Air New Zealand this week announced a new strategy built around a simplified pricing structure for Trans-Tasman fares, complete with a simplified on-board product offering.
Translation: Business Class is out, modified (or perhaps "glorified" is a better word) economy seating is in.
The new 4-tiered product and pricing approach is apparently as follows: the lowest price gives you a seat, a coffee or tea and access to entertainment; next highest price gives you the previous plus checked bags; 3rd highest adds a meal and drinks and the most expensive option features lounge access and a confirmed empty seat next to you. How luxurious.
According to Air New Zealand, they are on average only selling 1 Biz Class seat on any given Trans Tasman flight, so the thinking is that perhaps a 3-ish hour flight is not long enough to justify the higher cost of a Business Class product. So they're going to change their cabins to swap out Biz Class seats for Economy seating, but with the above mentioned flexible configurations and on-board amenities to choose from in order to determine the price for the seat. And, they hope, convince those seeking a more up-market product can be achieved with a standard Economy seat - with "perks."
From a creativity standpoint, I think this is admirable and followng on their announcement a few weeks ago of their Skycouch "lie-flat" long-haul Economy product it reinforces to me that the Kiwi carrier continues to push the creative envelope that Qantas seems to not even want to open. That being said - will this idea really fly?
First challenge: making sure corporate travel managers can figure out what level(s) of this new fare structure and related onboard product fits into their travel policy. Obviously if a company's current Trans Tasman policy is business, which of the 4-tiered product is an appropriate replacement? The 3rd-highest priced option with free drinks and a meal, or the most expensive option which provides those features plus lounge access and a blocked adjacent seat? Believe it or not, some companies still have an "International Flight = Business Class" policy which now will have to be re-thought should that company fly Air New Zealand. Or perhaps this may backfire and Air New Zealand customers my decide just to switch rather than deal with re-working their policy. Interesting...any corporate travel managers out there in the Cafe' care to comment?
Next Challenge: Convincing road warriors that this is a "premium" product. Yes, AKL-SYD isn't exactly the Kangaroo Route, but there are indeed plenty of business travellers who think that having to carry their passport (at least for now - soon NZ and Australia will eliminate that hassle of immigration...yeah!) means they're entitled to a Business Class seat. To most of them, the size of the seat is more important than whether the one next to you is empty, and especially if there's no incremental legroom in the new product then I'd predict this approach will fall flat with Business Travellers used to bigger seats.
Last Challenge: avoiding nose removal for facial spite. This move by Air New Zealand, although at the moment seems prudent due to GFC hangovers and a continued challenging operating environment, adds to the trend of carriers pulling out of premium products citing what they see as an irreversible trend in premium traffic. Qantas and BA both recently have stated they are changing aircraft product offerings as they don't see a near-term recovery in corporate premium purchasing. However, this could be short-sighted, as several corporate travel managers and a TMC leaders have commented to me lately that since the start of 2010, carriers that feature premium products prominently (try saying that 5 times quickly) like Singapore, Emirates, Etihad and Virgin Atlantic are enjoying quite full Biz Class cabins and in fact getting seats on top routes require booking a month in advance. Perhaps this is perception rather than reality as the airlines' recent financial reports do seem to be quite glum. But let's not write off premium traffic just yet, as my recent travels have seen full cabins, business people anxious to get out on the road, and a First Class lounge at LAX which had to ask people to remove their bags from seats in order to fit all the people in. No lack of premium demand there...
Thursday, March 25, 2010
Wednesday, March 17, 2010
Aussie, Aussie, Aussie....or U-S-A, U-S-A, U-S-A?
Ok, so in last week’s Cafe I said that after my relatively enjoyable A380 experience on Qantas, I wasn’t even going to bother evaluating the forthcoming US domestic flight as I had assumed it would be “completely awful.” Well, I was wrong.
It was worse.
But I’m not going to use this week’s Cafe (writing it as I am during a lovely 4-hour layover in LAX, but thankfully the relatively new Qantas lounge is my refuge rather than having to deal with the atrocious American Airlines “Admirals” Club...which should be court-martialled) as a rehash of American Airlines’ tiny seats, tiny flop-down TV screens, tiny inventory of pay-for-the-privilege onboard food (they ran out) or apparently tiny baggage staff at O’Hare (took 40 minutes to get my bags.)
