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Quote:
Originally Posted by Snowdevil
We agree on that part.
So the "Branson's a stone idiot pouring good money after bad" is a fair characterization? What's the difference between VX and VS, or VX and the other Virgin airlines then, that makes VX so horribly inefficient and a bad model for the United States, when similar models have worked for other Virgin airlines in other places? Your assertion seems to be that VX is just being horribly managed. I don't see it- yes, we have a customer on FT (our OP) who got a bad experience... and like I said, if you have 99.9% customer satisfaction, that still means you'll have PO'ed customers every now and then. I'm not going to draw conclusions completely from anecdote on FT- and even if we did, there are a number of people of FT (myself and others) who've flown them and were quite impressed at the service and experience. VX has won a share of my business, based on how I was treated on the flights I've flown... and I'm pretty sure I'm not the only person who believes that.
Like I said, I wouldn't be shocked at all if their REVENUE wasn't hitting projections, and that could be bleeding some unexpected cash from them, because the economy has gone a bit pear-shaped, and certainly $115 oil isn't helping things along... but costs at 2x-3x industry standard AND way out of their projections mean they are just completely incompetent at understanding their business model, and it strikes me as a rather outlandish claim to make, given my experience and that of others.
Is that fanboyism? No- if they are as badly managed as you say they are, the truth will out, regardless of how I felt about my VX flights. It just seems a bit hard to believe, given that there's no pension plan, new labor force that hasn't got seniority, brand new planes with low maintenance costs, a pretty fuel-efficient fleet, and some interesting ways to capture revenue in-flight (IFE and food purchases), and the fancy stuff, mood lighting/IFE/seats and so on are mostly fixed costs that shouldn't impact their operating costs dramatically. The question becomes "where are they bleeding money"?
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Quote:
Originally Posted by eponymous_coward
So the "Branson's a stone idiot pouring good money after bad" is a fair characterization?
Your words, not mine - and not Branson, since he's invested all he can already, back when the plans for VX were first laid out and fuel was substantially cheaper.
But yes, those continuing to invest are certainly pouring good money after bad.
Quote:
Originally Posted by eponymous_coward
What's the difference between VX and VS, or VX and the other Virgin airlines then, that makes VX so horribly inefficient and a bad model for the United States, when similar models have worked for other Virgin airlines in other places?
VS and the other Virgin-branded companies had relatively inefficient companies they could siphon traffic from in markets where they could command decent yields. Not so in the U.S. market - despite what you might think, most U.S. carriers are highly efficient and unit costs continue to trend down (except for WN) excluding fuel.
The U.S. market is also hypercompetitive, so VX is not able to command a revenue premium over their competitors and must sell at a loss. It's a war of attrition - their model is predicated on siphoning high-yield traffic from their competitors. The problem is that they're only attracting the low-yield fruit at this point and continue to bleed red ink at a rate that will exhaust their cash far before their main competitors cry uncle. Also, the load factors in their new West Coast markets are EXTREMELY low.
Quote:
Originally Posted by eponymous_coward
costs at 2x-3x industry standard AND way out of their projections mean they are just completely incompetent at understanding their business model
They simply don't have the ASMs to spread their costs over, and adding ASMs in this "perfect storm" of an economic situation is not sustainable for them either. So they need to raise fares, but enticing traffic from other carriers is predicated on offering lower fares and more amenities than the competition. So raising fares and getting more butts in seats are mutually exclusive for them at this point.
Quote:
Originally Posted by eponymous_coward
if they are as badly managed as you say they are, the truth will out, regardless of how I felt about my VX flights. It just seems a bit hard to believe, given that there's no pension plan, new labor force that hasn't got seniority, brand new planes with low maintenance costs, a pretty fuel-efficient fleet, and some interesting ways to capture revenue in-flight (IFE and food purchases), and the fancy stuff, mood lighting/IFE/seats and so on are mostly fixed costs that shouldn't impact their operating costs dramatically. The question becomes "where are they bleeding money"?
Everywhere.
