Virgin Australia expands and simplifies fares

VIRGIN Australia has expanded its range of ticket options  in what the company’s new airline group executive believes will be an industry trend towards branded fares and greater choice.

From September 7, the Australian carrier’s “Fares For You’’ structure will allow customers to choose a range of inclusions across its international and domestic flights.

But unlike US airlines, Virgin will not remove existing domestic flight entitlements such as complimentary baggage, food and entertainment. A range of economy fares starts with a “Getaway” fare for passengers who know exactly when they want to fly with increasing levels of flexibility with names such as “Elevate’’ and  “Freedom’’.

On trans-Tasman and short-haul international flights, ,there will be a basic “Go” fare, for passengers prepared to lock-in flights and travel without checked luggage, as well as a “Go Plus’’, for those who want checked baggage but are prepared to forego other benefits.

Business and premium economy fare types will include a premium saver, a flexible premium fare and equivalent fares in business class.

Virgin is upgrading its international business and premium economy cabins and chief executive John Borghetti has said he expects the airline’s impressive new business suite will allow it charge higher fares than would otherwise be possible. 

Virgin Australia global sales general manager Shirley Field said the fares would allow passengers to match fares with their travel type “providing choice, value and flexibility like never before”.

The scheme is similar to the “Seats to Suit’’ branded fare offering  pioneered by Air New Zealand and which has proved a winner for the Kiwi carrier. It is also in keeping with recent comments by John Thomas, who will be responsible for  Virgin’s  domestic and international airline operations, that new distribution methods showing product attributes will see a move away from buying airline tickets solely on price.

“if you’re (charging) $100 more and I think ‘Wow, I’m getting all of these product attributes for $100’ I’ll be less price sensitive because the industry is giving me a more complete picture of what I’m getting for that price,’’ Thomas  said during Virgin’s recent international product launch in Los Angeles.

Thomas, an industry veteran who was instrumental in introducing ancillary charges in the United States, said the US industry had realised that consumers reacted favourably to being given choice and a sense they were controlling their travel. There was also a move to replace confusing industry fare classes with the easier to understand branded fares which told travellers exactly what they were buying.

“The industry is migrating to being merchandisers or retailers,’’ he said. “Again it’s this classic of I need to have the right product, at the right price, to the right person at the right time.’’

However, the Virgin executive cautioned against following the US industry’s early move to adopt “take-aways’’, such as bag fees,  which had given it a perception problem with travellers.

He said less than 30 per cent of US full service carrier ancillary revenue was now coming from take-aways, while 70 per cent was derived from “enhancements’’ such as extra leg room seats and the ability to use an airport lounge.

“It’s about the personalisation,’’ he said. “I want to make sure I’ve got the right product so I can actually enhance the experience if I give people further choice.’’