Rather, I’d like to use this opportunity to comment on what I see are the glaring differences between flying in the Australasian region, and flying in the USA. You may think that this would be quite a simple exercise (Australasia good, USA bad.) Not so fast, person squished into seat 23B - which on some American planes is actually an aisle seat thanks to a silly 2-3 configuration which I thought is what I was booked into but on flight AA1006 from LAX-ORD actually is a B737 which makes 23B a middle and therefore why didn’t American move me to an aisle seat as I am an Emerald One World frequent flier for the love of all things human...don’t you even care about your most loyal customers?
But I digress.
My thoughts and ruminations on the differences – note not just the good vs. the bad – of flying in the USA vs. Australasia:
It’s better in Australasia because:
- Many flights – even domestic Australian flights - will find you on wide-body planes. I don’t care if the Qantas CityFlyers from SYD-MEL are on thousand-year-old B767’s, it beats a single-aisle plane any day of the week. And flying an A330 across Australia from Sydney to Perth is like a Rolls Royce compared to the Yugo-like B757’s I usually get flying from Philadelphia to Los Angeles in the US. Opinion: the B757 is the most diabolical aircraft on the planet. Discuss.
- People. Or rather, a lack thereof. Barring a domestic Chinese flight, or trying to get a bowl of cereal at 8am or a sandwich at 5pm in any Qantas Club in Australia, most of the time it just seems like flying around Australia and Asia seems less crowded. Maybe it’s because the airports are bigger, or the planes are bigger, or most likely its because the USA is still by far the largest travel market in the world. Whatever the reason, I just think that travelling in this part of the world gives you room to breathe. Dissenting opinions, anyone?
- Lounges that actually are relaxing, productive and inviting, rather than justifying their existence by basically having an ambiance that says “well at least you’re not out in the main terminal.” Frankly, many US airport terminals loaded with fast-food outlets are actually more welcoming than the airline lounges.
- Cross-alliance frequent fliers matter. I never joined their frequent flier program, but Cathay Pacific ALWAYS acknowledged my OneWorld status and made sure I had the seat I wanted and/or offered upgrades. Hey American – please remember you are part of the OneWorld Alliance, now can my Emerald status please allow me into this lounge I don’t want to come into anyway?
It’s better in the USA because:
- Choice. Yes, it’s often the best of a bad lot, but let’s face it – on any given route you likely have a dizzying array of airline choices. And if the US carriers ever get their act back together and sort out where they are good and where they are not, a plethora of competitive options will always be a good thing for travellers.
- Decent carry-on food options in the terminal. Now, you may argue that this is just a by-product of the removal of free food on flights, but at the end of the day, if I can get a huge roast turkey sandwich with all the fixings which was made fresh by Chili’s just an hour ago, pop it into my carry-on, and nosh on it during the flight, that’s not a bad thing. And although I still appreciate a free beer on Qantas CityFlyer flights between 4-7pm, no amount of Qantas’ “bento boxes” they’re passing off as onboard meals these days is going to get me to give up my Chili’s roast turkey sandwich. Mmmmm.....
- Camaraderie. It’s amazing – back when airlines in the US started charging for bags, all the travel blogs and news articles were speaking of “air rage” and “passengers bills of rights” to deal with all the headaches resulting from people bringing on board their bags rather than checking them. A couple of overstuffed overhead bin years later, and I am seeing quite an interesting development – what I’m calling the “Air Team” mentality. It now seems as though everyone dealing with the drudgery of US air travel now is realising everyone’s in this mess together, and the cooperation and team work I saw this past week was quite interesting. I’m talking fire bucket brigade-type operations where the guy in 7D has to put his laptop bag back by 27D due to no more space above his seat, and people were passing his bag down the aisle to the flight attendant in back. When we landed, process reversed and voila- by the time the door opened Mr. 7D had his bag and we all zipped off. Beautiful.
- Politeness. Sorry Aussies, but when it comes to apologising for bumping your head with a laptop bag while squeezing down a tight aisle, Americans come up trumps with politeness. I got smacked on my Qantas flight with such a bag and although the guy did turn around to see what got in his bag’s way, no acknowledgement of the shiner on my head was forthcoming. When stuck in my middle seat from LAX-ORD, the guy in the middle seat in front of me actually turned around and ASKED ME if I minded if he put his seat back a bit. Why not at all my good man, go right ahead. See how easy that is?
