VS Drop SYD - Exit Australia

seansasLCY · Tue Feb 04, 2014 11:08 am

VS have announced they are dropping SYD. This will mean they exit the Australian market.

http://www.ausbt.com.au/virgin-atlan...ic-to-axe-sydney-hong-kong-flights

FCAFLYBOY · Tue Feb 04, 2014 11:37 am

Well if nothing else, this is great news for BA!

Always sad to see VS retreating from markets, however it just never made sense now the VA is around.

RyanairGuru · Tue Feb 04, 2014 11:42 am

Utterly unsurprising news. As we discussed in the other thread just a couple of days ago, that route was a sure money loser. Now I wouldn't be surprised if BA follow. There is no reason for either of them to serve the market, which if not loss making ties up a lot of resources that could be better allocated in other areas.

FCAFLYBOY · Tue Feb 04, 2014 11:44 am

Quoting RyanairGuru (Reply 2):
Utterly unsurprising news. As we discussed in the other thread just a couple of days ago, that route was a sure money loser. Now I wouldn't be surprised if BA follow. There is no reason for either of them to serve the market, which if not loss making ties up a lot of resources that could be better allocated in other areas.

I doubt BA will exit any time soon, especially now VS have left the market, they do have their own loyal following to Oz and the new route with their 77W is making great gains against the former 744 service.

If nothing else, BA will keep it for commonwealth prestige, and for one-up on VS

LHRFlyer · Tue Feb 04, 2014 12:09 pm

I'm only surprised it has taken them so long to cancel the route. It always seemed something of a vanity exercise to me.

skipness1E · Tue Feb 04, 2014 12:12 pm

Not really vanity exercise, that's rewriting history, it's just the market is much more competitve than it was once.

Irishbean · Tue Feb 04, 2014 12:18 pm

Very sad....I am a big fan of VS, their upper class product is miles ahead of BA club (in my opinion!) and their club house in LHR is one of the best lounges in the world.....Also HK is a nice stop over going down under, was better then Dubai (awful place) and Singapore. VS seem a bit lost of late....I guess they are re focusing in trans Atlantic right now. Good news for BA, I really hope they keep this route open

EK413 · Tue Feb 04, 2014 12:19 pm

Even though this news isn't a surprise I wouldn't be surprised if VA fill the gap utilising ex-EK A332 fleet.
VA is scheduled to receive an 8th factory fresh A332 frame.

EK413

allrite · Tue Feb 04, 2014 12:36 pm

That's sad. I always loved watching their elegant A346 flying over Sydney, though of course time is running out for that aircraft anyway. Got a little model of it on my desk at home. So tempted to book to HKG.

zeke · Tue Feb 04, 2014 12:51 pm

Quoting EK413 (Reply 7):

That was the plan a few years ago.

jfk777 · Tue Feb 04, 2014 1:08 pm

Surprising Virgin stopping Sydney, they have used what has to be the most inefficient airplane for that flight. Their new 787-9 would probably make it profitable, if any can from LHR to SYD. Too bad the A330-300 wouldn't work, they probably can't do LHR to HKG.

CX Flyboy · Tue Feb 04, 2014 1:25 pm

Does this mean CX can add another SYD flight?

a380787 · Tue Feb 04, 2014 1:27 pm

Question becomes will VA launch this flight to backfill the capacity ... Still surprised VA really lacks an Asian strategy other than SQ

LondonCity · Tue Feb 04, 2014 1:30 pm

Quoting jfk777 (Reply 11):
Their new 787-9 would probably make it profitable, if any can from LHR to SYD.

But whatever plane type is used, you can't escape the fact that utilisation is poor. A B787 departing London on Sunday evening for Sydney, wouldn't return until Wednesday morning.

And what about staffing costs ? And what about the costs of "putting it back together" when things go wrong, ie tech delays, bad weather etc.

These are all extra costs which are incurred by direct flight carriers plying the kangaroo route.

Cipango · Tue Feb 04, 2014 1:40 pm

I knew it was never the money maker for VS but I thought they were paying the cost for the Prestige.

