Today’s ambush-by-trolley for unsuspecting Virgin Australia economy class travellers on higher fares, who were served free meals and drinks, is the latest move by former Qantas executive general manager John Borghetti to turn former Virgin Blue into the Qantas he had in mind before being recruited as its new CEO early last year.

Overnight Virgin Australia replaced its five fare domestic structure with three fares, two of which include meals.

Stripped of the PR puffery, they are for those of average or larger build:

Saver, or agony without complimentary food

Flexi, or agony with food, and complimentary liquor after 4 pm, and

Premium,  with any food or drinks you like, a large comfortable seat, access to the lounges, and a 69 kg luggage allowance, which is more than many passengers can carry unaided to the priority check-in point.

The premium category applies to current premium economy fares and their disappearance as the more pricey premium business class product takes over, starting with the the Sydney-Perth A330 service later this week, as well as on the 737 fleet (where some cabins have already been upgraded) and from about October, in the Embraer E-90 jets.

Flying Melbourne-Sydney today for example, the respective fare levels were $109, $199 and $425, with the last available in only eight large spacious seats seated in a glass ‘box’ at the front of the cabin (being rolled out over the next four months) rather than hidden behind a curtain from the eyes of the those paying their own way or working for companies that ban business class.

Premium is definitely conspicuous consumption in the single aisle jets.

But the logic of the fare levels is interesting, no doubt no more so than at Qantas, where it is a fair bet that the handing out of a few biscuits or a slice of fruit cake in a wrap-your-own-garbage pack with a cup of tea or coffee to passengers also paying around $400 for the same trip in economy may be over, rather quickly.

The difference in the service provided is detailed at the top of the Virgin Australia booking site. It explains how the airline intends to have everything from a low fare to a high fare offering on every jet flight, in competition with the dual branded Qantas/Jetstar strategy, or the token low cost offering from the Tiger Airways fleet, which can’t expand until the Civil Aviation Safety Authority is satisfied with its response to the recent show cause notice over issues which could have lead to it being grounded.

But the fine print needs to be studied. Virgin Australia has increased the cost of various extra charge options in its economy fares, and while those on Saver fares can buy refreshments off the trolley they will not be able to get the same meal offerings included in the Flexi fare level.

The reality is that tight cabin seating has made economy class flying miserable for most business related travel done under the terms of corporate accounts that increasingly prohibit premium fare flights on any airline.

Virgin Australia has made the misery more digestible. And female executives who are concerned about breaking through the glass ceiling in business can now look forward, literally, to breaking through the glass wall into business class.

But the Qantas responses to these changes is yet to appear, and there most likely will be one, even though it is under a lot pressure from investors, the pilot and licensed engineers unions, and better managed and far more successful international competitors.

The tactical reality for Qantas is that further cutbacks in quality or product delivery are no longer viable options.  The Virgin Australia push is about more quality at all price points, as well as reaffirming its commitment to bringing more jobs back into Australia. Willingly or otherwise, Qantas will no doubt reassess where it should be going with the Jetstar franchise, and how it deals with its international future.

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Peter Fray
Peter Fray
Editor-in-chief of Crikey
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