'm not making light of it. I was more poking at your generalisations

I also don't think Star Alliance membership is needed at all and Bain definitely does not have the power to make membership fees lower because "Star Alliance needs VA more than VA needs Star Alliance".
UA and SQ have new/existing agreements with VA and therefore don't need VA to have Star Alliance Membership. They are the 2 big boys in Star who fly into Australia. Everyone else is relatively minor.

On top of that, 80% of Australian population lives in the 5 big cities. SQ, CX, EK and QR fly direct to all 5 from their own hub, so no domestic connection is needed. If you take Brisbane, Sydney and Melbourne, you have about 70% of the population and UA flies to all 3. If you need to go direct to one of the smaller cities from overseas (or reverse), you are most likely Australian and prefer to fly QF. If you are a business flyer, high likelihood that end destination is SYD or MEL and your needs are covered.

If you are a tourist, it is cheaper to go online and buy a cheap QF/VA domestic ticket directly from their website instead of combining it with your international ticket as that is much more expensive.

Star membership is not needed unless VA builds a proper Asia network first and I can not see that happening.

Noted above UA does not fly Brisbane non stop.

SCFlyer wrote:

UA currently doesn't fly to BNE on their own metal and is unlikely to do so in the short term (domestic codeshare on VA will suffice for now).

Although BNE/Queensland is the other 'loser' (apart from DL) in the new UA/VA codeshare, there is also a chance that the Queensland State Government may step in with (taxpayer) subsidies for UA to start BNE in that short term (Taxpayers effectively paying for the lease/charter of UA a/c) for the sake of 'tourism and competition'' in Qld.

You're wrong about how these "subsidies" work - there is no paying for the lease or charter as that would be horrendously expensive. They are usually cooperative marketing funds used to drive inbound demand, often matched on a dollar-for-dollar basis. The government through its tourism body stumps up $x for marketing and the airline has to contribute the same amount - usually in-kind. In practice, it often amounts to the airline inflating the value of their marketing database, or just adding some nice clips to their IFE ads, but can go much further. In most cases there is a level of audit that is done to ensure that the taxpayer still gets value for money.

Any out-and-out, straight subsidies are the exception rather than the rule, and definitely not covering anywhere near the operating costs of such a service - especially on a longhaul flight.

Airports will also offer waivers on landing fees, sometimes on a tiered basis, as well as marketing to drive demand on the outbound sectors. Usually the two hunt together and put forward an overall package to the airline, but this is nowhere near providing an ongoing subsidy or covering the operating cost would be.

AngMoh wrote:

ClassicLover wrote:

superjeff wrote:

I’m glad somebody finally raised this question. Ansett had been in Star Allliance for a long time before its demise, and, from everything I’ve seen over the years, it was a successful relationship for them, providing domestic Australian feed to AC, SQ, UA, et al through SYD and MEL (and, for SQ at least, through ADL, PER, as well). Qantas gets a good deal of traffic due to its relationship with Oneworld, even where they may compete (I.e., CX to HKG). A Star relationship would probably pay dividends to Bain Capital, who control Virgin Australia, to United particularly, who have lacked an Australian partner (although they’re close with NZ), etc.

What is your definition of "a long time"?

Ansett was in Star Alliance for 27 months, from 3 May 1999 to they went bankrupt on 12 September 2001. Hardly a long time and it certainly didn't save them from their own mistakes, that's for sure.

Do you have any figures from your "Qantas gets a good deal of traffic due to its relationship with oneworld" theory? It's very rare for an airline to divulge alliance statistics - the only one I can remember is when Air New Zealand switched partner and listed they had somewhere between 100,000 and 150,000 passengers (I think the number was 147,000 but I could be wrong) the previous year on their old Trans-Tasman partner. Most of the Qantas traffic is Australians, who are members of the Qantas programme, flying Qantas. It would be the vast majority of their passenger makeup when compared to any feed they get from oneworld partners.

Don't get me wrong, partners are important, 20 people extra on a flight can make a flight go from loss making to profitable, so I'm not making light of it. I was more poking at your generalisations

I also don't think Star Alliance membership is needed at all and Bain definitely does not have the power to make membership fees lower because "Star Alliance needs VA more than VA needs Star Alliance".
UA and SQ have new/existing agreements with VA and therefore don't need VA to have Star Alliance Membership. They are the 2 big boys in Star who fly into Australia. Everyone else is relatively minor.

