Virgin Australia will end its reciprocal frequent flyer and interline arrangements with Malaysia Airlines as it pursues a partnership with the Kuala Lumpur-based carrier’s rival Singapore Airlines (Sydney Morning Herald, 28-Jun-2011). Virgin and Singapore Airlines have lodged an application with the Australian Competition and Consumer Commission to form a strategic alliance, which would see the two codeshare and cooperate on pricing, scheduling, marketing and sales on Australia-Singapore services and international and domestic connecting flights. They will also bid for corporate and government travel contracts, and offer reciprocal benefits to members of their respective frequent flyer programmes including lounge access and the ability to earn and burn points. Virgin and Singapore Airlines have said they are looking at new routes, but specific city pairs were left out of the application made public. Malaysia Airlines will join the oneworld alliance and seek closer cooperation with national flag carrier Qantas Airways.
Virgin drops MAS relationship for SIA
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Virgin Australia realigns its airline partnership priorities on new long haul strategy: Part 2
As Virgin Australia's unique accumulation of airline shareholders on its registry evolves, some of the longer term outlines of the Australian airline's strategy are unfolding. Air New Zealand is withdrawing as an equity owner, although the future nature of its partnership with Virgin has yet to coalesce. HNA Group, with its subsidiaries Hainan Airlines and Hong Kong Airlines is now on the register, along with the Nanshan Group, while Etihad and Singapore Airlines remain as substantial minority owners.
Part 1 of this report reviewed some of these issues in the context of Virgin Australia's international route plans.
Part 2 reviews the actual changes planned, as they relate to Virgin's US and Abu Dhabi routes and sets out why a greater emphasis on US routes is desirable for the short term, while a full picture becomes available for the more risky Chinese market.
Southeast Asia-US market Part 3: new nonstops need to overcome stiff one-stop FSC & LCC competition
Southeast Asian airlines are seeking to capture a larger share of the Southeast Asia-US market over the next few years as they launch new flights to the US. Three of the region’s flag carriers and at least one long haul LCC are planning to launch flights to the US, intensifying competition in an already fiercely competitive market.
Southeast Asian airlines currently account for less than a 20% share of the total Southeast Asia-US market. Philippine Airlines and Singapore Airlines are the only significant players in this market and are aiming to increase their share as they add new nonstop routes. Garuda Indonesia, Thai Airways and Vietnam Airlines are also keen to become significant players as they launch flights to the US, replacing their now limited offline products.
However, market share gains will likely come at the expense of yields and profitability as competition with North Asian airlines – and to some extent US and Gulf carriers – intensifies. North Asian airlines now account for more than 50% of bookings in the Southeast Asia-US market and have increased their reliance on Southeast Asian connections as they have added US capacity, resulting in very competitive fares.