FlightSimCrew wrote: It costs them about 10/15 mio per year. You have to get a lot of C-pax for this amount !
Sorry to ask, but could you maybe tell me why a FFP program like the one of SN would cost them 10/15 mio per year 8O Where is all that money used ??????
I have no exact figures but I know that for each pax SNBA is offering the exchange of points they have to pay to de respective company. So if someone who has collected 100.000 points wants to go New York with AA and fly business it is SNBA who has to pay AA for this seat. It is of course not free as you might imagine. Think also of the administration cost, personal communication, It systems, ... . I know from experience that these actions are time and resource consuming...
SN is carrying 3.000.000 pax, if only 1% uses it's points once a year and SNBA has to pay 150€ per ticket (most of their points are used for long haul flights so 150€ is quite cheap) it'll only will cost them 4.5 mio EUR !!! Do not understand me wrong I believe they have a strong FFP with lot's of advantages but I still am convinced that it's only way to expensive for them.
But as the future looks they will be within 2/3 years sold to British Airways and then they can fully integrate the FFP in one company... this reduces a lot of costs...
OK, you have a point that cost per ASK is "THE" financial measurement tool for airlines to be used however I just do not believe it is a sign for profitablity. Your profit or loss is stated by only two facts : cost and of course revenue !!!! If you look at the revenue per ask from VEX you can see that it's much lower than the one of EZY or FR. Why so ?
One is to blame on the predatory pricing (again!) from other airlines that keeps pressure on VEX yield.
Two is the overcapacity in the Brussels market and also the fault of VEX by flying wing to wing with traditional airlines to BCN/FCO/GVA/MAD... of course this causes friction.
Three is the pricing model of the low cost airline itself... I believe that the low cost model is only viable on short/medium haul sectors depending on the type of competition. I explain myself more clearly : If you are operating as the only carrier to a European Long destination (BRU-ATH) you can offer low fare seats and revenue manage you way up depending on loadfactor. this will guarantee you enough fare to operate the sector.But if you have to compete heavily on this route your yield will be lower meaning that this long sector will not be or become profitable. The low fare model itself is then restricted by the distance of the sector. This is why fex LCC are operating into Marrocco, Turkey, GreekIslanDs, Canary Islands. It are great destinations but you cannot create a low fare perception. Selling at 19€ is suicide on these routes and a profitable yield off 99 to 129€ is just not low fare anymore !! !
As VEX cost base is quite ok and overheads have been controlled from closeby I believe that strong cos reductions can be obtained by operating shorter sectors. Bases from NCE, FCO, ZRH, ORY are still great opportunities.....
Your previous post is indeed much closer to my own perception of the Virgin problems...
Untill now indeed lcc's have had the biggest relative advantage on relatively short haul sectors. (they exploit their efficiency much more on those routes, via short turn-around etc.).
Virgin may have more difficulties in this area, because I am not sure if BRU supports 25 min turnarounds, the taxes and landing fees are higher for sure, etc... And those items seem to be quite essential in the lcc - rather shorthaul - product...
My personal opinion (but I have no factual evidence) is that there are possibilities on the longer haul (like canary isles etc) as well. We can see now some experiments of Air Berlin, a former charter, now a 60% scheduled low cost.
But in the VEX case,... Their capital basis is not very strong anymore (after years of SN, SNBA, and other carriers competition). So I guess it would relieve a lot of pressure if they could combine with SNBA and become a sort of "monopolistic" homecarrier in BRU together. Thus eliminiation quite a bit of free market competition.
It's just a personal opnion I have, I do not say i am completely right on these matters.
On your turnaround time I can say that indeed BRU handlers do not support 25min turns. they only can guarantee 45/50 mins turns and only a slight % in 40/45minutes. On a VEX schedule this means one hour per aircraft less utiliezation than EZy or FR are producing.
Indeed Canary ISlands posses a potential but the main problem is that it are typical package destinations. LCC have based part of their success on people buying property in other countries: AGP is a perfect example. However there are very few real estate projects in the Canary region which means it is a very strong charter fortress...but I have seen fortresses being demolished in time!
I do not worry on the capaital exposure of VEX as it is supported by theVirgin Group. After floatations of Virgin Mobile and Virgin Blue this group has about 2 billion EUR in cash which is used to support it's subsidiaries. So there is some money over for VEX to stick around for years to come.
I believe also the main purpose of the lin up between VEX and SNBA is to create a solid traditional and low cost branche of Oneworld (British Airways) in Brussels. This gives the alliance a stronghold between the dominance of CDG and AMS. There are several signs that support this vision. Frst of all the interest of B.A.A. in BIAC or The london airports interest in brussels. If BA would come in with Oneworld this gives them a new hige HUB in Europe and a foothold on continental Europe.
I just wonder if they are still willing to invest it in VEX. This has not proven to be their best investment over the last years...
For the future of the SNBA-VEX group, the description you outline is a possibility. But I don't hear anything anymore about this coöperation in the first place... Time will tell