On top of that, 80% of Australian population lives in the 5 big cities. SQ, CX, EK and QR fly direct to all 5 from their own hub, so no domestic connection is needed. If you take Brisbane, Sydney and Melbourne, you have about 70% of the population and UA flies to all 3. If you need to go direct to one of the smaller cities from overseas (or reverse), you are most likely Australian and prefer to fly QF. If you are a business flyer, high likelihood that end destination is SYD or MEL and your needs are covered.

If you are a tourist, it is cheaper to go online and buy a cheap QF/VA domestic ticket directly from their website instead of combining it with your international ticket as that is much more expensive.

Star membership is not needed unless VA builds a proper Asia network first and I can not see that happening.

THIS is a much more sober and realistic assessment of the Australian inbound market.The vast majority of connecting traffic in Australia from regional cities are QF loyal pax on QF metal on QF tickets. Interline agreements can take care of the rest.

EBT wrote:

You're wrong about how these "subsidies" work - there is no paying for the lease or charter as that would be horrendously expensive. They are usually cooperative marketing funds used to drive inbound demand, often matched on a dollar-for-dollar basis. The government through its tourism body stumps up $x for marketing and the airline has to contribute the same amount - usually in-kind. In practice, it often amounts to the airline inflating the value of their marketing database, or just adding some nice clips to their IFE ads, but can go much further. In most cases there is a level of audit that is done to ensure that the taxpayer still gets value for money.

Any out-and-out, straight subsidies are the exception rather than the rule, and definitely not covering anywhere near the operating costs of such a service - especially on a longhaul flight.

Airports will also offer waivers on landing fees, sometimes on a tiered basis, as well as marketing to drive demand on the outbound sectors. Usually the two hunt together and put forward an overall package to the airline, but this is nowhere near providing an ongoing subsidy or covering the operating cost would be.

You've covered most of the bases, but many cases are different. I've been involved in these negotiations on the airline side and I can safely say there's never been any audit.
I doubt UA will launch BNE- as you said the subsidies wont cover the cost of sending a 787 to BNE- that's an expensive piece of real estate and UA can find a better use for it. Also note BNE is not a premium heavy destination compared to SYD/MEL.
With regards to the 8 month Air China service, my theory is the flight made massive losses- it's also a very long sector. I don't know if CA returned any of the marketing funds- that's been hushed up.
I do remember one haphazard negotiation with BNE Airport- their subsidized new route proposal was so off the market that in the second meeting I said to them, do you have any idea what the operating cost per hour of a longhaul aircraft is? They had no idea. After the BAC folks left the meeting I said to my boss 'if you submit that to head office you'll be laughed out of the room' and he agreed and tore up the document right there and then, Our position was marketing funds and waiving landing fees for 2 years (and even then the route profitability was questionable)- BAC baulked. We also wondered where BAC pulled their O&D pax numbers from.

This also basically confirms that VA has no interest in re-entering any destination that can't be reached with a 737. I also wonder if UA might, when Australia finally reopens, now add BNE to SFO, even if sub-daily (i.e., 4 times weekly). (Before the pandemic, UA was flying LAX/SFO to MEL and SYD, and IAH to SYD.) Upon reopening, I would expect SYD to SFO/LAX to be on the B77W, and everything else to be on the B789, except for BNE on the B788. (Speaking of BNE, UA didn't fly that before the pandemic, but AC did from YVR as its longest B788 route.)

I also wonder if AC, TG, or NH might commit to partnerships with VA.

aemoreira1981 wrote:

I also wonder if AC, TG, or NH might commit to partnerships with VA.

I believe this announcement is step one.

gaystudpilot wrote:

aemoreira1981 wrote:

I also wonder if AC, TG, or NH might commit to partnerships with VA.

I believe this announcement is step one.

VA had pre-existing codeshare agreements with AC and NH prior to voluntary administration. AC's agreement has since expanded to include FF reciprocation post-administration.