Anyway, enough of my drabbling on...did I mention I have a 4-hour layover? So, Cafe regulars, what do you think? Who’s got the better flying environment? And what are your observations about what’s good and what’s bad about air travel in your parts of the world? Let’s hear it. And I’ll see you in Sydney after I land in what seems to be about 5 days from now....
It was worse.
But I’m not going to use this week’s Cafe (writing it as I am during a lovely 4-hour layover in LAX, but thankfully the relatively new Qantas lounge is my refuge rather than having to deal with the atrocious American Airlines “Admirals” Club...which should be court-martialled) as a rehash of American Airlines’ tiny seats, tiny flop-down TV screens, tiny inventory of pay-for-the-privilege onboard food (they ran out) or apparently tiny baggage staff at O’Hare (took 40 minutes to get my bags.)
Rather, I’d like to use this opportunity to comment on what I see are the glaring differences between flying in the Australasian region, and flying in the USA. You may think that this would be quite a simple exercise (Australasia good, USA bad.) Not so fast, person squished into seat 23B - which on some American planes is actually an aisle seat thanks to a silly 2-3 configuration which I thought is what I was booked into but on flight AA1006 from LAX-ORD actually is a B737 which makes 23B a middle and therefore why didn’t American move me to an aisle seat as I am an Emerald One World frequent flier for the love of all things human...don’t you even care about your most loyal customers?
But I digress.
My thoughts and ruminations on the differences – note not just the good vs. the bad – of flying in the USA vs. Australasia:
It’s better in Australasia because:
- Many flights – even domestic Australian flights - will find you on wide-body planes. I don’t care if the Qantas CityFlyers from SYD-MEL are on thousand-year-old B767’s, it beats a single-aisle plane any day of the week. And flying an A330 across Australia from Sydney to Perth is like a Rolls Royce compared to the Yugo-like B757’s I usually get flying from Philadelphia to Los Angeles in the US. Opinion: the B757 is the most diabolical aircraft on the planet. Discuss.
- People. Or rather, a lack thereof. Barring a domestic Chinese flight, or trying to get a bowl of cereal at 8am or a sandwich at 5pm in any Qantas Club in Australia, most of the time it just seems like flying around Australia and Asia seems less crowded. Maybe it’s because the airports are bigger, or the planes are bigger, or most likely its because the USA is still by far the largest travel market in the world. Whatever the reason, I just think that travelling in this part of the world gives you room to breathe. Dissenting opinions, anyone?
- Lounges that actually are relaxing, productive and inviting, rather than justifying their existence by basically having an ambiance that says “well at least you’re not out in the main terminal.” Frankly, many US airport terminals loaded with fast-food outlets are actually more welcoming than the airline lounges.
- Cross-alliance frequent fliers matter. I never joined their frequent flier program, but Cathay Pacific ALWAYS acknowledged my OneWorld status and made sure I had the seat I wanted and/or offered upgrades. Hey American – please remember you are part of the OneWorld Alliance, now can my Emerald status please allow me into this lounge I don’t want to come into anyway?
It’s better in the USA because:
- Choice. Yes, it’s often the best of a bad lot, but let’s face it – on any given route you likely have a dizzying array of airline choices. And if the US carriers ever get their act back together and sort out where they are good and where they are not, a plethora of competitive options will always be a good thing for travellers.
- Decent carry-on food options in the terminal. Now, you may argue that this is just a by-product of the removal of free food on flights, but at the end of the day, if I can get a huge roast turkey sandwich with all the fixings which was made fresh by Chili’s just an hour ago, pop it into my carry-on, and nosh on it during the flight, that’s not a bad thing. And although I still appreciate a free beer on Qantas CityFlyer flights between 4-7pm, no amount of Qantas’ “bento boxes” they’re passing off as onboard meals these days is going to get me to give up my Chili’s roast turkey sandwich. Mmmmm.....
