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financial results

Aug 10, 2017

Virgin Australia’s ‘guests’ are today’s winners from its losses

Australia's main airline customers continue to be 'spoiled rotten' as Virgin improves its financial situation

Ben Sandilands — Editor of Plane Talking

Ben Sandilands

Editor of Plane Talking

The screen on one of Virgin’s trial internet enabled jets

Virgin Australia continues to pay the price for its daring to challenge the Qantas group while its ‘guests’ reap the benefits of sustained airline competition in this country.

Those who don’t closely follow the financial media but just want Choice with a capital C can reasonably conclude that this should remain so from its full yer results to June 30 this year.

And that is whether they read stories headlining a $3.7 million underlying pre-tax loss   or an $185.8 million net loss for the period.

Virgin Australia Holding’s chief executive officer, John Borghetti, seems to be standing on reasonably firm ground in arguing that is on course for much better results, or have even turned a corner, in its quest for profitability.

But there is no such thing as truly ‘firm ground’ in the airline game. Not in demand, consumer tastes, boardroom structures, or the competing or disparate strategic interests of key stakeholders, which in VAH’s case, means Singapore Airlines, Etihad, China’s enigmatic HNA group, and the PRC conglomerate Nanshan Group.

Qantas Group at the moment is both a powerful and highly profitable enterprise, but the benefit in this for VAH is that the dominant competitor is no doubt much busier banking the money than plotting its weaker opponent’s downfall.

The risk for consumers in this situation is that competition itself might stall as a result. Virgin Australia has superior premium grade product on its Hong Kong and Los Angeles flights in the opinion of some, including this writer, and a highly credible domestic offering, but on the international routes, in its own metal, remains an almost bespoke or niche player.

Both have embraced inflight internet on all key routes,although with different technical and pricing models, with Virgin dropping a further item of clothing in its dance of the veils so to speak today by promising full international and mainline 737 jet domestic jet services in the near future.

But we wait, as more remains to be revealed by both players.

Qantas reports its full year results and no doubt, much more, on August 25.

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7 comments

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7 thoughts on “Virgin Australia’s ‘guests’ are today’s winners from its losses

  1. BARLEY

    going to USA out of Brisbane, the only real choice is Virgin. Qantas old 747 bus, is very tired & must be 30 or more years old. No other nonstops to USA mainland.

    1. comet

      Virgin 777s are very nice.

      Qantas 747s are old, but still preferable to brand new plastic 787 Dreamliners, packed like sardines 9-across. At least Qantas is flying in its own metal.

      1. Mark Skinner

        It’s not much to do with age. The QF 747s are round 15 years old, and the VA 777s are round 8 years. Hardly relevant. It’s when they did the last cabin refresh. That was in the last couple of years with VA.

    2. Giant Bird

      I just booked for USA yesterday. Very much wanted to fly Virgin. But the timing to and from my destinations in the US were unattractive or required an extra day on the trip. Qantas has a sale on and their timings and transit times were ideal. At least I have a direct from Melbourne A380 on the way over, but unfortunately a 787 on the way back. Comfort and sleep on the way back not so critical fortunately. It was $100 cheaper through an on line travel agent than direct with Qantas. Saving will go towards a better rental car.

      1. BARLEY

        which online agent ? Many of them are based now in Philippines, but with Australian phone numbers & company details, but phones always answered O/S & are useless if need to make changes etc. Flight Centre seem to have 2 at least Manila based agents, BYOjet & Aunt Betty. Looked a booking a flights on Aunt Betty, but there was no option to pay except by card with extra fees. Bit dodgy.

        1. Giant Bird

          This time the best deal was bestjet, no credit card fees. For holiday stuff it is usually straight forward. You book online, they email any schedule changes and that is it. It gets more difficult with the on-line agents sometimes when the airline screws up and you are trying to get them to fix it. Some airlines refuse to talk to you if you have booked through an agent even if it is a mistake on the airlines fault. It can be hard to ring the agent and it can take a lot of calls to sort out the problems. Although even Qantas is hard to ring these days. I had a lot of problems with Qatar last year they changed my flights only weeks after I had booked and gave me minus yes minus two hours in Doha for transit. They refused to fix it unless the request came from the travel agent. It took three months to get it all sorted. Lucky I booked 9 months in advance. In the end I got free accommodation in Doha for my 22 hour revised layover but working with Qatar through the travel agent to fix the Qatar stupid mistake was painful.
          So I will pay a bit more to book direct with the airline (but not 8% more as in this case) because most times it is simpler if you have problems but not necessarily because if you have to make major changes then the agent can give more options than just one airline.
          I feel ripped off where the airline direct is charging me more, because airline is selling it cheaper to the agent and giving them a commission as well. I have noticed recently that where you use an airfare search engine for some airlines the cheapest fare is now coming up as direct with the airline. I have not found that with Qantas. The Qantas website is only the cheapest for the most inconvenient flight times and layovers the price escalates significantly for better itineraries more than the travel agents. To me it looks like a deliberate policy to screw extra money out of Qantas loyal customers.

  2. endeavour.paul@gmail.com

    I notice Tigerair have plunged back into the red after their short lived profit.