As for UA to BNE, not for the foreseeable future unless if the Queensland Government gets involved.
UA are content with sending Queensland pax via SYD or MEL on VA codeshares. Whilst a loss for BNE, probably better for them in the short term at least until UA's higher priorities for expansion gets sorted.

eta unknown wrote:

EBT wrote:

You're wrong about how these "subsidies" work - there is no paying for the lease or charter as that would be horrendously expensive. They are usually cooperative marketing funds used to drive inbound demand, often matched on a dollar-for-dollar basis. The government through its tourism body stumps up $x for marketing and the airline has to contribute the same amount - usually in-kind. In practice, it often amounts to the airline inflating the value of their marketing database, or just adding some nice clips to their IFE ads, but can go much further. In most cases there is a level of audit that is done to ensure that the taxpayer still gets value for money.

Any out-and-out, straight subsidies are the exception rather than the rule, and definitely not covering anywhere near the operating costs of such a service - especially on a longhaul flight.

Airports will also offer waivers on landing fees, sometimes on a tiered basis, as well as marketing to drive demand on the outbound sectors. Usually the two hunt together and put forward an overall package to the airline, but this is nowhere near providing an ongoing subsidy or covering the operating cost would be.

You've covered most of the bases, but many cases are different. I've been involved in these negotiations on the airline side and I can safely say there's never been any audit.
I doubt UA will launch BNE- as you said the subsidies wont cover the cost of sending a 787 to BNE- that's an expensive piece of real estate and UA can find a better use for it. Also note BNE is not a premium heavy destination compared to SYD/MEL.
With regards to the 8 month Air China service, my theory is the flight made massive losses- it's also a very long sector. I don't know if CA returned any of the marketing funds- that's been hushed up.
I do remember one haphazard negotiation with BNE Airport- their subsidized new route proposal was so off the market that in the second meeting I said to them, do you have any idea what the operating cost per hour of a longhaul aircraft is? They had no idea. After the BAC folks left the meeting I said to my boss 'if you submit that to head office you'll be laughed out of the room' and he agreed and tore up the document right there and then, Our position was marketing funds and waiving landing fees for 2 years (and even then the route profitability was questionable)- BAC baulked. We also wondered where BAC pulled their O&D pax numbers from.

We've had similar experiences as I worked for a tourism authority in another state. Our agreements had reporting requirements to substantiate their spend before they got paid, although some had upfront payments. We had one route underwrite proposal put to us once, however the cost was ridiculous - beyond the budget of all of our agreements - and didn't make it anywhere near the MD's office.

As for UA going to BNE, having VA as a partner could increase the likelihood of making it sustainable, but I suspect that the level of traffic and available yield really only supports one operator - UA or QF. Yes, it has previously supported two, but VA was marginal at best, and more likely losing heavily. In a post-COVID environment, it's even more uncertain, unless UA uses BNE to connect pax from around Australia, and SYD and MEL largely focus on point-to-point. Again, I think that's unlikely as both of the latter routes need that feed coming in.

On a related note QF formally filed double daily BNE-LAX into the GDS effective May 2022 with a frequencies subject to change asterisk note.

So that puts to bed UA or any other competitor entering the market from BNE anytime soon.

SCFlyer wrote:

On a related note QF formally filed double daily BNE-LAX into the GDS effective May 2022 with a frequencies subject to change asterisk note.

So that puts to bed UA or any other competitor entering the market from BNE anytime soon.

All that really does is prevent UA from entering the LAX-BNE market.

Yes, that is the largest tpac O&D market from BNE, but that isn't to say that the SFO-BNE market doesn't exist.

QF plans on resuming BNE-SFO this coming spring/summer (I think) - I wouldn't be too surprised to see UA try the market - albeit, definitely not anytime soon. And, as posters have stated above, the Queensland government would probably have to be involved in some way... maybe they would re-incentivize the route if QF happened to drop it.

As of now, however, Fiji Airways seems to have the upper hand on the SFO-secondary Australia market with convenient and quick one-stop options via NAN. Just wondering if/when they put the A350 on SFO! Fiji's 359 biz is a vast improvement over their 332/3 biz...

