Qantas, Virgin Australia business class fares set to rise?

Qantas, Virgin Australia business class fares set to rise?

Qantas and Virgin Australia are upgrading their business class offerings, but will travellers pay more for the privilege?

Both airlines are set to launch new business class seats on their Airbus A330 jets which ply the east-west transcontinental route.

Qantas will be first out of the gate with a December debut of its long-awaited Business Suite (above), followed by Virgin Australia's 'business/first' seat (below) from March 2015.

The next-gen Qantas and Virgin Australia seats will offer a lengthy lie-flat bed, greater personal space and direct access to the aisle for every passenger.

But such creature comforts require a larger footprint than today's seats, resulting in fewer seats in the business class cabin.

Virgin Australia's Airbus A330s will lose close to 20% of their business class capacity, with the pointy end trimmed from 24 seats down to 20.

Qantas has not revealed the new configuration for its refitted domestic Airbus A330s, which currently have 36 seats in business class.

However, given that those seats are more tightly packed than Virgin Australia's current A330 offering, the Flying Kangaroo's revised seatcount is likely to drop below 30.

Passengers will pay more for better seats

Virgin Australia CEO John Borghetti has hinted that business class fares will rise, with the new seat offering an improved travel experience for which passengers will be prepared to pay a bit more – thus narrowing the price gap between Virgin and Qantas.

“I can guarantee you one thing, we will be competitive, we have to be competitive" he says, "and everywhere we've operated we have always brought fares down. But people will be prepared to pay a premium (for this seat)."

Borghetti also expects that the updated A330s will deliver higher yield, or revenue per passenger, in part because they have fewer premium seats.

"It's a question of yield mix, not absolute seat numbers" he explains.

"A lot of people make the mistake of equating seats with revenue. But that's not necessarily the case because the bigger the aircraft the more seats you have, the harder it is to yield-manage and the more desperate you get to fill every seat."

"So yield management comes into play very importantly here, and our business case shows very strongly that the (yield) result per airplane will improve – we wouldn't be doing this otherwise."

A spokesperson for Qantas declined to comment on any potential impact of the A330 refit on fare pricing, saying "As we haven’t yet confirmed or released any details of the configuration including seat count of the refurbished aircraft yet, (we) aren’t in a position to comment on this at this time."

Also read: Qantas Business Suite vs Virgin Australia's new business class – how they compare

Follow Australian Business Traveller on Twitter: we're @AusBT 

David Flynn
David Flynn is the editor of Australian Business Traveller and a bit of a travel tragic with a weakness for good coffee, shopping and lychee martinis.
 

16 comments

  • Shang YEH

    a19901213

    9 Oct, 2014 08:30 am

    The domestic business class price is already ridiculously high. I think Australia is the only place in the world charges one hour fligh for $800+.

    They charge Sydney-Perth return business return ticket for like $2000 plus, with this kind of pricing, I can actually buy a return business from Japan to Syd. 

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  • Robert Eden

    reno

    9 Oct, 2014 09:15 am

    Your right it is to high,but unlike the US and some European markets there is virtually no true competition or demand.And they will as you can expect do ther utmost to see it pevails as is.

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  • Hugo

    Hugo

    9 Oct, 2014 10:01 am

    Australia is also the only place in the world where a one-hour domestic business class flight gets you a lie-flat seat. Besides, I don't think the price discrepancy is as big as you think it is; I've never seen a SYD-NRT business class fare for $2000ish. Random hipmunk search suggests more like $5000 if you want a nonstop. 

    I don't know who is actually paying the $800 for a one-hour flight anyway. If it were any of my employees I'd have them caught and shot.

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  • edy4eva

    edy4eva

    9 Oct, 2014 10:49 am

    Shang was referring to fares ex-JP, not AU-JP.

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  • Doubleplatinum

    Doubleplatinum
    Banned

    9 Oct, 2014 02:37 pm

    You are kidding yourself - $2K return business Sydney Japan get real

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  • Gian

    Gian

    9 Oct, 2014 09:24 am

    Another side to this coin, will they increase the amount of points required for reward seats in J class or decrease availability of award seats?

    Both international and domestic?

    The answer is probably yes to both.

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  • Jono

    Jono

    9 Oct, 2014 10:29 am

    I'd be curious to find out how many business seats both VA and QF sell out right compared to upgrades, (be they via points, cash or any other method).

    Given I am more of a bargain hunter the a fine flying connoisseur, it alarms me that QF are asking roughly $3,100 for a return MEL to PER ticket in business, yet I can get a RTW ticket for $2,529!?

    Whilst admittedly that's an economy ticket, it's four stops around the world and even if you were to tack on an extra $150 for a Priority Pass for some lounge access, you still get a lot more for your hard earned.

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  • watson374

    watson374

    9 Oct, 2014 12:29 pm

    The words you are looking for are 'redemption' and 'junket'.

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  • reeves35

    reeves35

    9 Oct, 2014 11:10 am

    It is all about real estate.  If less seats are using up the same amount of space previously occupied by more seats, fares have to rise.  If QF/VA cannot raise their fares, then their yields decline and this is not a satisfactory outcome.

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  • Jack Dawson

    Jack Dawson

    9 Oct, 2014 12:14 pm

    I like the old Qantas business class seats, they are very roomy and this one (both Virgin and Qantas) looks very clostrphobic!!

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  • Merc25

    Merc25

    9 Oct, 2014 12:56 pm

    i agree with Jack,i prefer more space to a clostrphobic space even with a smart seat!!

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  • Hugo

    Hugo

    9 Oct, 2014 01:16 pm

    It's interesting that small spaces are described as "claustrophobic".

    That's like describing a spider as arachnophobic.

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  • eminere

    eminere

    9 Oct, 2014 09:03 pm

    Of course fares are going to go up. They have to pay for the refurb somehow, don't they?

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  • AussieGuest

    AussieGuest

    10 Oct, 2014 05:06 pm

    Carriers may increase fares but the market will decide whether or not this is acceptable.  Should an operator arrogantly proclaim 'passengers will pay more' they may be in for one hell of a shock when bookings dwindle to a trickle.... Yield?  Who will be doing the yielding?  Time will tell.

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  • kimshep

    kimshep

    11 Oct, 2014 10:21 am

    The New York Times reports today that oil prices are down 19% since June 2014. Perhaps it's about time we started pressing both Qantas and Virgin Australia to reduce their overly onerous 'fuel surcharges' now? Seems to me that the public conveniently forget this element on a regular basis - but be damned certain that QF and VA don't forget it when looking to maximise profit.

    Further, both carriers regularly hedge fuel prices. Perhaps, deserving of a casual glance by the ACCC?

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  • abudhabi1

    abudhabi1

    13 Oct, 2014 10:04 am

    The Gap between Domestic Economy and Business and we are one of the few parts of the world to have had three class domestic used to be 15% what happened?

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Guest

17 Jul, 2019 12:58 pm

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