Will the HKG schedule stay the same?

Also with the free'd up A346, do they have any available slots at LHR to increase capacity on a current route or perhaps start a new destination?

I've been hearing rumours of YYZ!

skipness1E · Tue Feb 04, 2014 1:45 pm

Quoting cipango (Reply 15):
Will the HKG schedule stay the same?

Still squeezed between BA's twice daily A380 and Cathay on five a day B77Ws. Surely the medium term focus is going to be Westbound rather than Eastbound?

anstar · Tue Feb 04, 2014 1:48 pm

Do any LHR 747's leases expire soon? Perhaps the spare 600 will just replace a 747???

If not then surely Atlanta has to be on the list at some point.

zeke · Tue Feb 04, 2014 1:54 pm

Quoting CX Flyboy (Reply 12):
Does this mean CX can add another SYD flight?

No, VS is not a HKG carrier.

1400mph · Tue Feb 04, 2014 1:55 pm

Well even though I wear blue in the BA / VS rugby scrum I think this news is undesirable.

BestWestern · Tue Feb 04, 2014 2:02 pm

http://virginatlantic.custhelp.com/app/answers/detail/a_id/897

Financial performance on the route has deteriorated significantly and although passenger numbers have remained static overall, the route has been losing money due to tough trading conditions. Revenues have been hit by the weakening Australian dollar, falling yields and rising operating costs.

skipness1E · Tue Feb 04, 2014 2:05 pm

Quoting 1400mph (Reply 19):
Well even though I wear blue in the BA / VS rugby scrum I think this news is undesirable.

Gives BA the best chance of keeping the BA015 running to Oz though, hopefully Mixed Fleet and using the new B77Ws will give it a chance.

cedarjet · Tue Feb 04, 2014 2:12 pm

I don't know why Virgin don't join an alliance, they bring some major trunk routes to the table (Star Alliance don't fly LHR-JFK! and a whole host of routes to Skyteam e.g. LHR to California, Dubai, HK, Tokyo, Africa) and likewise, what frequent flyer would do all those miles without earning a single point? I fly from London to Sydney every year and Virgin never occurs to me, for that exact reason - if I fly almost any other airline, I get tonnes of miles, doesn't really matter which alliance it is, I have status with all three so I am happy to make a donation to my balance with any one of them, as long as it is one of them and not none. Virgin is basically only for one-time flyers who don't travel often enough to have a loyalty to any alliance, which = high advertising costs (cos the cost of acquiring a customer isn't spread over many bookings like it might be with someone who flies LHR-NRT six times a year) and they're probably travelling on leisure so = low yield.

What is Virgin actually for?

SKAirbus · Tue Feb 04, 2014 2:54 pm

Quoting skipness1E (Reply 21):
Gives BA the best chance of keeping the BA015 running to Oz though, hopefully Mixed Fleet and using the new B77Ws will give it a chance.

I reckon they will put the 789 on it eventually... better economics and less capacity. Although it depends on whether they will put a first class cabin in the 789.

BA0197 · Tue Feb 04, 2014 2:55 pm

I'm quite surprised VS has had this route for such a long time. 3 Aircraft have to be dedicated to the LHR-SYD route. To put that in perspective, VS could, as a result of their DL venture, now open daily flights up to ATL, MSP and CVG with the cancellation of this one route. Very logical for such a small, niche airline.

I'm sure BA have a smirk on their face right now. Ever since the 77W introduction on the route, BA found their niche aircraft to operate the route. I'm sure that in addition to their informal Commonwealth ties, BA is making a small profit on the route (or deems it a necessary point in their network regardless of profitability).

a380787 · Tue Feb 04, 2014 2:59 pm

Quoting BA0197 (Reply 24):
I'm quite surprised VS has had this route for such a long time. 3 Aircraft have to be dedicated to the LHR-SYD route. To put that in perspective, VS could, as a result of their DL venture, now open daily flights up to ATL, MSP and CVG with the cancellation of this one route. Very logical for such a small, niche airline.