- Camaraderie. It’s amazing – back when airlines in the US started charging for bags, all the travel blogs and news articles were speaking of “air rage” and “passengers bills of rights” to deal with all the headaches resulting from people bringing on board their bags rather than checking them. A couple of overstuffed overhead bin years later, and I am seeing quite an interesting development – what I’m calling the “Air Team” mentality. It now seems as though everyone dealing with the drudgery of US air travel now is realising everyone’s in this mess together, and the cooperation and team work I saw this past week was quite interesting. I’m talking fire bucket brigade-type operations where the guy in 7D has to put his laptop bag back by 27D due to no more space above his seat, and people were passing his bag down the aisle to the flight attendant in back. When we landed, process reversed and voila- by the time the door opened Mr. 7D had his bag and we all zipped off. Beautiful.
- Politeness. Sorry Aussies, but when it comes to apologising for bumping your head with a laptop bag while squeezing down a tight aisle, Americans come up trumps with politeness. I got smacked on my Qantas flight with such a bag and although the guy did turn around to see what got in his bag’s way, no acknowledgement of the shiner on my head was forthcoming. When stuck in my middle seat from LAX-ORD, the guy in the middle seat in front of me actually turned around and ASKED ME if I minded if he put his seat back a bit. Why not at all my good man, go right ahead. See how easy that is?
Anyway, enough of my drabbling on...did I mention I have a 4-hour layover? So, Cafe regulars, what do you think? Who’s got the better flying environment? And what are your observations about what’s good and what’s bad about air travel in your parts of the world? Let’s hear it. And I’ll see you in Sydney after I land in what seems to be about 5 days from now....
Thursday, March 11, 2010
The "Sky Try" - Qantas A380 from SYD-LAX
OK, so I’ve wanted to fly this behemoth for ages, not so much because it’s big, but mainly because I’ve heard more about the onboard experience than anything else. The A380 gets lots of press for being big, but let’s face it – there hasn’t been a brand new aircraft that’s come out for ages and so forgetting all the hype about size – what’s cool about it inside?!
So I booked myself a QF Frequent Flyer ticket in Economy, and with the economy the way it is nowadays, more and more of my flying companions in the back of the bus (well, in the A380’s case, it’s the lower deck of the bus) are business travellers whose companies have cut back on travel costs. So mingled in with the holiday makers’ bags of stuffed koalas and duty free hauls are wheelie computer bags stuffed with laptops and travel gear, so this “Sky Try” perspective is from that of the poor business traveller who’s previously enjoyed flying a bit more towards the front/top deck of the airplane.
Which brings me to the first comment about the A380 – finally, power points in Economy! It’s ridiculous that it’s taken a brand new aircraft for Qantas to put this incredibly valuable feature in on their long-haul product but hey, there it is. And to be fair to Qantas, most other airlines have missed this trick as well but given QF’s volume of biz travellers it would have been good to have a long time ago. For those business travellers who also need to work the entire trip, they’ve taken a few pages out of the Business class product and put them into Economy like serve-yourself food and drinks all throughout the flight (great for the all-night Powerpoint cram sessions) as well as pinpoint-accurate lighting for each individual seat.
Now, speaking of seats, these new Economy seats finally have a design element to them that Qantas’ much loved designer Marc Newson actually HAS done right – when you recline, the bottom slides out a bit to give you an feeling of more “flatness” in the seat. Very comfy by Economy standards. Mr. Newson has received much praise in the design press (and of course from Qantas) for his Skybed Business Class product but I’ve always thought it was way over-rated. With the A380 Economy seat, however, he seems to have gotten it right. Integrated netting-style foot rests are also quite a nice touch, mounted under the seat in front of you.
Where Mr. Newson goes wrong again quickly, however, is in the overall cabin design. In a word- boring. In two words, boring and drab. I was in the second of three economy sections and apparently he thought it was a good idea to break up the monotony of dark red seat colours by adding in a section of hideous “gecko green” seats. Yikes. Thank God most of the flight is at night because having to look at those green seats in the daylight could give you a headache.
But once we get away from the design elements the Qantas A380 really is a good aircraft and a good on-board product. Topping the list of good improvements is the new “iQ” entertainment system, which is very easy to use, has an outstanding and extensive list of movies, TV shows and music, and has a very sharp screen with good picture quality. The “A to Z” search feature was great to quickly scan all the movie choices without having to determine whether “Inglourious Basterds” is categorised as a comedy, new release or Oscar nominee. (FYI, I’m not quite sure on the first point, definitely it’s not the second, but indeed it was the third.)
