You are the Boss - how do you save VS some money?

[Nottingham Nick]

We are all too aware that a lot of walks of life are suffering, due to the current economic woes. Airlines are apparently particularly vulnerable and as a result Virgin Atlantic have been trying to make savings in all sorts of areas.

The savings have been made by reducing capital spending (no new IFE on the LGW planes, for example), route cuts and service reductions to name but a few ways.

A lot of the decisions made by the Beancounters have come under fire on V-Flyer over the past few months.

Assuming that more money needs to be saved. If you were the boss, what ways of saving money or increasing revenue would you recommend?

Which of the cuts already made do you think are false economies?

Have any of the cutbacks caused you to use other carriers instead of VS?

I am one who has been critical of the Beancounters, but coming up with popular alternatives isn't that easy.

Nick

How about charging for alcohol served after the main lunch service back in Y? Each pax can have a couple of drinks for free (1st drinks round + 1 with lunch), after that, they pay. On a LAS flight Virgin would make a fortune.

Of course, people will say 'no' to this - but if BA announced they were doing the same, how long before Virgin followed suit? 48hrs tops in my book.

James

Nick [y] - this could turn into an interesting thread !

A couple of things spring to mind one of which would be relatively easy to implement. This wouldn't be a case of saving money rather than making more money.

In-flight duty free sales. On a full flight of 400+ to a holiday destination, why is there not more emphasis put on duty free sales. In almost all of the previous flights I have bben on for the last few years, there has been very little effort (VS staff please don't take that the wrong way) put into duty free sales. They just seem to spint up the isles shouting 'duty free sales'. Now surely you have a pretty much captured market and even with 250 people being 'persuaded' to spend £20 each (which is not a lot) that could potentially be £5k worth of sales per leg. (Is there a legal reason why the duty free sales must be rushed on a 7 hour + flight [?])

Again, please VS staff don't take this the wrong way, but merely an observation and a suggestion to the thread title.

Secondly - the flights that are just about breaking even but have too many sold seats to combine flights or cancel - would it be better to reprice the future flights so that more seats could be sold at less profit per seat but which would enable an overall profit on each flight.

In these hard times, if you can get even a small profit from each flight as opposed to some breaking even and others with huge losses, surely thats a better option.

Edited to add : I know they must do something like this already but there must be an amount of profit per seat which they would ideally like against an amount of profit which actually covers the costs but would attract extra business [?]

(now I am confussing myself [:D])


David

Move all transatlantic flights from LHR to GLA.
Saves almost 10% of fuel to JFK
Saves over 650 miles on a return to SFO.

It's easy to make savings - but will they create more or less profit?

VS had a winning formula - be the best.
Cutting costs by cutting service can destroy that.
Already many LGW/MAN pax are comparing service (unfavourably!) to Thomson & other charter flights rather than to BA.

[Darren Wheeler]

Sack the beancounter.
Reduce the number of Greeters at LHR. Sorry, but if you can manage to find the right terminal, the right desk shouldn't be an issue.
Make the flights slightly longer in duration. Reduce speed and save fuel without reducing performance.
Drop the K-ID packs.
Stop the longer Cowshed treatments and only do 15min ones.

Problem is, you either cut services or jobs. Neither are very attractive.

Great thread and I am looking forward to reading the responses.

Focus on the USP's that made VS special and the experience worth repeating Economy through to UC - cream rises to the top.

[HighFlyer]

As Darren says, drop the K-ID packs. They must weight and cost a fair bit and I imagine that most parents will bring things for their own children to keep them entertained.

Would it be an idea to remove the amentity kits from Y and do a run like in UC with a basket of shades, socks and earplugs?

Thanks,
Sarah

[Scrooge]

quote:Originally posted by Darren Wheeler
Sack the beancounter.

Make the flights slightly longer in duration. Reduce speed and save fuel without reducing performance.



