Virgin Australia CEO John Borghetti said during CAPA’s 'Airlines in Transition CEO Summit' last week that the carrier’s new domestic business class product has proven to be highly successful. Mr Borghetti says within one week of the 18-Jan-2012 Australia-wide launch of the new product, Virgin Australia had a domestic business class load factor that was four times higher than its prior premium economy product. He said premium economy sold very poorly over the five years it was offered and introducing business class domestically was “a natural” addition in Virgin Australia’s quest to attract more corporate traffic. “For us it was an easy decision. And it's paying off,” Mr Borghetti explained.
Virgin Australia says new domestic business class product is highly successful
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Virgin Australia realigns its airline partnership priorities on new long haul strategy: Part 1
There have recently been important shifts in Virgin Australia's partnership relations, as Air New Zealand withdraws its ownership and the roles of Singapore Airlines and Etihad evolve with HNA becoming a substantial shareholder. As a consequence, Virgin is restructuring its long haul network for the first time in over two years. Individual changes are not significant, but they help tie up loose ends in Virgin's strategy. Virgin and its US JV partner Delta have been static since United and Qantas-American Airlines greatly altered the Australia-US market profile, a route which constitutes most of Virgin's long haul network.
Virgin struggled to find a use for what was essentially leftover aircraft capacity that it allocated to Sydney-Abu Dhabi as part of a JV with Etihad. With a limited fleet, North America beckoning, and Etihad seemingly losing some lustre since a Virgin-Singapore Airlines partnership, Virgin is having to cut Sydney-Abu Dhabi to free up capacity to relaunch Melbourne-Los Angeles.
Virgin will still commit to its Etihad partnership by adding three weekly Perth-Abu Dhabi flights on the A330-200, which will finally be moved out of the domestic market and deployed long haul. Since the end of the West Australian mining boom, these well equipped aircraft are no longer needed on transcontinental domestic service. Virgin's fleet of five 777-300ERs now will exclusively be used on Los Angeles.
Tigerair Australia Part 2: LCC looks to Value Alliance to drive near-term growth opportunities
Tigerair Australia has no immediate plans for expanding its international operation, which launched with three routes to Bali in Mar-2016. However, the Virgin Australia LCC subsidiary plans to expand its international network virtually by linking up with partners from the newly formed Value Alliance.
The Bali operation has been relatively successful, despite the use of aircraft wet-leased from its full service, higher-cost parent. However, for now Tigerair Australia is focused on transferring the three Bali routes to its own fleet as part of a transition from A320s to 737s, rather than pursuing growth.
The Virgin Australia LCC subsidiary could potentially pursue international growth once it secures regulatory approvals to operate international services with its own operator’s certificate. Some domestic growth is also possible once it completes the transition from A320s to 737s in 2019.