Jon Marshall

1
Jon Marshall

• Global Sales Manager
• Virgin Blue Airlines

2

Myth 1 All LCCs are the same

• Generic Low Cost Carrier product/route
• Product -use traditional routes but
  differentiating service options
• Route - Create new demand
• Low Cost Carriers fall into either category but
  will display secondary attributes.
• Virgin Blue has route model attributes but is
  predominantly a product differentiator
• Low Cost/High Quality
• Hybrid Low Cost Carrier

3

Myth 1 All LCCs are the same

• Operating costs are fixed
• Maximise utilisation of aircraft
• Variable operating costs are kept low
• Profitability will drive fares levels
• Commodity business
• Pricing power resides with the lowest-cost
  producer
• LCCs have developed into a wide range of business
  models with our markets dictating the style

4
Myth 2 Virgin Blue doesnt have a stronghold in
the corporate market?

• September 2000 1.4 Share
• 1st Birthday August 2001 9.3
• 2nd Birthday August 2002 21.1
• 3rd Birthday August 2003 29.6
• Today 34
• 55 Consumer Direct
• 15 Corporate Direct of remainder
• 60 via CTM Trade
• 20 wholesale

5
Myth 2 Virgin Blue doesnt have a stronghold
in the corporate market?

• Some Corporates Include
• Coles Myer
• Origin Energy
• Boral
• Microsoft
• Queensland Govt

Dramatic increase in number of corporate customer
accounts with Virgin Blue
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Myth 3 Virgin Blue doesnt have a corporate
product

• Business travellers wont fly Virgin Blue
• People dont take LCCs over 2 hours Perth is
  not a market for our product
• Guests are jammed in like sardines
• Virgin Blue 737 31.7 average seat pitch
• Jetstar 717s 29, Qantas 737 31
• Regional Centres cannot support 737 services
• SME business routes NTL, LST, TSV, MKY, ROK
• REX connectivity

7
Myth 3 Virgin Blue doesnt have a corporate
product

• Business Travellers are motivated by
• The overwhelming need to eat a plastic wrapped
  triangle sandwich or sausage surprise
• Frequent Flyer Points
• A free paper and re-hashed TV news
• On Time Performance

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Myth 3 Virgin Blue doesnt have a corporate
product
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Myth 3 Virgin Blue doesnt have a corporate
product
(1) On Time defined as arriving within 15 minutes
of scheduled arrival (2) Virgin Blue 12 months to
August 2003 US airlines 12 month averages to
December 2002 European airlines 7 month average
to July 2003 Sources US Bureau of Transportation
Statistics www.bts.gov Association of European
Airlines www.aea.be Virgin Blue
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Myth 4 Corporate Guests are different

• Product enhancements offered as choice user
  pays
• Self Funding Lounges Self Funding Valet Parking
  
• Holiday Programme Car / Hotel Partnerships
• Effective Online Booking Distribution
• Customer Loyalty Programs
• Customer ID
• International Services

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Myth 4 Corporate Guests are different

• Low Fares distributed on the Internet provide
  price savings
• UK experience
• 69 wealthy business travellers favour LCCs
• 95 claim happy with the service provided.
• 2 LCCs listed in the 2003 top 5 business
  airlines
• BA fell 15 on 2002 as favourite airline.
• LCC easyJet 3rd most popular followed by BMI
• Barclaycard, Business Travel Survey, January 2003

12

Myth 5 Web Distribution doesnt suit the
corporate market.

• Adoption rates of tools risen to 35.
• 90 of Companies managed corporate travel -
  online tool
• 40 will be do so for meetings/group travel
• Expedia, Travelocity or Orbitz will become major
  travel management
• Of the top online leisure agencies none were
  travel agencies pre-Internet
• CTMs of tomorrow will be companies that were not
  CTMs pre-Internet.
• PhoCusWright/ NBTA July 2003 Corporate Industry
  Trends Survey

13
Myth 5 Web Distribution doesnt suit the
corporate market.

• GDS deregulation carriers charges on bookings
  made by CTMs via GDSs
• Corporations to negotiate directly with the GDS -
  access to full inventory
• Reduction in carrier distribution costs passed
  on?
• Real-time integration of disparate systems
  (direct-connects)

14

Myth 5 Web Distribution doesnt suit the
corporate market.

• Corporate demand for integration of web fares
  into domestic and international itineraries
• Immediate challenges - search and booking tools
• CTM costs
• Common Global Technology platforms
• Education and training
• Data Capture.
• Travel Management bypass

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Myth 6 Weve done all there is to do..

• 22 flights a day from Sydney to Melbourne
• Westjet carries over 50 of the traffic on a
  number of routes in Canada as do Southwest and
  Jet Blue in U.S.
• A sustainable aviation model.
• Capital
• Good management
• Realisation that change is the norm, long term
  planning is speculative
• Government involvement

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• Thank You