EBT wrote:

eta unknown wrote:

EBT wrote:

You're wrong about how these "subsidies" work - there is no paying for the lease or charter as that would be horrendously expensive. They are usually cooperative marketing funds used to drive inbound demand, often matched on a dollar-for-dollar basis. The government through its tourism body stumps up $x for marketing and the airline has to contribute the same amount - usually in-kind. In practice, it often amounts to the airline inflating the value of their marketing database, or just adding some nice clips to their IFE ads, but can go much further. In most cases there is a level of audit that is done to ensure that the taxpayer still gets value for money.

Any out-and-out, straight subsidies are the exception rather than the rule, and definitely not covering anywhere near the operating costs of such a service - especially on a longhaul flight.

Airports will also offer waivers on landing fees, sometimes on a tiered basis, as well as marketing to drive demand on the outbound sectors. Usually the two hunt together and put forward an overall package to the airline, but this is nowhere near providing an ongoing subsidy or covering the operating cost would be.

You've covered most of the bases, but many cases are different. I've been involved in these negotiations on the airline side and I can safely say there's never been any audit.
I doubt UA will launch BNE- as you said the subsidies wont cover the cost of sending a 787 to BNE- that's an expensive piece of real estate and UA can find a better use for it. Also note BNE is not a premium heavy destination compared to SYD/MEL.
With regards to the 8 month Air China service, my theory is the flight made massive losses- it's also a very long sector. I don't know if CA returned any of the marketing funds- that's been hushed up.
I do remember one haphazard negotiation with BNE Airport- their subsidized new route proposal was so off the market that in the second meeting I said to them, do you have any idea what the operating cost per hour of a longhaul aircraft is? They had no idea. After the BAC folks left the meeting I said to my boss 'if you submit that to head office you'll be laughed out of the room' and he agreed and tore up the document right there and then, Our position was marketing funds and waiving landing fees for 2 years (and even then the route profitability was questionable)- BAC baulked. We also wondered where BAC pulled their O&D pax numbers from.

We've had similar experiences as I worked for a tourism authority in another state. Our agreements had reporting requirements to substantiate their spend before they got paid, although some had upfront payments. We had one route underwrite proposal put to us once, however the cost was ridiculous - beyond the budget of all of our agreements - and didn't make it anywhere near the MD's office.

As for UA going to BNE, having VA as a partner could increase the likelihood of making it sustainable, but I suspect that the level of traffic and available yield really only supports one operator - UA or QF. Yes, it has previously supported two, but VA was marginal at best, and more likely losing heavily. In a post-COVID environment, it's even more uncertain, unless UA uses BNE to connect pax from around Australia, and SYD and MEL largely focus on point-to-point. Again, I think that's unlikely as both of the latter routes need that feed coming in.

With reporting the only thing I had to do was submit the advertising costs to BAC to pay- I alone decided where to spend the money- it was fun!
If you look at the QLD regional numbers that connect via BNE, the numbers are insignificant.

The DL/VA frequent flyer partnership now has an end date: June 12, 2022.

https://www.delta.com/us/en/skymiles/ho ... e-partners

So what would this mean for DL forming partnerships in the future? So far DL has AM-JJ in The Americas, AF-KL in Mainland Europe, VS for UK and KE-MU in Asia with no partners in Africa and Australia/NZ and the Middle East.

J343 wrote:

So what would this mean for DL forming partnerships in the future? So far DL has AM-JJ in The Americas, AF-KL in Mainland Europe, VS for UK and KE-MU in Asia with no partners in Africa and Australia/NZ and the Middle East.

Maybe not at JV level but they do have an African partner through SkyTeam with Kenya Airways, as well as Saudia and a considerable number of Asian partners. As for Australia/NZ Qantas is in OW, Air New Zealand is *A, Virgin is now in bed with United, there are no other large Oceanian partners left.

I think DL will continue LAX-SYD. They have too many FFs wanting to go there. In normal times, there is a lot of cruise traffic out of SYD. My wife and I did it several years ago. I think that VA's LAX-Oz flights were more important to DL than any domestic feed in Oz. They basically gave DL several flights out of LAX. Without them, since VA quit LH, the JV lost its importance.

alancostello wrote:

J343 wrote:

So what would this mean for DL forming partnerships in the future? So far DL has AM-JJ in The Americas, AF-KL in Mainland Europe, VS for UK and KE-MU in Asia with no partners in Africa and Australia/NZ and the Middle East.

