At the risk of too many Virgin birth metaphors in the midst of the peak pagan summer holidaying and retailing festivities, those chasing last-minute Christmas domestic airfares may have stumbled upon the resurgence of Richard Branson’s airline as the country’s most desirable — and thus costly — domestic airline.
It will cost you more to fly Virgin for Christmas in many instances than Qantas, but not by all that much, and there were some notably cheap seats offered this morning on Virgin and Qantas key routes, usually under red lettering saying “only X seats at this price left” on their booking sites.
Why is this so?
Well, the corporate coma that sets in after the last career is ruined at a company Christmas party also marks the start of a business travel drought that traditionally lasts until well into February.
Now that Virgin has transformed itself into a corporate-oriented carrier, it has to share the pain of the “survival season”, which was once solely a Qantas torment until the big end of town comes back with lots of bookings.
The domestic lounges empty, or in some cases, even close. The business-class seats are full of passengers being “rewarded” rather than passengers paying.
If David Attenborough were to pace the perimeters of the domestic-terminal wildernesses, he would intone that “the kings of the jungle must now adapt or perish” while no doubt pausing beside the empty valet parking or exclusive premium entrances to the lounges, devoid of suits, celebrities and the self-important.
In this impending survival season, Qantas and Virgin also share an additional common factor that may work for or against them: they both have wholly owned low-cost carriers, Jetstar and Tigerair respectively, each being unruly juveniles whose natural prey is, it seems, their parents.
If Qantas and Virgin can ensure their progeny only take customers off their rivals, all will be well. This morning, the difference between the best deals on Australia’s busiest air route over the holiday period — Melbourne to Sydney — between full service and low-cost brands was only around $30, or much less than a taxi or even an Uber to the airport for most travellers.
That’s not enough of a price gap to entice too many full-sized Australian adults into the confines of a low-cost cabin, with both Qantas and Virgin generally posting healthy airfares. They carefully avoid offering too many seats for sale and take advantage of customers’ willingness to pay a premium for a seat that suits travel plans before December 25 or just after January 1.
But as the rivers of money dry up later in the survival season, who will break first when it comes to offering sudden discounts to keep up the cash flow until the corporates come back to prop up the full-service loads?
This could be the hardest holiday period yet for the big two full-service domestic brands.
More than five years ago, senior Qantas executive John Borghetti was recruited to Virgin Blue as its CEO, rebranded it Virgin Australia and pursued, at very high cost, the rebirthing of the business as a full-service carrier that could attract the managed corporate, government and public institution accounts that were the Qantas honey pot.
As the latest financial results show, Borghetti has been rewarded with measured success, yet that has been overwhelmed by the comprehensive restoration of profitability at Qantas because of massive restructuring as well as fuel cost savings on its part.
Qantas’ financial health has been boosted by fleet valuation write-offs, a powerful loyalty program where it mints money out of thin air or the promise of the unattainable for the eternally hopeful, and the substitution of Emirates for its own international services out of lesser parts of Australia, including all those losers in Brisbane, Adelaide and Perth when it comes to flying to Europe and the UK.
Virgin does this for international flights even more than Qantas, going a few steps further, on a smaller scale, by being significantly owned by three foreign carriers, Singapore Airlines, Air New Zealand and Etihad. But the pressure from those carriers for Virgin Australia to collect a premium for its very deep and thorough investment in lounges and in-flight quality of service is apparent in its domestic pricing.
At the moment, if you haven’t bought your tickets for preferred holiday dates on domestic services, you may have to choose between being gouged or crushed, depending on whether you opt for the full-service or low-cost option, and Jetstar and Tiger can also charge high fares when they know you need a booking so badly you’ll do anything.
But here’s a tip. Keep your eyes open for a sudden scheduling of extra flights by one or more domestic carriers, for a “fair price”, of course. Until now there has been a capacity truce between Qantas and Virgin, but both have to a degree recourse to either international jets or those in lesser demand for remote or resource industry flying.