Vueling expansion at BRU

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Inquirer
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Re: Vueling expansion at BRU

Post by Inquirer »

sean1982 wrote:I have been saying from the start of that discussion that an LCC passenger is not necessarilly a low yield passenger.
I'd like to add is that I feel the term 'Low Cost' is something which has become so widely (mis)used by every new airline in Europe over the past decade, that nobody still knows what it exactly means and we have definitely seen an awful lot of stretch to the original concept, so much even that even ryanair now needs to reposition itself not to be left behind!

Everybody understands that ryanair definitely is a genuine low cost airline as it will remain positioned at the lower end of the market (wherever that may be), whereas Swiss definitely isn't a low cost airline, but where exactly you need to put a vueling for instance, I wouldn't dare to say for sure as in fact they are often on a par or even more expensive as Bru.air in light, so unless you have no problem calling that a genuine low cost product too, vueling isn't a real low cost airline, IMHO, just as Germanwings or even Easyjet aren't any longer.

I think the term low cost urgently needs to be replaced by something like 'pay on demand airline' vs. 'all in airline' as there really seems to be only a very small (if any) price difference left between airlines calling themselves low costs and others in order to justify using the term low costs still.

sean1982 wrote:The Vueling prices are also too high to be a major threat to FR in CRL imho
Only time will tell, but what I do know is that ryanair definitely must be suffering enough from carriers like Easyjet to the point that it is now forced to fight back in order to try to catch up with them, so clearly there is a big enough treat even from higher priced 'pay on demand airlines', on condition they are perceived to still offer a good deal.

Something I have been saying all along: a good deal doesn't necessarily mean the best deal: it's not because few people want to spend a night at the Hilton, that they all want to sleep at the youth hostel either.

I have no figures to back this up, but just like you think that quite a few people may be convinced to take a vueling flight over a Bru.air flight simply because they are perceived to be cheaper (or actually are, on occasions) I can just as well imagine that quite a few people may be tempted by a perceived better airline like vueling over flying ryanair too: it's exactly the problem ryanair is having right now with easyjet amongst others , so I don't think it is far fetched to say the vueling offer from BRU isn't particularly very good news for ryanair either, as it covers a bunch of their destinations too and it may eat into the portion of their passenger which pay a higher fare and which are in fact their most lucrative ones.

sean1982
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Re: Vueling expansion at BRU

Post by sean1982 »

load factors in CRL are among the highest of all FR destinations. Some bases see quite a big fluctuation between summer and winter, but CRL remains constant all year through. That's also one of the reasons why there are always few reductions in a/c for the winter schedule in CRL. I don't see that changing because of Vueling putting 1 airplane in BRU :)

Inquirer
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Re: Vueling expansion at BRU

Post by Inquirer »

sean1982 wrote:load factors in CRL are among the highest of all FR destinations. Some bases see quite a big fluctuation between summer and winter, but CRL remains constant all year through. That's also one of the reasons why there are always few reductions in a/c for the winter schedule in CRL. I don't see that changing because of Vueling putting 1 airplane in BRU :)
Of course not, but don't be tempted to think a new entrant on the market isn't going to affect you significantly, like you seem to be doing!

As a first general rule of competition, you better assume it is going to affect you too significantly, as there's likely not enough growth in the market, so market shares will be reshuffled.

The attitude you take reminds me of that of the traditional airlines 10 years ago: 'we offer a different product, so we don't care as our customer base isn't going to be affected'.
IMHO, nobody looks just at price, just as nobody looks just at quality: most people look at a mixture of both and decide accordingly, and don't mind giving in a bit on one side, if they get enough back on the other.

A second general rule is that when the new competitor sets itself slightly below your product, you likely lose on the low end of your customer basis, which is immediately noticable as for an airline as it shows in their volumes. However, the effect on total revenues is not as big as you may come to think of it.

On the contrary, if a new competitor sets itself slightly above your product, you most likely lose on the high end of your customer base, so although the effects are going to be far less noticable for those without access to the financial numbers as this is generally a smaller portion of your total customer base, it's effect on total revenues are equally pronounced as this is your most lucrative customer base which is being affected.