The planes are more costly than you realize. Airbus doesn't outfit A320s and A319s with IFE, mood lighting, leather seats, etc for free, y'know. And sure, they're fuel-efficient, but while running out and buying a Prius might save you $80.00/month on gas, but are you REALLY saving money when you have a car payment of $450.00/month and very low income to boot? And again, they've not been successful in commanding a revenue premium, even when you factor in ancillary revenues from IFE, meal purchases, etc.
Another thing to consider is that they're running those fuel-efficient planes against competitors with planes that are either just as fuel-efficient or are paid off already, meaning they fixed ownership costs are lower than VX's.
Oh yeah - and most of those competitors have fuel hedges in place that reimburse them after they pay the spot price. VX doesn't have hedges of which to speak, so they pay through the nose.
Speaking of no pensions...UA doesn't have a pension plan to worry about, either. Watch what numbers they post for 1Q08.
Think about ALL of this - and then go back to VX's attempt to keep their Form 41 information confidential (that's big-time chutzpah, by the way - it's okay for VX to use information from their competitors' filings against them, but somehow the other way around isn't fair? Spare me.), and you'll start to see a picture of a horribly-timed startup watching their little remaining cash circling the drain.
The planes are more costly than you realize. Airbus doesn't outfit A320s and A319s with IFE, mood lighting, leather seats, etc for free, y'know. And sure, they're fuel-efficient, but while running out and buying a Prius might save you $80.00/month on gas, but are you REALLY saving money when you have a car payment of $450.00/month and very low income to boot? And again, they've not been successful in commanding a revenue premium, even when you factor in ancillary revenues from IFE, meal purchases, etc.
All of the amenities you mention cost $2MM per plane. Break that down per seat-mile, and you get...not 2-3x CASM. "very low income to boot" = FUD. You've presented no facts to show that, and are using it in your argument. Did you read the definition of FUD I posted above?
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Another thing to consider is that they're running those fuel-efficient planes against competitors with planes that are either just as fuel-efficient or are paid off already, meaning they fixed ownership costs are lower than VX's.
Tell me which routes have competitors with paid-off, fuel-efficient planes? Is it Alaska's brand new 737-900s from SEA? I don't think they're paid off. I know United has a 737-300 from SEA-SFO, because I've had the pleasure of riding in it once, but I'm not sure how fuel-efficient those old things are. Seriously, do you know that the other airlines on these routes have paid-off planes, or is this more FUD? It's not something I know anything about, so I'm looking forward to the FACTS.
Quote:
Oh yeah - and most of those competitors have fuel hedges in place that reimburse them after they pay the spot price. VX doesn't have hedges of which to speak, so they pay through the nose.
Please cite the percentage of CASM that hedges save their competitors on the routes they fly. Again, I don't know the answer, but do you? If they hedged this year, the percentage savings is much lower than if they hedged 4 years ago. Please present the FACTS, because you write this as though you have some authoritative information that this number is material on the actual routes VX flies.
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Speaking of no pensions...UA doesn't have a pension plan to worry about, either. Watch what numbers they post for 1Q08.
I know nothing about VX's pensions, but I know they have no seniority.
Quote:
Think about ALL of this - and then go back to VX's attempt to keep their Form 41 information confidential (that's big-time chutzpah, by the way - it's okay for VX to use information from their competitors' filings against them, but somehow the other way around isn't fair? Spare me.), and you'll start to see a picture of a horribly-timed startup watching their little remaining cash circling the drain.
Their request to avoid form 41 has absolutely nothing to do with it not being fair for their competitors to use their information, it has to do with the fact that they are a private company. Public companies have to release their finances to the world, but private companies don't. I've run both. I've never complained about either one, but certainly never released my finances when I've run a private company!
Sorry, can't see the picture of VX "circling the drain". All of the airlines are in big trouble, because of fuel costs. VX has more money behind it than most. They appear to have great load factors, and a product much more compelling than anyone else's.
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Sorry, but I'm not buying your "I can tell you, but I'd have to kill you" stance
The last couple flights I've had with them (within the last week), have been packed. And the only F seat that was free (on only one of the flights) wasn't sold because it was not functional.
