Business
Virgin Blue Ready For Deals With National Airlines
It’s a strategy to fight Qantas, Air New Zealand
Australia’s emerging new major domestic airline, Virgin Blue, is ready for partnership deals with weak government-owned Pacific Islands airlines as a strategy for fighting Qantas, Air New Zealand and Air Pacific for a chunk of the tourist travel market to the region.
Solomon Islands cabinet minister Michael Maina, currently chairperson and acting chief executive of Solomon Airlines, told Island Business it has already begun talks with the Brisbane-headquartered Australian carrier.
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Air Nauru is also understood to be in discussions with it.
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Virgin Blue, half-owned by a company headed by British entrepreneur Sir Richard Branson and half by an Australian investment business, Patrick Corporation, announced last year that it intended to branch from Australia to destinations including New Zealand, the Pacific Islands and South East Asia.
The collapse of Ansett, which in the past had operated in various forms to the Cook Islands, Samoa, Vanuatu and lastly Fiji, helped it expand rapidly as the second major Australian inter-state carrier, operating 28 Boeing 737 jets to every capital city.
Fiji, Samoa and Vanuatu appear to be Virgin Blue’s first Pacific Islands targets, although talking to Islands Business in a telephone interview the airline’s commercial head, David Huttner didn’t state that directly.
“We are not looking at going head-to-head with national carriers on routes that are very marginal and that’s the way we look at it,” he said.
“ We understand that some of the national carriers are struggling. We even feel that with countries that can’t support two carriers, we’d be open to partnering with some of the local carriers, and we could offer a more effective partnership than they could get from Qantas or Air New Zealand.”
Virgin Blue’s arrival in the Pacific Islands will be competition for Air New Zealand, Qantas and Air Pacific, which is 46 percent owned by Qantas.
It could also impact harmfully on the business of struggling regional carriers like Air Vanuatu, Samoa’s Polynesian Airlines, Solomon Airlines, Air Nauru and Royal Tongan.
Huttner said for commercial reasons, “We obviously don’t want to state exactly when we will open our new services. But we will be flying by the end of this year. Right now we’ve received submissions from majority of the Pacific Islands nations—we will narrow it down the next couple of weeks to five or six.”
Fiji was clearly one of the possibilities, but the biggest markets in the region were not necessarily Virgin Blue’s priorities, he said.
“We’ve had an operational team in Fiji. I’m going to Singapore, Vanuatu, Samoa at some stage, and Fiji in March.
“There are certain nations where we are likely to come first because they can absorb additional flights and also the state of their national carrier is not so fragile.
“The goal is not the market share that already exists, but to look for new opportunities.”
It would also operate from New Zealand, Huttner said.
Huttner said a newspaper report that the airline envisaged a A$500 Australia/Fiji return fare, substantially below current Qantas/Air Pacific rates, had got it wrong.
“I can tell you this...if there’s enough traffic, we can drop Qantas’ fares by 30 or 50 percent.”
Virgin Blue was committed to lower fares but wasn’t a no-frills operator, Huttner said.
“We don’t like the term no-frills. We are a very service-minded carrier that doesn’t waste money on meals that nobody likes and lounges that only business people use. Business people never pay for their tickets, so we have no business class.
“We have cabin service and we think our service is better than Qantas. We have won a number of awards because of the quality of the staff we have. We sell snacks onboard. But if you want to bring your own lunch, you can do so.”