See what I mean, sean?
It's exactly why in another topic you had a hard time accepting that ryanair is heading for some stormy weather until recently, because they still see very good loadfactors: the thing is they are seeing their most lucrative customers being drained by competitors offering a better product at what is perceived by those customers as a fair price for it and as from next summer, vueling is just going to add to that effect a bit more, even if just modestly at first, I agree, but it's yet another sign on the wall that indeed they are going to put ryanair under pressure too, believe it or not.

Flanker2
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Re: Vueling expansion at BRU

Post by Flanker2 »

I think that FR will be hit but not as bad as legacy carriers such as SN.

FR is nearing its expansion limit, there are only so many city pairs that you can do in Western Europe. So yes, from now on they will be more vulnerable to any new competition popping up anywhere, expanding into their territory and they will have to fight harder for their market share.

If anything I think that U2 will be affected more than FR, as it has almost the same concept as Vueling.

But a Vueling expansion could be disastrous for many weak legacy airline such as SN...

Speaking of Air Berlin, it surprises me that they aren't attempting an expansion in Europe. They used to be a LCC, nowadays you barely hear about them.
(Reuters) - European airlines will have to cut costs at existing short-haul businesses to compete with budget airlines or struggle to stay aloft, IAG boss Willie Walsh said.

So-called legacy carriers such as IAG, Lufthansa (LHAG.DE) and Air France-KLM (AIRF.PA) are cutting jobs, renegotiating staff contracts and dropping uncompetitive routes to get costs on a par with budget carriers, such as market leaders Ryanair (RYA.I) and easyJet (EZJ.L).

They are also replacing older, fuel-thirsty planes and streamlining back-office operations.

"We're focused on reducing out cost base and making our short-haul business more efficient ... those that don't will struggle to survive," Walsh said on the sidelines of the World Low Cost Airlines Congress in London on Tuesday.

"We have Vueling and I think every airline should aim to have an independent low cost arm."

In current cut-throat market conditions, even some of the budget airlines are finding it tough. Ryanair earlier this month warned it could its miss annual profit target due to lower demand across Europe. Fast-growing budget carrier Norwegian Air (NWC.OL) also said revenue per passenger fell in August, partly due to competition.

British Airways and Iberia parent IAG bought Spanish discount carrier Vueling for $180 million in April to help stem losses in Spain, where Iberia's short-haul business has been hit by competition from low-cost airlines and high-speed trains.

British Airways previously tried to run a low-cost airline, Go, alongside its mainline carrier but sold it to private equity group 3i in 2001 after it under-performed.

"There was a lot of management interference in Go and it started cannibalizing BA to some extent so we have left Vueling as a separate, independent airline," said Walsh.

"Alex Cruz (Vueling CEO) is running Vueling the way he always has and we're not changing his business model."

IAG, Europe's third-biggest airline by market value, has spent almost $1 billion to lower the cost base at Iberia and also set up Iberia Express last year to operate short-haul routes from Madrid to feed into Iberia's long-haul network.

"Costs at Iberia Express, excluding fuel, are 40 percent lower than they were at Iberia's short-haul business," said Walsh. "To compete you need a lower cost base, it's simple."

In August, IAG said Iberia, Europe's biggest carrier to Latin America, had started to turn the corner, despite reporting a loss of 35 million euros in the three months to June 30.

Earlier this year, Air France-KLM formed a new French regional airline unit called Hop! to respond to competition from low-cost rivals, while Lufthansa is transferring its domestic and European non-hub flights to its low-cost arm Germanwings.

Recent research from KPMG shows it costs a low-cost carrier $12,000 less to operate a return service between London and Rome than it does for the average legacy airline.

"The concept of customer loyalty to a brand is becoming obsolete as the service now being offered by low cost and legacy carriers is more or less the same," said James Stamp, a partner at KPMG's Global Aviation Team. "Price has become the key factor for customers when it comes to choosing a short haul flight."