They're also using a plane too big. I thought the new build 333s can do both LHR-HKG and HKG-SYD legs just fine ?

BA0197 · Tue Feb 04, 2014 3:07 pm

Quoting a380787 (Reply 25):
They're also using a plane too big. I thought the new build 333s can do both LHR-HKG and HKG-SYD legs just fine ?

I don't have offical figures to show, but I had rather thought that yield was the problem on LHR-SYD and not load factor. I'm sure they were filling up the plane, just not charging appropriate fares for the service (and the market conditions). This, combined with them flying not the most economical aircraft on this route is what did in the service. I'm quite sure that the 744 was suited for the HKG market and does rather fine, it was simply a mater of need that VS had to service this route with the 744 because HKG is suited to that aircraft. Also VS were scared to compete head to head with BA, QF, and SQ from SIN.

As a result of them dropping the HKG-SYD sector, I have no doubt whatsoever that VS will be launching a daily flight to a DL hub (ATL seems likely so that VS can carry they J-class market across the Atlantic with their better product). This cancellation will allow for an additional aircraft to be scheduled.

BestWestern · Tue Feb 04, 2014 3:16 pm

Quoting BA0197 (Reply 26):
I don't have offical figures to show, but I had rather thought that yield was the problem on LHR-SYD and not load factor. I'm sure they were filling up the plane, just not charging appropriate fares for the service (and the market conditions).

Correct - and Virgin have said the same.

The LON HKG yields are also dire, especially for one stop connections.

1400mph · Tue Feb 04, 2014 3:37 pm

Quoting skipness1E (Reply 21):
Gives BA the best chance of keeping the BA015 running to Oz though, hopefully Mixed Fleet and using the new B77Ws will give it a chance.

It is mixed fleet already isn't it ?

skipness1E · Tue Feb 04, 2014 3:40 pm

Quoting 1400mph (Reply 28):
It is mixed fleet already isn't it ?

It is indeed.

BA0197 · Tue Feb 04, 2014 3:43 pm

Quoting 1400mph (Reply 28):
It is mixed fleet already isn't it ?

It is, yes. This coincided with the 77W introduction on the route.

Oykie · Tue Feb 04, 2014 3:56 pm

I have tried to book a flight from Norway through LHR to SYD to fly with VS. But everytime they ended yo being the more expensive option.

I really hope that VS, VA and VX all start codesharing and interlining their routes. I have always imagined flying Virgin brand around the globe. But you have to book all tickets separately.

slinky09 · Tue Feb 04, 2014 4:03 pm

Quoting FCAFLYBOY (Reply 1):
Now I wouldn't be surprised if BA follow. There is no reason for either of them to serve the market, which if not loss making ties up a lot of resources that could be better allocated in other areas.

I agree. When you look at how BA is down to a solitary 777 from where they once were ...

Quoting FCAFLYBOY (Reply 3):
If nothing else, BA will keep it for commonwealth prestige, and for one-up on VS

The days of BA flying a loss making route for prestige are, I think, long over.

Quoting skipness1E (Reply 5):
Not really vanity exercise, that's rewriting history, it's just the market is much more competitve than it was once.

Absolutely, in the ten years VS has visited SYD the market and options have changed hugely. Let's just leave it at EK.

Quoting LondonCity (Reply 14):
And what about staffing costs ? And what about the costs of "putting it back together" when things go wrong, ie tech delays, bad weather etc.

VS has a HKG crew base which I guess may also go, but HKG was always reputedly a good route for VS with high yields and lots of cargo. It was once 2x daily too until some leased slot holdings ran out. I do hope VS stays with HKG but as has been said, the focus is on UK-USA now.

hibtastic · Tue Feb 04, 2014 4:06 pm

I love the Virgin brand. I like its youthful and less formal feel. I also love the fact that the airline was set up by a British entrepreneur and has been relatively successful over the years. If there was a dream job for me it would be Richard Branson's haha.