I find some humor in that. If one F seat is non functional, don't sell it. If every F seat (and, Y seat, for that matter) is non functional, come on board!
I find some humor in that. If one F seat is non functional, don't sell it. If every F seat (and, Y seat, for that matter) is non functional, come on board!
Agreed.
Do the math, though. $25 (voucher) per seat x 8 seats = $200, which happens to be right around the amount most of their F seats sell for.
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Thanks for posting this.. Had not flown VX but if this kind of well thought out customer service/planning is an indicator of the VX package. I will pass on VX for a few years, until they iron it out.
I find some humor in that. If one F seat is non functional, don't sell it. If every F seat (and, Y seat, for that matter) is non functional, come on board!
Yeah I thought that was a bit strange too when the FA told us why the seat was vacant.
Has anyone seen the dark A319 lately? Maybe they took aviators99's advice and removed it from service?
Thanks for posting this.. Had not flown VX but if this kind of well thought out customer service/planning is an indicator of the VX package. I will pass on VX for a few years, until they iron it out.
They don't realize how much a dark plane can damage their reputation. But I think customers would be even more annoyed if their flight got canceled the first time they tried VX.
Has anyone seen the dark A319 lately? Maybe they took aviators99's advice and removed it from service?
Yes! It flew LAX-SFO this morning and was turning around to head over to LAS. I see that dark plane quite a bit...
I will say in VX's favor that their operational reliability seems much improved compared to the first few months of operation. However, I still will not book any short-haul flight that is scheduled for A319 (especially early morning out of LAX or SFO), since I know the three "lit" A319s are primariily being flown to/from JFK. So, an early morning short-haul A319 flight is quite likely to be "dark." And I really don't think VX is going to sub an A320 for an A319 if the A319 is not pretty heavily booked--they obviously would want to save the money on fuel by operating the A319.
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Quote:
VS and the other Virgin-branded companies had relatively inefficient companies they could siphon traffic from in markets where they could command decent yields. Not so in the U.S. market - despite what you might think, most U.S. carriers are highly efficient and unit costs continue to trend down (except for WN) excluding fuel.
The U.S. market is also hypercompetitive, so VX is not able to command a revenue premium over their competitors and must sell at a loss. It's a war of attrition - their model is predicated on siphoning high-yield traffic from their competitors. The problem is that they're only attracting the low-yield fruit at this point and continue to bleed red ink at a rate that will exhaust their cash far before their main competitors cry uncle. Also, the load factors in their new West Coast markets are EXTREMELY low.
So, none of this was true a couple of years ago when Branson et. al. were going over the business case for VX?
See, that's why I think you're basically calling Branson an idiot. The only fundamental market conditions for US airlines that have changed in the last couple of years are a) fuel's more expensive and b) the economy's gone south, making air travel somewhat soft. The US market was hypercompetitive in 2005 as well as 2008, no? So if VX's model was never going to be able to deal with that fact of life... then Branson's an idiot for starting an airline based on faulty assumptions.
Also, seems to me that for their economy class customers, VX's model is actually somewhat similar to B6's. Heck, you don't even get peanuts in economy, like you would on WN. The seats, IFE, mood lighting and so on are mostly fixed costs you pay up front to improve the experience on the plane, and you do need to earn it back... but they aren't ongoing inefficiencies so much.
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Quote:
Originally Posted by Raindeer
True. but don't forget the hundreds (or thousands) of dollars of lost revenue from angry customers....
Well, what's going to make a customer angrier and less likely to fly an airline- a cancelled flight because they can't put another plane in service, or a flight where the IFE's broken and the FC seats have to be adjusted manually and don't have massage?
You might want to ask an AA frequent flyer how their last couple of weeks have gone before answering that.
This isn't to say I don't agree with the general sentiment in this thread- having a dark plane does hurt the VX experience, no doubt, and they should be getting this taken care of ASAP.
Also, the load factors in their new West Coast markets are EXTREMELY low.
I missed this one earlier. To me, this proves that your "inside info" doesn't exist. As far as I know, their load factors are good on their "West Coast" markets.
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