IAG's Walsh also said he would not shirk from taking on unions opposed to reforms at Iberia but that there was no agreement yet with Spanish pilots' union Sepla. He said in June that more than 3,000 job cuts were just the beginning.

Walsh said IAG was unlikely to take part in any more European airline consolidation and sees more interesting opportunities outside Europe.

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cathay belgium
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Re: Vueling expansion at BRU

Post by cathay belgium »

Hi,

Also a new base at FCO, flights to TXL,MUC,CTA,PAlermo..
After SN, strike at struggeling AZ...
EK also started NYC flights from Milano..
Foreign companies hitting hard from inside?

CXB
New types flown 2022.. A339

crlhub

Re: Vueling expansion at BRU

Post by crlhub »

And also YYZMXP + FCOYUL by AC.

Passenger
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Re: Vueling expansion at BRU

Post by Passenger »

From Reisburo Actueel (NL):

Vueling adds Amsterdam-Rome (FCO) as from 27th June 2014. Other Vueling destinations to/from Rome (don't know from when) are Athens, Prague, München, Berlin, Split, Dubrovnik, Mykonos, Santorini, Malta, Alicante, Sevillla, Rhodos, Corfu, Krete and Santiago de Compostela.

Vueling destinations out of AMS are: Alicante, Barcelona, Valencia, Malaga, Ibiza, Sevilla, La Coruna and Palma (and Rome as from June 2014). This makes the Netherlands Vueling's fourth international market, after France, Italy and Germany.

Source:
http://www.reisburoactueel.nl/vueling-r ... naar-rome/

I think that Vueling Brussels will surely get lots of passengers who use Vueling Amsterdam right now. Specially those living in the northern part of Antwerp (Ekeren/Brasschaat towards Dutch border) and the southern part of Holland (Breda towards Belgian border).

stefanel
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Re: Vueling expansion at BRU

Post by stefanel »

I don't understand why Vueling wants to compete so much with Ryanair at Brussels. They cannot win with their much higher prices... what do you think?

Didymus
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Re: Vueling expansion at BRU

Post by Didymus »

It's the other way around: Vueling announced a new base at BRU and a couple of weeks laters, Ryanair did the same before having acquired the necessary slots. Ryanair wants to drive Vueling out of BRU, not the other way around...

Passenger
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Re: Vueling expansion at BRU

Post by Passenger »

stefanel wrote:I don't understand why Vueling wants to compete so much with Ryanair at Brussels. They cannot win with their much higher prices... what do you think?
Depends what you mean with "their much higher prices". Like proven in other topics, there is no carrier anymore who always has the lowest price. Yield management (= the system) now decides.

And even if they're not the cheapest: many people don't mind to pay 50 Euro more if that allows them to avoid extremely unpleasant surcharges.

Didymus
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Re: Vueling expansion at BRU

Post by Didymus »

Furthermore, Vueling offers connecting flights through BCN and FCO which might appeal more to business travelers.

sean1982
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Re: Vueling expansion at BRU

Post by sean1982 »

Passenger wrote:
stefanel wrote:I don't understand why Vueling wants to compete so much with Ryanair at Brussels. They cannot win with their much higher prices... what do you think?
Depends what you mean with "their much higher prices". Like proven in other topics, there is no carrier anymore who always has the lowest price. Yield management (= the system) now decides.

And even if they're not the cheapest: many people don't mind to pay 50 Euro more if that allows them to avoid extremely unpleasant surcharges.
Which "unpleasant charges" are you talking about? All of them are avoidable.
And we're not talking 50EUR difference here .... last time I checked there was always 150-200EUR between SN and FR. That a lot of money for a "free bag" :D

Flanker2
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Re: Vueling expansion at BRU

Post by Flanker2 »

Furthermore, Vueling offers connecting flights through BCN and FCO which might appeal more to business travelers.
Out of BRU, there are only few destinations that you can connect to through BCN and FCO in the Vueling network.

