Originally Posted by
lokijuh
Given the security charge of $5.82 and passenger service charge of $26.87, with GST leviable on both, that's $35.96 of the fare that VA doesn't see.. So for a $50 fare, that leaves $14.04, 1/11th of which will go to GST, leaving VA to pocket $12.76. Minus the cost of extra fuel needed to carry an extra 50-100kg of self loading freight and their luggage. Obviously, out of $70 they would get more, in this case $31. Also you want to avoid training consumers to expect either cheap airfares - or cheap packages. So there must be a point below which it is not worthwhile, unless you have strong ancilliary revenue (like JQ) to support it.
few things
1. in packages, public has not idea of airfare costs (as mentioned above, some of the components of a package can be described as free, some cheap, but the airfare doesn't have to be.
Eg. in the $499 package deal above, it could be described as
$299 return airfare & get the hotel (normally $200/night, for only $70/night, reef cruise only $90 $ & get rental car free)
or
The airline could actually be the packager, so it picks up commission on hotel, car, reef cruise.
Many do this now, but not with hidden individual component prices.
Buying components online is rarely the cheapest way to do it & selling components of package piecemeal, .......ises all the components.
The difference here, is the package only offer 1 or certain hotels, not any hotel.
In other words, want huge choice, pay for it.
2. the public & the media tend to notice if a flight is full or empty. Media reports such things, but have no idea of yields.
(ie. full flights MUST mean they are doing well, empty flight MUST mean they are going broke). There are plenty of full flights that make no money & plenty of flights with 50% load that make money, but public/media look at very simplistic view of load factor only.
With Virgin having lost billions, the public needs to hear the flights are full, especially at end of school holidays.