You can do that to a point, then the aircraft starts burning more fuel per leg, saying that adding 20-30 mins to a Trans Atlantic shouldn't be an issue, except for slots at LHR, meaning an early departure on the inbound leg.

As David says, increase the time for duty free sales, it may well just be me procrastinating, but it seems that when I ask the cart has already been stored.

Cut back on the champagne in UC

Seriously, there are still areas where waste occurs, and as time has gone by and the low hanging fruit has been picket, it gets much harder to eke out the savings.

Cutting service and innovation does not bode well, and in a recession, it is actually the investments you make in these areas that stand you a better chance of surviving and making money.

Virgin has great customer service, keep it up. I had a very pleasant call with an agent last night when booking a flight, I don't ever recall other airlines being as friendly, asking for my advice on Purple Parking , and giving suggestions about my destination.

From my observations and comparisons against other airlines, I think Virgin are actually one of the more efficient and wel run airlines. From a Six Sigma perspective, I'd love to get a better view to work out where service could improve and revenue opportunities maximised, but thats an inside job.

I'm looking forward to my next 2 flights with Virgin. I did get a bit grumpy last year and talk about switching to BA. That's not going to happen for a while, particularly as I have a BA flight in Economy with 40+ Scouts coming up !

I am surprised that VS don't take a leaf out of SQ and charge a little more for a premium service. I would be prepared to spend £40 or £50 more for the new PE seat ex Gatwick for example but at the moment I would just go for the airline offering the best price where there is little comparison in service or product.

[Darren Wheeler]

quote:Originally posted by ukcobra
Cut back on the champagne in UC

Seriously, there are still areas where waste occurs, and as time has gone by and the low hanging fruit has been picket, it gets much harder to eke out the savings.




Perhaps it's time to look further up the food chain trunk and see how many managers are surplus rather than cutting the sharp end, which is normally the first to feel the axe swing?

This thread could be a can of worms.

The problem is that one has to ensure a balance between the classes. It is all to easy for those to sit up front and say cut x and y in Economy and vice verser.

Bill hits the nail on the head. Any savings must continue to make a profit. If VS moved out of LHR and LGW and decided that LTN or even Kent International were better they could save a huge amount of money on landing fees, handling fees and the like but the question then is will passengers follow them.

Personally I think the way forward is to look at areas where the airline can increase its money. Scrooge and David raise harder selling of duty free, which I think is an excellent suggestion. VS seem to have been taking the route of increasing revenue where it can, for example the sale of extra legroom Y seats ex LGW (which was heavily criticized at the time on certain forums), the entry of VH passengers into the LGW/LHR CH (again criticized by some), the use of the SFO CH by VX passengers (VX Must be paying to use it; again criticized). IMHO these moves are good moves, as long as the level of service does not drop. I am all for seeing other airlines using the CH during quiet times etc.

Keeping the weight of the aircraft as low as possible will save a lot of money in fuel and so forth. You could change anything in regard to this. For example less alcohol on board or an adjustment of weight allowances for baggage.

FC could save some money as well. Do away with the Silver membership packs, which in essence contain nothing (or at least don't resend them to someone who always changes tier levels. Do away with the red card until x amount of flights flown.

With regards to KID packs, I would be interested to see how much they cost. VS is in a tough corner, its competitors will steal a march on it, if they do away with them on the ex LGW routes. It must be a selling point to those with young families who are going away to MCO for a once in a lifetime trip.

I wouldnt save but spend/enhance to improve the profit margin on the Upper Class product for Business pax routes(not used the other cabins so can not comment):

I would bring all all those lovely things that Upper used to have that made it a more premium business product - cusions on seats (red I believe) flowers on the bar, a proper amenity kit (I can hear GJ already !), inflight beauty therapist etc.

I know many of my colleagues that have gone back to BA would consider moving thier First and full priced J business back to VA if they did (little things sometimes please guys and gals with big wallets - and yes there still quiet a few of them about Virgin so get tempting them back !)