Maybe not at JV level but they do have an African partner through SkyTeam with Kenya Airways, as well as Saudia and a considerable number of Asian partners. As for Australia/NZ Qantas is in OW, Air New Zealand is *A, Virgin is now in bed with United, there are no other large Oceanian partners left.

Oh yes, I forgot KQ and SV are in SkyTeam. Correct me if I’m wrong though but weren’t there rumours or several news articles stating that KQ is leaving SkyTeam due to the failed or unsuccessful JV with AF/KL JV? Also, isn’t Delta very selective as to who they want to cooperate with as I believe DL wasn’t very keen on SV joining SkyTeam alongside Aeroflot or to an extent not wanting to cooperate with SV?

777ER wrote:

This will be interesting for DL and the viability of their SYD service

I wonder if this could be the start of a broader star alliance partnership. It would be good for the alliance with SQ, AI, TG, AC, NZ, UA etc getting domestic Australian feeds.

zeke wrote:

777ER wrote:

This will be interesting for DL and the viability of their SYD service

I wonder if this could be the start of a broader star alliance partnership. It would be good for the alliance with SQ, AI, TG, AC, NZ, UA etc getting domestic Australian feeds.

It's hard for me to see it as anything other than another strategic international loss for DL.

DOT today approved the carrier's request and granted the authority until March 2024.

OST-2022-0002

zeke wrote:

777ER wrote:

This will be interesting for DL and the viability of their SYD service

I wonder if this could be the start of a broader star alliance partnership. It would be good for the alliance with SQ, AI, TG, AC, NZ, UA etc getting domestic Australian feeds.

AI and TG are only basic interline with both QF and VA and offers fares on both carriers.

NZ has only a 'very basic' interline to VA, however their primary Australian partner will remain QF for the foreseeable future.

SQ, AC and UA are the only three carriers that would actually get codeshare feed and revenue to/from VA.

SCFlyer wrote:

zeke wrote:

777ER wrote:

This will be interesting for DL and the viability of their SYD service

I wonder if this could be the start of a broader star alliance partnership. It would be good for the alliance with SQ, AI, TG, AC, NZ, UA etc getting domestic Australian feeds.

AI and TG are only basic interline with both QF and VA and offers fares on both carriers.

NZ has only a 'very basic' interline to VA, however their primary Australian partner will remain QF for the foreseeable future.

SQ, AC and UA are the only three carriers that would actually get codeshare feed and revenue to/from VA.

Wasn't NH working with VA?

Obzerva wrote:

SCFlyer wrote:

zeke wrote:

I wonder if this could be the start of a broader star alliance partnership. It would be good for the alliance with SQ, AI, TG, AC, NZ, UA etc getting domestic Australian feeds.

AI and TG are only basic interline with both QF and VA and offers fares on both carriers.

NZ has only a 'very basic' interline to VA, however their primary Australian partner will remain QF for the foreseeable future.

SQ, AC and UA are the only three carriers that would actually get codeshare feed and revenue to/from VA.

Wasn't NH working with VA?

NH signed a codeshare agreement with VA which was suspended around COVID. However whether if they reactivate the agreement is unknown considering the unknown future of VA's HND slot, which is tipped at this stage to have their authority expire/lapse in October of this year.

eta unknown wrote:

EBT wrote:

eta unknown wrote:

You've covered most of the bases, but many cases are different. I've been involved in these negotiations on the airline side and I can safely say there's never been any audit.
I doubt UA will launch BNE- as you said the subsidies wont cover the cost of sending a 787 to BNE- that's an expensive piece of real estate and UA can find a better use for it. Also note BNE is not a premium heavy destination compared to SYD/MEL.
With regards to the 8 month Air China service, my theory is the flight made massive losses- it's also a very long sector. I don't know if CA returned any of the marketing funds- that's been hushed up.
I do remember one haphazard negotiation with BNE Airport- their subsidized new route proposal was so off the market that in the second meeting I said to them, do you have any idea what the operating cost per hour of a longhaul aircraft is? They had no idea. After the BAC folks left the meeting I said to my boss 'if you submit that to head office you'll be laughed out of the room' and he agreed and tore up the document right there and then, Our position was marketing funds and waiving landing fees for 2 years (and even then the route profitability was questionable)- BAC baulked. We also wondered where BAC pulled their O&D pax numbers from.