In all seriousness I think we will see lots of changes at VS over the next few years which will hopefully result in a stronger more competitive airline. Its clear though that VS's bread and butter has to be its offering across the Atlantic. I am also hoping Little Red prove's its worth this year - I will be trying them out between EDI and DXB later this month.

anstar · Tue Feb 04, 2014 4:22 pm

Quoting a380787 (Reply 25):
They're also using a plane too big. I thought the new build 333s can do both LHR-HKG and HKG-SYD legs just fine ?

The VS ones dont have crew rest and as it is required on that distance they wouldnt be able to operate. I think 13.5 hours on a 333 would be a bit of a stretch with any decent payload.

Quoting slinky09 (Reply 32):

VS has a HKG crew base which I guess may also go,

The HKG base has been around since HKG started so I think it will stay - however it will be reduced.

TC957 · Tue Feb 04, 2014 4:32 pm

It will interesting to see if VS start extra HKG rotations, perhaps with their B789's later this year, as they had always wanted to. Also would a freed-up A346 from SYD be used for other new Asian routes - SIN ? There's not so much capacity on LHR-SIN as there used to be when QF has 2 A380's going that way.
But I agree that ATL and probably a return to YYZ must surely be on the cards as well.

1400mph · Tue Feb 04, 2014 4:36 pm

Quoting slinky09 (Reply 32):
I agree. When you look at how BA is down to a solitary 777 from where they once were ...

Well if they didn't dump it when it was running at a loss I can't see them doing so when it's profitable.

Quoting slinky09 (Reply 32):
The days of BA flying a loss making route for prestige are, I think, long over.

I don't think it's prestige I think it's obligation. SYD is entirely unique in this respect ref the BA network and obligation is bearable when it's profitable.

IF BA were losing money 'hand over fist' on the route they would very reluctantly pull out of the 'continent' but they are not.

Quoting BA0197 (Reply 24):
Ever since the 77W introduction on the route, BA found their niche aircraft to operate the route. I'm sure that in addition to their informal Commonwealth ties, BA is making a small profit on the route

Correct....there is just no way British Airways will drop the Australian continent.

We have reached a point where competition just cannot get any fiercer....if anything VS gone is just another reason to stay.

QF now routing through DXB is also another boost. Some much prefer Singapore.

vv701 · Tue Feb 04, 2014 4:44 pm

Quoting SKAirbus (Reply 23):
Although it depends on whether they will put a first class cabin in the 789.

At the IAG Capital Markets Day on 15 November it was stated that BA's 787-9 will be configured with just 8 F Class seats. The planned configuration of the other three cabins on the 787-9 was not announced.

slinky09 · Tue Feb 04, 2014 4:49 pm

Quoting TC957 (Reply 35):
It will interesting to see if VS start extra HKG rotations, perhaps with their B789's later this year, as they had always wanted to.

Dropping SYD doesn't release a LHR slot pair, so any NA expansion needs to come from acquiring slots, or DL being friendly.

anstar · Tue Feb 04, 2014 4:52 pm

Quoting slinky09 (Reply 38):
Dropping SYD doesn't release a LHR slot pair, so any NA expansion needs to come from acquiring slots, or DL being friendly.

My money is on one of the LHR 747's going this year and being replaced with the freed up 346.... either that or another 343 leaves earlier than planned.

A388 · Tue Feb 04, 2014 5:06 pm

Quoting skipness1E (Reply 16):
Quoting cipango (Reply 15):
Will the HKG schedule stay the same?

Still squeezed between BA's twice daily A380 and Cathay on five a day B77Ws. Surely the medium term focus is going to be Westbound rather than Eastbound?

The Kangaroo route isn't my field of expertise but wow, does CX fly LHR-HKG fives times a day, seven days a week and BA flies LHR-HKG twice a day with the A380? I can imagine the LHR-HKG route being quite lucrative but wouldn't imagine it to warrant so many daily flights. Amazing...

A388

ytz · Tue Feb 04, 2014 5:58 pm

Quoting LondonCity (Reply 14):
But whatever plane type is used, you can't escape the fact that utilisation is poor. A B787 departing London on Sunday evening for Sydney, wouldn't return until Wednesday morning.