Vueling seemed more expensive than FR and SN in the beginning, but if you compare April-June fares today, you can see that Vueling is trying to get as close as possible to FR, and SN is often the most expensive one.

Sample:
BRU-LIS June 10
LIS-BRU June 21

FR 73€
TP 106€
VY 110€
SN 171€

BRU-LIS June 7
LIS-BRU June 22

FR 114€
TP 120€
VY 155€
SN 312€ (outbound codeshare with TP // own metal = 357€)

This example is not exclusive and is a good representation of the average fare repartition.
It's easy to see who will be driven out of the market... and it won't be VY.

By the way, bravo to TP for staying in tune with the market. They won't make money but they won't loose too much either.
Depends what you mean with "their much higher prices". Like proven in other topics, there is no carrier anymore who always has the lowest price. Yield management (= the system) now decides.
We have to be fair here, FR is often the cheapest. My personal opinion is that yield management is still yield management but given the overcapacity on the routes compared to the demand, it's becoming an underbidding war, as we may expect in this situation.

The survivors will be those who will be able to find the best balance in yields, so not necessarily the lowest bidders. The survivors will claim the market once the others drop out.

SabenaForever
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Re: Vueling expansion at BRU

Post by SabenaForever »

Flanker2 wrote:
Vueling seemed more expensive than FR and SN in the beginning, but if you compare April-June fares today, you can see that Vueling is trying to get as close as possible to FR, and SN is often the most expensive one.

Sample:
BRU-LIS June 10
LIS-BRU June 21

FR 73€
TP 106€
VY 110€
SN 171€

BRU-LIS June 7
LIS-BRU June 22

FR 114€
TP 120€
VY 155€
SN 312€ (outbound codeshare with TP // own metal = 357€)

This example is not exclusive and is a good representation of the average fare repartition.
It's easy to see who will be driven out of the market... and it won't be VY
I don't like sample's and this is why:

BRU-FCO May 8
FCO-BRU May 22

SN 102€
FR 104€ without bags
VY 115€ without bags
AZ 154€

It all depends on the date you travel.... Some days SN or AZ are cheaper the other days FR or VY! ;)

DannyVDB
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Re: Vueling expansion at BRU

Post by DannyVDB »

My experience too,

Depending on the time you might have very good prices at SN, AZ, VY, ... (I went with my family to Malaga last year - 5 tickets with SN - 525€ - good price - what are we complaining about?)

In any case I always take SN if I can (will use alsy VY one of the coming months) because of AND/OR good prices, AND/OR good service, AND/OR reliable, etc.

Because of the experience some of my colleagues had, FR is avoided by people of my organisation. It is a question of TRUST and RESPECT ...

It is as simple as that :D

Regards,
Danny

PS: once I will fly also FR for sure, I want to have it done, but beyond that, no thanks
PS2: good they come to BRU and I hope they are succesful all the way ...

Passenger
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Re: Vueling expansion at BRU

Post by Passenger »

Flanker2 wrote: Vueling seemed more expensive than FR and SN in the beginning, but if you compare April-June fares today, you can see that Vueling is trying to get as close as possible to FR, and SN is often the most expensive one.

Sample:
BRU-LIS June 10
LIS-BRU June 21
FR 73€
TP 106€
VY 110€
SN 171€

BRU-LIS June 7
LIS-BRU June 22
FR 114€
TP 120€
VY 155€
SN 312€ (outbound codeshare with TP // own metal = 357€)

This example is not exclusive and is a good representation of the average fare repartition.
No, it is NOT a good representation of the average fare repartition.

If you click “Best fares +/- 7 days” and/or "Flexible Dates" when you book Brussels Airlines, you will get much lower fares then above, also for dates close to those for which you have previously found cheap flights on Ryanair or Vueling.

I've asked "Best fares / Flexible dates", and this is what I've got just 5 minutes ago:

Brussels To Lisbon 08/06/2014 on SN3815 11.25-13.10
Lisbon To Brussels 20/06/2014 on SN3816 13.50-17.30

Total 120.33 Euro. And this includes 23 kg luggage plus friendly check-in plus normal hand luggage (6 kg) plus preseating plus boarding pass.