Hackneyguy

Is there really a need for a Captain and a first officer on every flight? Surely some of the shorter routes only need the one pilot...? Just think of the savings - kerching!

I'd agree that further cutbacks (post red cushion/champagne in PE/flowers-on-the bar/UC amenity kit/IFBT etc.) probably aren't the way to go. Offering superaltive service from top-to-bottom, check-in to baggage reclaim, is highly cost-effective and will keep pax coming back to VS for more.

[fozzyo]

Paper ways a lot to carry ... weight = fuel = expensive! So get rid of all the bloody Golf magazines in Upper! Passengers already have an extensive choice of papers and magazines in the clubhouses, just ensure they know that they need to take what they would like to read as there are no magazines provided on board.

Duty free is an interesting one, and I'm sure they must have done this calculation. Not taking into account pre-ordered there are several trolleys full of rather heavy products, and a lot of them! This is a lot of weight to carry. What is the cost in fuel for this on each flight, loading, shipping, handling etc? Then look at the on board sales ... is the profit from carrying that weight that good?

The one thing that in a tougher market needs to happen is getting bums on seats. And that means addressing one of the big issues VS have ... consistency of service! How many times have we talked about it in trip reports etc?

So much has been cut and trimmed that from what is left there isn't much that can go without affecting the quality of the products which could risk alienating passengers, so less revenue and so on.

Mat

More incentive for the middle players gaining & renewing Silver, I.e. add in stuff thats actually worth something. Access to CH or lounges at a 'reduced rate', yes a charge but pitched at something people may actually take up & not just the LHR CH

The gap between taking one flight and gaining AU needs filling with better temptations
The incentive to take 'that extra flight or two' to hold on to some benefit, as currently, as seen in many a post- its just not worth it.

NH

I was going to say play 'Born To Run' but then realised you meant 'the boss' rather than 'The Boss'...

I think I'd try and focus on the non-flight items. As Willd said, why send out membership packs, cards and aspirational magazine that simply end up in the recycling ? In a digitised age, what use are they ?

Upping service and perhaps fares in the higher classes ? Mmm. Try that one on with our 'price is the only thing that matters' travel team and see what reaction you get.[B)]


I wondered about the possibility of charging for seat preassignment (along with upping the point at which it becomes unavailable on the more predictable LGW routes) but then found a fence to sit on and considered issues around refunds for aircraft changes or on the day reassignment. I also suspect that preassignment also helps in some small way at check in where it must reduce the average time an agent spends with each passenger group.

Though the last minute 'price to sell empty seats' model is nominally attractive wouldn't that just mean people would then play the system and delay buying tickets ? I presume there are also brand protection issues to be considered, otherwise they may have attempted to identify what price I would have been willing to pay for a PE - UC upgrade to fill 4 of the 38 empty UC seats on my recent Chicago trip rather than saying, in effect, '£1500 each one way, take it or leave it.'[:w]

Presumably there are also opportunities out there for increasing revenue from cargo?

But in short, I have no idea.

Paul

quote:Originally posted by pjh


But in short, I have no idea.

Paul


That makes two of us!

alex

afaik cargo revenues are already down - so little to be saved by cutting weight just to increase cargo.

VS do cost more than some carriers - accept that - their customers already do - but that extra cost is to pay for extra service. It is vital to keep the differential with other carriers.

Many of the service differentials are cost free - such as using names & FSM circulating & greeting UC pax - (and PE as well where possible - certainly on MAN/LGW where numbers are limited). They don't have to remember the names - just spend an hour walking round with a list. That service should be the norm not the exception!

As most VS customers already have shown that they are willing to pay a little extra for that extra service, look for further opportunities. Examples already are the extra length seats.

What could be gained from a pre-ordered prepaid meal upgrade in PE & Y?