This is going to be a totally noob question: why can't VS cooperate with VA at HKG to offer a sort-of seamless (or rather similarly branded) service to Oz?

rutankrd · Tue Feb 04, 2014 6:18 pm

Quoting ytz (Reply 41):
This is going to be a totally noob question: why can't VS cooperate with VA at HKG to offer a sort-of seamless (or rather similarly branded) service to Oz?

The franchises are not related since the major shareholders in Virgin Atlantic moved from Singapore to Atlanta.

Virgin Group (SRB) will franchise anything for a fee !

From fizzy drinks, finance, media,phones and trains -All are partnered with other companies Usually specialists in said field doing the heavy lifting !

That said there is nothing commercially stopping them.

phunc · Tue Feb 04, 2014 6:28 pm

Quoting 1400mph (Reply 19):
Well even though I wear blue in the BA / VS rugby scrum I think this news is undesirable.

Admirable - You're the most anti VS person on this forum!

Why do you rate it undesirable?

Quoting cedarjet (Reply 22):
What is Virgin actually for?

Choice?

Quoting SKAirbus (Reply 23):
Although it depends on whether they will put a first class cabin in the 789.

I thought they were?

Quoting anstar (Reply 34):

Quoting a380787 (Reply 25):
They're also using a plane too big. I thought the new build 333s can do both LHR-HKG and HKG-SYD legs just fine ?

The VS ones dont have crew rest and as it is required on that distance they wouldnt be able to operate. I think 13.5 hours on a 333 would be a bit of a stretch with any decent payload.

Spot on from Anstar. No crew rest plus the LHR-HKG-LHR sector is way too much of a stretch for a 330-300. Max fuel is c74T. The 200 could maybe have the range as it has bigger tanks. Certainly payload restrictions would be in order.

Quoting A388 (Reply 40):
The Kangaroo route isn't my field of expertise but wow, does CX fly LHR-HKG fives times a day, seven days a week and BA flies LHR-HKG twice a day with the A380? I can imagine the LHR-HKG route being quite lucrative but wouldn't imagine it to warrant so many daily flights. Amazing...

Don't forget the connections CX has out of HKG. A lot of pax on those CX flights may be connecting to regional Asia flights; MNL, SGN etc... Plus CX has a feed of OW airlines at LHR from Europe. Same for BA. They both have a great network of connectors whereas VS struggle.

I think the APD taxes have played a part here. If connecting through LHR within 24HRS, less APD is changed (if any?). Thus BA can bring pax into and out of LHR without having to charge them the highest APD rate. VS, possibly being o&d, will have to apply the highest APD to the fare.

In terms of the Kangaroo route, LHR-HKG-SYD means highest APD. LHR-DXB-SYD is less APD. EK and QF can yield more profit for themselves rather than the government.

Quoting ytz (Reply 41):
This is going to be a totally noob question: why can't VS cooperate with VA at HKG to offer a sort-of seamless (or rather similarly branded) service to Oz?

You'd think that but I find it non-existent. Can one book a flight from LHR to CBR/ADL/CNS etc... with seamless ticketing and transiting onto VA? From UK regional airports, say MAN - CBR, EK / EY could get you there with two stops rather than three.

ytz · Tue Feb 04, 2014 6:30 pm

Quoting rutankrd (Reply 42):
The franchises are not related since the major shareholders in Virgin Atlantic moved from Singapore to Atlanta.

Oh I totally get that. But, they do have codeshares and the same brand.

I suppose that more broadly my question is why do eurocarriers bother on going the whole way on the Kangaroo route. Even BA. Why not just do LHR-DXB/SIN/HKG/etc and leave the other leg to a partner carrier? Why do the Europeans insist on flying the whole route themselves?

Makes no sense to me that BA (and VS) until recently insist on continuing onwards to Australia. At least QF helps EK with slot issues so there are reasons to continue onwards. But why doesn't BA leave Aus connections to CX or VS to VA?