But the “way coolest” feature by far is the tail-mounted camera which gives you a birds-eye view looking down the fuselage from above, which you can dial up on screen during take-off and landing. Finally we get to see something like what the pilots see. Like I said – way cool!
So, overall the A380 itself is a beautiful, big, well-built, quiet and excellent aircraft. Qantas has taken this opportunity to (at least in Economy) create a much better flying experience for the traveller but as with all new Qantas products they’ve left a few things off that would have been much better. A more warm and welcoming cabin with better colour schemes would have made a huge difference in the feel of the airplane, and given all the space they had to play with I’m surprised they couldn’t come up with a Skycouch-type product like Air New Zealand has done. The closest thing to a sky couch was my actual seat -71D, which as reported in the inaugural Friday Morning Cafe indeed has no seat in front of it and makes for a “luxurious” Economy class experience. Now on to a US domestic flight which I won’t even bother to comment on as I know it will be completely awful.
CAFE OPENING HOURS UPDATE: Next week’s (March 20) Cafe is likely to be either a bit early or a bit late, as I’ll be on the return flight from LAX next Thursday. Apologies in advance if the Cafe isn’t open first thing on Friday! Cheers.
So I booked myself a QF Frequent Flyer ticket in Economy, and with the economy the way it is nowadays, more and more of my flying companions in the back of the bus (well, in the A380’s case, it’s the lower deck of the bus) are business travellers whose companies have cut back on travel costs. So mingled in with the holiday makers’ bags of stuffed koalas and duty free hauls are wheelie computer bags stuffed with laptops and travel gear, so this “Sky Try” perspective is from that of the poor business traveller who’s previously enjoyed flying a bit more towards the front/top deck of the airplane.
Which brings me to the first comment about the A380 – finally, power points in Economy! It’s ridiculous that it’s taken a brand new aircraft for Qantas to put this incredibly valuable feature in on their long-haul product but hey, there it is. And to be fair to Qantas, most other airlines have missed this trick as well but given QF’s volume of biz travellers it would have been good to have a long time ago. For those business travellers who also need to work the entire trip, they’ve taken a few pages out of the Business class product and put them into Economy like serve-yourself food and drinks all throughout the flight (great for the all-night Powerpoint cram sessions) as well as pinpoint-accurate lighting for each individual seat.
Now, speaking of seats, these new Economy seats finally have a design element to them that Qantas’ much loved designer Marc Newson actually HAS done right – when you recline, the bottom slides out a bit to give you an feeling of more “flatness” in the seat. Very comfy by Economy standards. Mr. Newson has received much praise in the design press (and of course from Qantas) for his Skybed Business Class product but I’ve always thought it was way over-rated. With the A380 Economy seat, however, he seems to have gotten it right. Integrated netting-style foot rests are also quite a nice touch, mounted under the seat in front of you.
Where Mr. Newson goes wrong again quickly, however, is in the overall cabin design. In a word- boring. In two words, boring and drab. I was in the second of three economy sections and apparently he thought it was a good idea to break up the monotony of dark red seat colours by adding in a section of hideous “gecko green” seats. Yikes. Thank God most of the flight is at night because having to look at those green seats in the daylight could give you a headache.
But once we get away from the design elements the Qantas A380 really is a good aircraft and a good on-board product. Topping the list of good improvements is the new “iQ” entertainment system, which is very easy to use, has an outstanding and extensive list of movies, TV shows and music, and has a very sharp screen with good picture quality. The “A to Z” search feature was great to quickly scan all the movie choices without having to determine whether “Inglourious Basterds” is categorised as a comedy, new release or Oscar nominee. (FYI, I’m not quite sure on the first point, definitely it’s not the second, but indeed it was the third.)
But the “way coolest” feature by far is the tail-mounted camera which gives you a birds-eye view looking down the fuselage from above, which you can dial up on screen during take-off and landing. Finally we get to see something like what the pilots see. Like I said – way cool!
So, overall the A380 itself is a beautiful, big, well-built, quiet and excellent aircraft. Qantas has taken this opportunity to (at least in Economy) create a much better flying experience for the traveller but as with all new Qantas products they’ve left a few things off that would have been much better. A more warm and welcoming cabin with better colour schemes would have made a huge difference in the feel of the airplane, and given all the space they had to play with I’m surprised they couldn’t come up with a Skycouch-type product like Air New Zealand has done. The closest thing to a sky couch was my actual seat -71D, which as reported in the inaugural Friday Morning Cafe indeed has no seat in front of it and makes for a “luxurious” Economy class experience. Now on to a US domestic flight which I won’t even bother to comment on as I know it will be completely awful.
