Virgin Blue’s domestic load factors fall, Continental to launch B787 Houston-Auckland service

Virgin Blue reports domestic passenger numbers in Apr-2010 rose 0.5% year-on-year, but domestic passenger load factor fell 1.4 ppts as the airline grew capacity by 3.1% (against a financial year-to-date reduction in capacity of 3.6%).

Virgin Blue domestic PLF and int’l PLF (%): Apr-2009 to Apr-2010

The carrier’s international passenger numbers rose 18.7% while load factors gained 8.5 ppts. The airline’s shares rose 1.2% yesterday.

Virgin Blue int’l and domestic pax numbers growth (% change year-on-year): Apr-2009 to Apr-2010

Goldman Sachs JB Were (GSJBW) maintained its ‘Hold’ rating on the stock, noting it is “difficult to draw any firm conclusions on operating performance, given VBA does not disclose monthly yield data”.

Australia’s Bureau of Infrastructure, Transport and Regional Economics (BITRE) released its Domestic Air Fare Index for May-2010 (on 13-May-2010), which showed the Best Discount Fare Index (Jul-2003 = 100) for domestic travel fell 29.0% year-on-year to yet another all-time low of 50.1. Restricted economy, full economy and business class fares in Apr-2010 were all lower year-on-year at 92.7, 90.2 and 94.5, respectively.

GSJBW stated, “we understand this is being driven by increased intensity of competition among the domestic carriers in recent months on the back of significant capacity increases announced by Qantas mainline, Jetstar and Virgin Blue in the 2H FY10”.

Continental Airlines announces its first 787 route – to Auckland

Continental is the first airline in the world to formally announce specific, initial route plans for its Boeing 787 fleet. The airline has firm orders for 25 Dreamliners, with deliveries to commence in Aug-2011. The aircraft will have 228 seats, including 36 new flat-bed BusinessFirst seats.

Continental Airlines, a Star Alliance member and in the process of merging with United Airlines, plans to deploy B787 equipment to Auckland, New Zealand from 16-Nov-2011. It is a new route for the carrier and one which promises to open up a range of new connection opportunities for travellers between North America and New Zealand/Australia via the airline's well-located Houston hub in Texas.

Jeff Smisek, Continental's Chairman, President and CEO, stated, the Houston hub “has ongoing growth opportunities because it has a strategic location, space for expansion, support from the community and an excellent team of Continental co-workers who deliver our clean, safe and reliable service”. It will challenge Los Angeles (and to a lesser extent San Francisco and Vancouver) which has been the dominant entry point to North America for passengers from the South Pacific region and vice-versa.

Houston Airport System spokeman, Mario Diaz, stated, “this new flight between Houston and Auckland shows how the Dreamliner will create new opportunities to connect global markets that currently are not being served".

Air New Zealand’s shares rose 0.8% yesterday.

Asia Pacific selected airlines daily share price movements (% change): 26-May-2010