To me the Kangaroo routes could be managed with a JV....QF might have come off better in that scenario and not had to turn to EK. I could imagine for example BA, MH and QF cooperating at KUL on PER, ADL and MEL routes and BA, CX and QF cooperating at HKG on SYD, BNE, AKL routes. VS and VA similarly cooperating at multiple transit points.

[Edited 2014-02-04 10:41:50]

1400mph · Tue Feb 04, 2014 6:52 pm

Quoting phunc (Reply 43):
Admirable - You're the most anti VS person on this forum!

Tongue in cheek - the way they grassed up BA in the price fixing thing was the last straw !

Quoting phunc (Reply 43):
Why do you rate it undesirable?

Well I'm not sure of the wisdom in VS operating to SYD from the U.K in the first place given the other places they could have surely used their limited resources more profitably.

That said I think it 'undesirable' because no doubt their hand is being forced by DL who wish to see a return on their investment by pulling as much of VS onto the north Atlantic as possible. Totally understandable from their perspective.

Secondly, with the amount of traffic on the Kangaroo route I think it sad that apart from BA neither British VS or Australian QF can independently make a route that starts and ends in Britain and Australia work anymore. I don't want to get into the pros and cons of state owned airlines in the middle east but to me that fact is just 'wrong'.

skipness1E · Tue Feb 04, 2014 6:59 pm

"Europeans" don't offer service to Australia anymore, all the legacies bar BA have now dropped out. The market is now better served via the middle east with a one stop service to points East. As to why BA are still there, well there's history. They've been there since BOAC and had a strong JV with Qantas until the rise of the desert rats. It would be more profitable to redeploy the aircraft elsewhere for sure, however BA has retreated and downsized from a lot of places. They're no longer the World's Favourite Airline.

So if they can maintain one single profitable Sydney connection attached to a strongly performing Singapore, then there's a good reason to keep going. BA succeeded (just) when all before them fell. Yeah a JV would make more sense but it's not all about the bottom line in business.

anstar · Tue Feb 04, 2014 7:11 pm

Quoting ytz (Reply 41):
This is going to be a totally noob question: why can't VS cooperate with VA at HKG to offer a sort-of seamless (or rather similarly branded) service to Oz?

Because VA push all their EU pax through AUH.

I believe VA have a JV with EY to AUH and that probably sways the decision. EY is closer to VA then VS. Plus VS/VA have never had a super close relationship.

deconz · Tue Feb 04, 2014 8:21 pm

Quoting phunc (Reply 43):
In terms of the Kangaroo route, LHR-HKG-SYD means highest APD. LHR-DXB-SYD is less APD.

It's not that simple! APD is charged based on your final destination. If you stopover in DXB then yes, APD would be less. Connecting within 24 hours and you pay the highest band so your choice of transit point makes no difference.

ytz · Tue Feb 04, 2014 8:24 pm

Quoting anstar (Reply 47):
Because VA push all their EU pax through AUH.

So VA aside, why not VN then?

Quoting skipness1E (Reply 46):
They've been there since BOAC and had a strong JV with Qantas until the rise of the desert rats.

But apparently QF doesn't feel the same right?

Quoting skipness1E (Reply 46):
Yeah a JV would make more sense but it's not all about the bottom line in business.

Really? That's not what airlines say when they fight the entry of new competitors or when they cut back on passenger amenities.

skipness1E · Tue Feb 04, 2014 8:29 pm

Quoting ytz (Reply 49):
So VA aside, why not VN then?

Vietnam AIrlines?

Quoting ytz (Reply 49):

But apparently QF doesn't feel the same right?

Of course they do, that's why they maintain service to Heathrow when it may well make more sense to terminate in Dubai.

Quoting ytz (Reply 49):

Really? That's not what airlines say when they fight the entry of new competitors or when they cut back on passenger amenities.

Hmmm I see you're Canadian, I guess you're referring to Air Canada and the attempts to fend off foreign competition? The markets we're talking about are already more deregulated.

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