CAFE OPENING HOURS UPDATE: Next week’s (March 20) Cafe is likely to be either a bit early or a bit late, as I’ll be on the return flight from LAX next Thursday. Apologies in advance if the Cafe isn’t open first thing on Friday! Cheers.
Thursday, March 4, 2010
Here's Johnny!
So perhaps the least surprising announcement in the Australian travel industry came earlier this week when Virgin Blue introduced former Qantas Executive GM John Borghetti as the new boss at Virgin. I think pretty much everyone who’s in the business here knew that as soon as Borghetti’s 12 months of non-compete time were up he’d likely pop up at another carrier, and even more likely at Virgin since Brett Godfrey announced his departure last year.
What will be very, very interesting to watch as Borghetti takes over the reins is whether he can deliver on his ultimate boss’ (Sir Richard Branson) statement that Australia’s number two airline will need to “go after the business market in a big way.” Borghetti was a big driving force behind Qantas’ business products, including the launch of their new business class early in the past decade as well as overhauling the QF flagship lounges – all critical to attracting the high-yielding corporate traveller dollar.
Virgin has done a nice job in recent years of slowly but surely adding on more features to woo business travellers, from upgraded lounges to increased flights amongst top city pairs to special seating to a greatly enhanced Velocity rewards program. These are the “fab four” of what attracts the business traveller: frequency, points, lounges and perks.
If we focused on just the fab four factors, then the good money would likely be on Qantas to continue to enjoy dominance in the business market as although Virgin has indeed greatly improved their products over the past few years, by and large they still are a bit behind Qantas in terms of frequency (although they are very close, especially on SYD-MEL) loyalty (QFF is still the biggest loyalty program in Australia),and lounges (newly refurbished domestic lounges and let’s not even try to compare the Qantas International First Class lounge to anyone else.)
With respect to perks I’ve not been able to experience Virgin Blue’s approach to upgrades, special seating requests, better meals, etc. as I’ve just not flown them enough to have an opinion, so for the sake of this discussion I’ll just call that even.
However, where things get interesting is thanks to the new frugality brought on by the GFC, and that is with fares. DJ has enjoyed strong growth since taking over from Ansett as the antipodean #2 carrier and much of that is due to their aggressive fare discounting in the leisure sector attracting cost-conscious holiday makers. Well guess what – CFO’s and corporate travel managers are the new “holiday makers” in that they too are now seeking out the best deals, the cheapest seats, and any airlines who will give that to them.
I’m afraid that like the original Fab Four, the aforementioned fab four of business travel are about to be broken up and go on solo careers as many companies aren’t concerned about who gives out the most points anymore or who has Cararra marble in their lounge bathrooms (guess which carrier that distinction belongs to?)
So, which approach will Borghetti use to woo Sir Richard’s expected corporate travellers – the QF method of providing “addictive” travel perks like swish lounges and Platinum cards, or will he go after the bottom-line minded travel buyers and CFO’s as after all, they’re the ones really holding the purse strings? Only time will tell (Borghetti apparently starts in May) but I’m sure it will be an interesting matchup to watch.
EXTRA SHOT FOR THE DAY : “AUSTRALIAN GOVERNMENT STIMULATES THE CORPORATE TRAVEL INDUSTRY”
Sorry if the headline is misleading, because I’m sure billions of dollars are not about to be put into the corporate travel industry. But about $500 million or so of government "money" is actually out there for the taking...
Talk is starting to heat up around the impending (apparently within the next 3-4 weeks) announcements by the Australia Federal Government around who wins and who loses across their $500M+ annual expenditure in travel. Airlines, hoteliers, travel agencies and technology providers are all on pins, needles and lobbyists’ hotlines waiting to hear how the Qantas dual stronghold (on air and travel management services) will be reallocated. Note that I said “how” rather than “whether” as I will be extremely surprised and not a little dismayed if nothing changes out of this process.
