Virgin Blue could go bust: redeem Velocity points now?

bits · #1 (**permalink**) 5th June 2008, 01:53 PM

Hi all,

Saw this report on SMH about the possibility of VB going bust if oil prices continue to climb and VB is unable to dramatically raise airfares.
Virgin Blue has to hike fares to survive, JPMorgan says

What are people's views on the prospect of this happening?

If you had Velocity points, would you continue to save them to redeem for air tickets later or redeem now for store cash cards (which offer less value per point)?

maninblack · #2 (**permalink**) 5th June 2008, 03:16 PM

Toll must be rueing the day they decided to get into the airline business.

Maybe NZ can pick up some early deliveries on the 777's

pauly7 · #3 (**permalink**) 5th June 2008, 09:08 PM

Quote:

Originally Posted by bits

Hi all,

Saw this report on SMH about the possibility of VB going bust if oil prices continue to climb and VB is unable to dramatically raise airfares.
Virgin Blue has to hike fares to survive, JPMorgan says

What are people's views on the prospect of this happening?

If you had Velocity points, would you continue to save them to redeem for air tickets later or redeem now for store cash cards (which offer less value per point)?

Its certainly a bit touch and go... I myself am waiting for Virgin Blue to announce the measures they will be taking to try turn the business around (a la QF Groups announcements over the last two weeks).

Will see the general reaction to that and make a call, but I'm certainly not transferring any points to Velocity from my C/C anymore.

Mal · #4 (**permalink**) 5th June 2008, 09:19 PM

I'm not too concerned about Virgin Blue at this stage, or my Velocity points. ASX disclosure and other regulatory measures should help keep things in perspective. I do think that people associated with Virgin Blue do need deep pockets though!

However, Frequent Flyer points earn no interest, depreciate and suffer other issues which reduce their value. Why keep them there if you're not going to use them?

thegurio · #5 (**permalink**) 5th June 2008, 09:35 PM

I personally am not worried about any airline going under - lets face it, for most of us, we have to go where we are going regardless so you havent "paid" for them, you have just recieved them.

And i would also imagine that the government wouldn't like to see it dissapear and become a one horse town and niether would the consumer so i think its a while off yet.

codash1099 · #6 (**permalink**) 6th June 2008, 10:27 AM

Quote:

Originally Posted by thegurio

And i would also imagine that the government wouldn't like to see it dissapear and become a one horse town and niether would the consumer so i think its a while off yet.

Substitute "Ansett" for "Virgin Blue" and you'll see that that statement isn't borne out by history.

AnonymousCoward · #7 (**permalink**) 6th June 2008, 01:59 PM

Quote:

Originally Posted by codash1099

Substitute "Ansett" for "Virgin Blue" and you'll see that that statement isn't borne out by history.

When Ansett went bust didn't we have two other start-up airlines (including DJ) flying as well?

dajop · #8 (**permalink**) 6th June 2008, 02:23 PM

Quote:

Originally Posted by AnonymousCoward

When Ansett went bust didn't we have two other start-up airlines (including DJ) flying as well?

And we don't now? Tiger is a start-up (somewhat comparable to DJ in 2001, but substitute MEL for BNE) and by the time of AN's collapse, Impulse had already been folded into QF, to form the basis of the JQ we know and love/hate today.

Fluid-Flyer · #9 (**permalink**) 6th June 2008, 03:16 PM

Quote:

Originally Posted by dajop

Tiger is a start-up (somewhat comparable to DJ in 2001, but substitute MEL for BNE)

Interesting analogy... although if DJ releases massive route reductions/cancellations (probably hitting Qld and possibly Tas the hardest?), I reckon it will be mere minutes until Tiger announces a new hub in South East Queensland! AND a huge domestic expansion (maybe even routes into Sydney from SEQ & Melbourne). JQ would then need to respond. Interesting to see if TT have managed to come to LCC terms with BNE airport (who would be likely to lose a hub airline - if the title of this thread eventuates) or if TT will go with OOL?

codash1099 · #10 (**permalink**) 6th June 2008, 04:23 PM

In reality, the likelihood of DJ going bust is extremely low. Although under some pressure, they are a well run airline, something that couldn't be said of Ansett. They may have to trim here and there, defer aircraft deliveries and the like. Morgan's time period in which fares must be raised is quite long and I can't see DJ not responding to an obvious need.

Short term pain? Sure. Long term danger? Unlikely.