Sales of LHR CH access has already gained £1m. Does that not clearly demonstrate the need for more & better lounges? MAN? MCO? Extra income can generated.

Rather than just cutting the range of CDC & drive through check-in, why not actively sell the service - and extension in range? Increase income rather than just cutting.

After deducting the fixed costs in the price of the ticket, taxes charges etc., the actual revenue element is very small - a small increase can have a proportionately large effect upon the overall profitability. On that basis I would argue for an increase in ticket price - but that cannot and must not come with any decrease in service.

There are of course 2 sides to every coin and when in a recession companies often look at ways to save money by making cuts to achieve a more efficient bottom line.

There are however some companies that see recessions as an opportunity to increase market share and put their competitors under extreme pressure and in some cases put them out of business.

VS are in a fortunate position to take advantage of the current situation but seem unwilling to take the risk. If I were in charge I would looking to go back to the innovative approach that made VS what it is today. Make your product more attractive than the competition and increase your market share. In other words invest now to take maximum advantage when the upturn comes.

While risky I think this would see VS come out stronger and more ahead of the competition than it ever has been.

Miopyk[8D]

quote:Originally posted by miopyk


There are however some companies that see recessions as an opportunity to increase market share and put their competitors under extreme pressure and in some cases put them out of business.

VS are in a fortunate position to take advantage of the current situation but seem unwilling to take the risk. If I were in charge I would looking to go back to the innovative approach that made VS what it is today. Make your product more attractive than the competition and increase your market share. In other words invest now to take maximum advantage when the upturn comes.



That is all very well but you missed a fundamental point IMHO. None of what you mention can be done without money. If VS can't raise the money (through various means) then it can't change anything.

And that is the key point. A recession is fine if you have available cash. Just look at the housing market, one can get a real bargain at the moment but the difficulty is getting a mortgage to pay for it. If you are a cash buyer you are laughing.

Banks don't even trust each other at the moment hence why the money markets have dried up. How on earth is company, regardless of size, supposed to raise the finance?

It should be clear to many on these boards that the way Virgin Group operate their subsidiaries is very complicated and I believe the money isn't as freely available as one would think (look at the way in which SRB was forced to sell 49% of VS to SQ in order to keep other areas of the Virgin empire afloat). Virgin, like all major companies, rely heavily on the bank and if the bank aint lending there is not much that can be done in order to take the initiative.

I was at LGW this morning droping the old folks off for the 15 across to MCO today. HAd a look round check in to see if I could see any cutting cost measures. Only thing I could see was the ridiculous amounts of flowers around the J check in and the ticketing desk. Surely not needed. Was good to note that VS is cleary pushing online check in, the number of desks for old school check in was less than 50% of total VS check in desks. One has to wonder when J and W cabins will be expected to bag drop as well.

On a side it was nice to see that the BAA IT systems are working well [}:)]- out of 10 self check in machines I saw only 2 were fully functional!!

quote:Originally posted by mdvipond
Is there really a need for a Captain and a first officer on every flight? Surely some of the shorter routes only need the one pilot...? Just think of the savings - kerching!

Maybe just fly it on auto pilot all the way? Just think of the £'s saved with no one at the pointy end.[:o)]

In four words: LEAN and SIX SIGMA

Regards
Bryan

What about only opening check in 3 hours before flight departure time thus limiting time U/C and AU customers can spend in the Clubhouse. Think of the money saved on food, drink and Cowshed treatments. The only exception to this being those transiting directly from VS to VS on same day.

I read a lot of TRs where the CH is a destination in its own right (not had the good fortune to make it there myself - jealous - I think so). In my experience business FFs aim to spend the minimum amount of time at the airport. So a 3 hour maximum in CH would be reasonable.

Lights blue touch paper and stands well back....

How about making it easier to redeem 'companion' and 'PE' upgrade vouchers. They are marketing these as a benefit of the card after all and from what I can tell at the moment they are pretty much useless.

Its not like you get them for nothing.