What’s great about this whole thing is that everyone and their mother thinks they’re going to get a slice of this enormous pie. Even Etihad is wading into the fray, as the Middle-Eastern airline’s CEO James Hogan was recently quoted as saying the six-year old carrier is fully into the bidding process. Given Qantas often complains about Mid-East carriers enjoying government subsidisation that QF hasn’t had for years, it would be slightly ironic if any of them got a slice of the Australian Government’s spend. As a taxpayer, however, I’m more than happy to have the Government fly on more cost-effective suppliers - assuming Etihad or any other carrier will indeed be cost-effective of course....
What will be very, very interesting to watch as Borghetti takes over the reins is whether he can deliver on his ultimate boss’ (Sir Richard Branson) statement that Australia’s number two airline will need to “go after the business market in a big way.” Borghetti was a big driving force behind Qantas’ business products, including the launch of their new business class early in the past decade as well as overhauling the QF flagship lounges – all critical to attracting the high-yielding corporate traveller dollar.
Virgin has done a nice job in recent years of slowly but surely adding on more features to woo business travellers, from upgraded lounges to increased flights amongst top city pairs to special seating to a greatly enhanced Velocity rewards program. These are the “fab four” of what attracts the business traveller: frequency, points, lounges and perks.
If we focused on just the fab four factors, then the good money would likely be on Qantas to continue to enjoy dominance in the business market as although Virgin has indeed greatly improved their products over the past few years, by and large they still are a bit behind Qantas in terms of frequency (although they are very close, especially on SYD-MEL) loyalty (QFF is still the biggest loyalty program in Australia),and lounges (newly refurbished domestic lounges and let’s not even try to compare the Qantas International First Class lounge to anyone else.)
With respect to perks I’ve not been able to experience Virgin Blue’s approach to upgrades, special seating requests, better meals, etc. as I’ve just not flown them enough to have an opinion, so for the sake of this discussion I’ll just call that even.
However, where things get interesting is thanks to the new frugality brought on by the GFC, and that is with fares. DJ has enjoyed strong growth since taking over from Ansett as the antipodean #2 carrier and much of that is due to their aggressive fare discounting in the leisure sector attracting cost-conscious holiday makers. Well guess what – CFO’s and corporate travel managers are the new “holiday makers” in that they too are now seeking out the best deals, the cheapest seats, and any airlines who will give that to them.
I’m afraid that like the original Fab Four, the aforementioned fab four of business travel are about to be broken up and go on solo careers as many companies aren’t concerned about who gives out the most points anymore or who has Cararra marble in their lounge bathrooms (guess which carrier that distinction belongs to?)
So, which approach will Borghetti use to woo Sir Richard’s expected corporate travellers – the QF method of providing “addictive” travel perks like swish lounges and Platinum cards, or will he go after the bottom-line minded travel buyers and CFO’s as after all, they’re the ones really holding the purse strings? Only time will tell (Borghetti apparently starts in May) but I’m sure it will be an interesting matchup to watch.
EXTRA SHOT FOR THE DAY : “AUSTRALIAN GOVERNMENT STIMULATES THE CORPORATE TRAVEL INDUSTRY”
Sorry if the headline is misleading, because I’m sure billions of dollars are not about to be put into the corporate travel industry. But about $500 million or so of government "money" is actually out there for the taking...
Talk is starting to heat up around the impending (apparently within the next 3-4 weeks) announcements by the Australia Federal Government around who wins and who loses across their $500M+ annual expenditure in travel. Airlines, hoteliers, travel agencies and technology providers are all on pins, needles and lobbyists’ hotlines waiting to hear how the Qantas dual stronghold (on air and travel management services) will be reallocated. Note that I said “how” rather than “whether” as I will be extremely surprised and not a little dismayed if nothing changes out of this process.
What’s great about this whole thing is that everyone and their mother thinks they’re going to get a slice of this enormous pie. Even Etihad is wading into the fray, as the Middle-Eastern airline’s CEO James Hogan was recently quoted as saying the six-year old carrier is fully into the bidding process. Given Qantas often complains about Mid-East carriers enjoying government subsidisation that QF hasn’t had for years, it would be slightly ironic if any of them got a slice of the Australian Government’s spend. As a taxpayer, however, I’m more than happy to have the Government fly on more cost-effective suppliers - assuming Etihad or any other carrier will indeed be cost-effective of course....
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