Tuesday, July 27, 2010

Liz Savage (EGM Commercial) of Virgin Blue on the difference between Euro and AU Air markets

For part of today I was at the Australia Pacific Aviation Outlook Summit 2010. Highlight speaker of the seasons I listened to was Liz Savage the (relatively) new Chief Commercial Officer (now Executive General Manager Commercial) of Virgin Blue. Ninemsn is carrying the traditional news part of her speech around DJ's determination to carve a space in between the hard core low cost of Tiger yet steal premium customer share from Qantas. She announced a desire to double DJ's share of the corporate sector from 10% to 20%.

Savage's background (linkedin profile here) was with easyjet and Monarch. She took some time in her speech to share three key differences between the Low Cost/New World Carrier market in Europe and Australia. They are:
  1. Number of competitors and low cost carriers: Compared to her time in Europe, Savage was intrigued to discover how concentrated market share was in Australia. This lack of competition was particularly acute for Savage when it came to LCCs. Europe is filled with point to point low cost carriers. Savage mentioned that her previous employer - Monarch - was a medium sized carrier (some 30 aircraft and 100 routes) but was also a profitable airline and of size enough to compete. In Australia, no matter how you measure the market, there a very limited number of competitors - on an absolute scale and relative to Europe;
  2. Number of secondary airports: Savage reminded us that the success of Ryanair was in no small part due to the use of secondary airports. In Australia there are virtually no secondary airports, forcing low cost and new world carriers to sit with the same airport cost base as the full service/premium carrier(s); and
  3. Need for an international network: European LCCs can survive and prosper on the back of point to point short haul. But given Australia's distance and market, a carrier must says Savage have an international network (either directly or a virtual one via alliances).
Great to get a new view on the Australian market. Any other major differences between the Euro and Australian air markets?


David Whitley said...

The major difference is the number of sizable population centres. Australia only has a certain amount of places worth flying to (or rather, that can profitably sustain regular flights). just look at the number of 300,000+ population cities within a four hour flight of London, then compare with the number of such cities within a four hour flight of Sydney. And that pretty much explains the differences...

steve sherlock said...

just saw some stats that in 08/09 there were 24 mil international passenger movements in oz, and 50 mil domestic movements. 22 mil population.

i suspect europe has even higher per capita movements. Brussels alone had 19mil.

Philippine Travel said...

Europe has more higher capita than australia because it composes several countries than 1.