VA-keeping competitors honest

[Snapshot]

Is it possible that we are/were losing money because we are/were pricing it at the cost of the flight and couldn't fill the airplane? .

Then you weren't pricing at the cost of the flight.

Sorry, brother.
Virgin, who prices below cost in addition to "not" being a foreign owned carrier operating in violation of Federal Cabotage Regulation (I know, Former DOT secretary Sam Skinner being on the board was a huge coincidence!) is the last carrier who gets to cry that they are the victim of "predatory practices."
Be thankful that the pounds that keep you afloat are worth $1.50.

 

[bri5150]

Again, what were the prices of the tickets before United responded and what does it cost for us to operate that flight? Even then, a "fare sale" for the first couple days isn't predatory. Here we are again...a dicsussion that can't be won. Just like most arguments with Virgin America because we are a private company and people don't have information to make statements based on fact.

 

[ALSF 2]

Am I the only one that thinks the ONLY true reason that Branson dipped his toe into the US market was to get a foothold in the US until cabotage and ownership regs. relax enough to where he can just connect the dots worldwide? I think VX is just him hedging a bet that in the next 5-10 years the political landscape will change enough so that when the regs go away, he already has a presence in the US and just boom, connects the big airplanes with the little ones. Just a though. I think he will keep pouring money into his hedge until those regs. go away or there is absolutely no political chance that things will change.

Cheers!

 

[bri5150]

Am I the only one that thinks the ONLY true reason that Branson dipped his toe into the US market was to get a foothold in the US until cabotage and ownership regs. relax enough to where he can just connect the dots worldwide? I think VX is just him hedging a bet that in the next 5-10 years the political landscape will change enough so that when the regs go away, he already has a presence in the US and just boom, connects the big airplanes with the little ones. Just a though. I think he will keep pouring money into his hedge until those regs. go away or there is absolutely no political chance that things will change.

Cheers!

While I like your theory, and it might be true, one of the biggest things that bugs me about this place is the lack of connecting passengers right now between the Virgin airlines. Maybe it is intentional to keep the foreign ownership dogs away, but it is pretty frustrating to see a Virgin Australia codeshare on a Delta sign for a flight between SFO and LAX.

 

[ALSF 2]

While I like your theory, and it might be true, one of the biggest things that bugs me about this place is the lack of connecting passengers right now between the Virgin airlines. Maybe it is intentional to keep the foreign ownership dogs away, but it is pretty frustrating to see a Virgin Australia codeshare on a Delta sign for a flight between SFO and LAX.

That's what I'm saying. With all the regs. gone he could connect from both coasts and fill in everything else. Just needs to keep the domestic plan on life support building brand recognition until that pesky problem goes away. Learned from Pan Am, all international and no domestic feed doesn't work with global airlines. I am convinced that VX is just that, a hedge for when it all goes away. I do agree with your assessment that perhaps the no codeshare with other virgin bands is a ploy to keep the watchdogs away. Connecting up that stuff would, while obvious, show his hand.

Cheers!

 

[Andy]

I think I've been very clearly on the record that VX has been pricing their tickets well below breakeven which is why it's been a failing business model.

I've just crunched through the Q4 DOT air fare numbers (released on Thursday). I had based my Q4 VX earnings estimates using +4.5% average ticket price increases. That number was WAY off. On many routes, VX fares increased in excess of 20% from 4Q2011.

In spite of a decreased load factor in 4Q2012 (I estimate it at 78.15%), down from 82.4% in 4Q2011, it looks like VX came very close to a net profit in 4Q2012. My new VX earnings estimates used Thursday's DOT data along with some assumptions based on reported numbers from other airlines, but VX should have a decent operating profit for 4Q2012.

I'm happy to see that VX is finally starting to price their product rationally. As long as they continue to price their tickets rationally, there's room for them in the business.​

 

[bri5150]

I think I've been very clearly on the record that VX has been pricing their tickets well below breakeven which is why it's been a failing business model.

I've just crunched through the Q4 DOT air fare numbers (released on Thursday). I had based my Q4 VX earnings estimates using +4.5% average ticket price increases. That number was WAY off. On many routes, VX fares increased in excess of 20% from 4Q2011.

In spite of a decreased load factor in 4Q2012 (I estimate it at 78.15%), down from 82.4% in 4Q2011, it looks like VX came very close to a net profit in 4Q2012. My new VX earnings estimates used Thursday's DOT data along with some assumptions based on reported numbers from other airlines, but VX should have a decent operating profit for 4Q2012.​

I'm happy to see that VX is finally starting to price their product rationally. As long as they continue to price their tickets rationally, there's room for them in the business.​

:beer: It's amazing what one man can do (John McLeod). Oh, and I finally hope you are right.

 

[Flyer1015]

I think I've been very clearly on the record that VX has been pricing their tickets well below breakeven which is why it's been a failing business model.

I've just crunched through the Q4 DOT air fare numbers (released on Thursday). I had based my Q4 VX earnings estimates using +4.5% average ticket price increases. That number was WAY off. On many routes, VX fares increased in excess of 20% from 4Q2011.

In spite of a decreased load factor in 4Q2012 (I estimate it at 78.15%), down from 82.4% in 4Q2011, it looks like VX came very close to a net profit in 4Q2012. My new VX earnings estimates used Thursday's DOT data along with some assumptions based on reported numbers from other airlines, but VX should have a decent operating profit for 4Q2012.​

I'm happy to see that VX is finally starting to price their product rationally. As long as they continue to price their tickets rationally, there's room for them in the business.​

What do you predict as the operating profit (not interest expense net loss) for 4th quarter? What date will the DOT release the result, VX usually releases it just days before.

 

[Andy]

What do you predict as the operating profit (not interest expense net loss) for 4th quarter? What date will the DOT release the result, VX usually releases it just days before.

$15-30M operating profit. It's a wide range because I'm basing my CASM costs on Q3 CASM and I don't know how much variation there was from Q3 in fuel expenses.

The Q4 Form 41 DOT release date is May 14.


I really hope that VX can continue to rationally price their product; there's no reason why they can't turn a profit in the current environment. What has happened in the past is that VX has lowered prices and then everyone matches. When VX raises prices, everyone matches. And then VX cuts again and everyone matches. The better solution is to sell the seats at a profit, especially considering that they could get a lot of last minute (higher priced) bookings.

 

[bri5150]

$15-30M operating profit. It's a wide range because I'm basing my CASM costs on Q3 CASM and I don't know how much variation there was from Q3 in fuel expenses.

The Q4 Form 41 DOT release date is May 14.


I really hope that VX can continue to rationally price their product; there's no reason why they can't turn a profit in the current environment. What has happened in the past is that VX has lowered prices and then everyone matches. When VX raises prices, everyone matches. And then VX cuts again and everyone matches. The better solution is to sell the seats at a profit, especially considering that they could get a lot of last minute (higher priced) bookings.

With what you are saying, it makes me think John McLeod had an instant effect on our bottom line. That lines up with the numbers we have started having since I was hired, and since he got here.