We've had similar experiences as I worked for a tourism authority in another state. Our agreements had reporting requirements to substantiate their spend before they got paid, although some had upfront payments. We had one route underwrite proposal put to us once, however the cost was ridiculous - beyond the budget of all of our agreements - and didn't make it anywhere near the MD's office.

As for UA going to BNE, having VA as a partner could increase the likelihood of making it sustainable, but I suspect that the level of traffic and available yield really only supports one operator - UA or QF. Yes, it has previously supported two, but VA was marginal at best, and more likely losing heavily. In a post-COVID environment, it's even more uncertain, unless UA uses BNE to connect pax from around Australia, and SYD and MEL largely focus on point-to-point. Again, I think that's unlikely as both of the latter routes need that feed coming in.

With reporting the only thing I had to do was submit the advertising costs to BAC to pay- I alone decided where to spend the money- it was fun!
If you look at the QLD regional numbers that connect via BNE, the numbers are insignificant.

Although this is ancient history, in terms of inbound Sydney and "the outback" had recognition but there was almost no recognition of Brisbane in the US. The work I was briefly involved with sort of concluded that inbound Sydney will always be the core gateway of choice for visitors, but Brisbane is an interesting add on for a nature/sun. There was some corporate travel, but nothing like enough. So I find it hard to see why Brisbane would be attractive to UA's core US base, it's a classic feeder connection destination. Agree BAC are not impressive. (Although I should point out this is ancient history and I was only briefly involved).

Exactly- there isn't enough premium traffic to/from BNE to justify UA sending a premium heavy 787 to BNE. What little corporate traffic there is QF has in their pocket (along with the POM transit traffic). Someone mentioned upthread that AC is proof that the route is viable, but what's viable for one carrier isn't necessarily for another. I imagine AC & NZ with small premium cabins can justify it. I'm just glad I don't have to deal with BAC anymore...

SCFlyer wrote:

Obzerva wrote:

SCFlyer wrote:

AI and TG are only basic interline with both QF and VA and offers fares on both carriers.

NZ has only a 'very basic' interline to VA, however their primary Australian partner will remain QF for the foreseeable future.

SQ, AC and UA are the only three carriers that would actually get codeshare feed and revenue to/from VA.

Wasn't NH working with VA?

NH signed a codeshare agreement with VA which was suspended around COVID. However whether if they reactivate the agreement is unknown considering the unknown future of VA's HND slot, which is tipped at this stage to have their authority expire/lapse in October of this year.

The only thing I know between NH and VA is NH recently added VA to their staff travel program (ZED) during the past month - so their ties aren't completely severed IMO

Michael

eta unknown wrote:

Exactly- there isn't enough premium traffic to/from BNE to justify UA sending a premium heavy 787 to BNE. What little corporate traffic there is QF has in their pocket (along with the POM transit traffic). Someone mentioned upthread that AC is proof that the route is viable, but what's viable for one carrier isn't necessarily for another. I imagine AC & NZ with small premium cabins can justify it. I'm just glad I don't have to deal with BAC anymore...

UA's 787 fleet is also complicated in the fact that some has up to 4 classes. J, W, Y+ (extra legroom standard economy) and Y.
AC's 787 fleet is just W, J and Y. Which would make it easier for them on most routes including BNE-YVR.

BNE is probably similar to many other cities in Asia with Trans-Pacific traffic, large demand but not a lot of high-yielding traffic. For example, PR and QF are probably similar in that regard with having the lions-share of the limited high yielding traffic on MNL-LAX/SFO and BNE-LAX respectively.

In addition, UA's brand recognition in BNE (outside of aviation gunzels) was also minimal before the VA partnership, only showing up in the codeshares with NZ, any increase in awareness for UA outside of the new VA partnership will likely require marketing via the recently announced Queensland Aviation Subsidy fund in partnership with the Airports, Tourism Queensland and Queensland Government.