See also :
SabenaForever wrote: BRU-FCO May 8
FCO-BRU May 22

SN 102€
FR 104€ without bags
VY 115€ without bags
AZ 154€

It all depends on the date you travel.... Some days SN or AZ are cheaper the other days FR or VY
I agree with SabenaForever: sometimes SN will be the cheapest, sometimes AZ, sometimes FR, sometimes VY.

nordikcam
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Re: Vueling expansion at BRU

Post by nordikcam »

My experience too :
BRU BCN and back in may ( 21 to 24 ) ...SN was cheaper than FR and Vueling and I do not speak about bags. I will fly with SN.

b-west

Re: Vueling expansion at BRU

Post by b-west »

It's almost impossible to tell. For every 10 examples where SN is the cheapest, I can show you 10 where VY is the cheapest and somebody else will show you 10 where FR is the cheapest... it all depends on your individual needs and flexibility. Maybe travel 1 day earlier and you'll get that sweet deal with Ryanair... or you get a nice price with SN even with checked bags... I guess it all comes down to the passengers keeping his eyes open and actively looking for the lowest price.

Though I assume that a lot of passengers are just always gonna think, thanks to clever promotion: "this or that airline is the cheapest, period." And they'll book with them without checking other carriers and end up maybe with the best price but more likely not...

Didymus
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Re: Vueling expansion at BRU

Post by Didymus »

Flanker2 wrote:Out of BRU, there are only few destinations that you can connect to through BCN and FCO in the Vueling network.
I count 51 possible connections. Admittedly, they don't all make sense because of ridiculous backtracking or impossible schedule, but I wouldn't call it nothing.
b-west wrote:Though I assume that a lot of passengers are just always gonna think, thanks to clever promotion: "this or that airline is the cheapest, period." And they'll book with them without checking other carriers and end up maybe with the best price but more likely not...
Absolutely true. Some people assume you can only fly cheap with Ryanair and they think I'm a rich snob if I say I regularly fly SN to Milano.

Flanker2
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Re: Vueling expansion at BRU

Post by Flanker2 »

SabenaForever wrote:
I don't like sample's and this is why:

BRU-FCO May 8
FCO-BRU May 22

SN 102€
FR 104€ without bags
VY 115€ without bags
AZ 154€

It all depends on the date you travel.... Some days SN or AZ are cheaper the other days FR or VY! ;)
Actually not that simple.
May 8th out May 22nd back to FCO is a typical low season (potentially VFR) trip profile.... this is why SN is cheap on this selection.
Leisure trips are more flexible by definition, hence anyone looking up such dates will end up booking FR with a departure and return one day earlier at just 69 euro's... :roll:

When you go out on a leisure trip for 2 weeks in May to Rome, when children are still in school, the profile here is a typical retired couple or people with time on their hands going for VFR. Hence, people will choose to save money by departing a day earlier or later carrying together one single checked luggage.

SN knows this very well and this is why they are cheap on this selection of dates, but FR knows this too and will offer such people a cheaper option on another date because they anticipate sufficient demand from business travelers travelling on shorter trips in that period.
Remember that FR works with one-way fares, hence their yield management is completely different from SN and it takes only daily traffic into consideration.

SN's yield management works like this:
-business trip profile = super expensive
-ambiguous profile = expensive
-leisure / low demand profile = low price

FR's yield management works like this:
-convenient business schedule = average price
-less convenient business schedule = low price
-convenient leisure schedule = low price
-less convenient leisure schedule = rock bottom price

So in most cases of people booking, FR will have the much cheaper option, because they differentiate much less between the customer profiles and for very typical leisure travelers they can offer rock bottom fares if these have more flexibility.

So sampling isn't a good method but it shows that the price range of FR is almost always between 30 and 200 euro return, whereas SN's price range is from 100 to 500 euro return and that you're very likely to find a cheaper fare with FR.

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