Virgin Australia Talks Being The ‘Challenger Brand’ In New Zealand, And International Opportunities

Transcript

Rob Sharp:The alliance that we had in place actually is being let to fall away, so it effectively lapses. So Air New Zealand's decided not to go through the application approval process to renew it. So it is a divorce in that we're playing nicely together at the moment, but we'll be fierce competitors post the end of October. It's really disappointing for consumers because the arrangement, the codeshare arrangement that's been put in place, effectively means a drop in the competition within domestic New Zealand. So the 2 major players there are coding onto each other's domestic product. They are also 70% of the capacity on trans-Tasman. It will have a flow-on effect there, so we believe that this will be adverse to consumers. Now we're a brand that's known for being a challenger brand and we're going to bring our full suite of product across. We've already announced our network proposition and we believe we'll be very competitive in the market and we'll certainly bring competition. But there are some interesting aspects to this and quite a bit of dialogue happening in the industry, given we're here at IATA, around the nature of the arrangement. For Virgin Australia, the focus is on the premium leisure and business markets, so the The big change was really increased frequency to Auckland from the east coast of Australia, right-sizing of the network, but also opening up some new routes. So Sydney, Wellington, Melbourne, Queenstown, and that's been our initial focus because obviously Virgin Australia is focused in that market. We have said that Tiger remains an option to bring across to New Zealand. At the moment it's focused on a fleet transition from A320s to A737s. It's bringing new product on, and, but it is not too far down the track an option for us to be able to bring Tiger into the market. Nothing to announce, but it is an option that we have. Yeah, it's very exciting. The key platform for us is Greater China, and so we announced in April the commencement of Sydney-Hong Kong routes, and that's an airport that's technically full, but we have secured slots and very good slots for the business market coming out of Sydney. That partnership also has an arrangement between our Velocity loyalty business and the Fortune Wings business, so it brings lounge access and points. Hainan Airlines codeshare was announced 2 days ago. It's the 4th largest carrier in China. It's a premium carrier, and the product alignments are very good. It's opening up another 6 to 7 cities in China that you can fly direct to from Australia. Once again, lounge access reciprocity with points, and it brings a very, very good value proposition. So we now can serve up to 19 cities into China over Hong Kong or directly on Hainan. So increases our footprint there, leverages our partnership credentials with our partners in China, and also plays to our strength here domestically. So we believe it's a good recipe for us to, phase one, enter into the Greater China market. North America is the other key platform for our international focus. A deep alliance with Delta, and we work very, very closely with them. We have joint marketing in place, our product alignment's very good. They've got new aircraft that are coming. We have just announced Wi-Fi on board aircraft, so you have live connectivity now from gate to gate. A very reliable system, and that just keeps us at the top of the game. We have the world-class business class cabin in our 777s. So there's a very high level of product, product alignment and coordination that occurs there. Over Hong Kong, it was useful to also leverage our sister company, Virgin Atlantic, and we can now fly from Sydney and Melbourne over Hong Kong up to London. So it's all about choice. You can go via Singapore, over Hong Kong, or even through LAX up to London. So more choice provides distribution strength for us and leverages those partnerships that, as I indicated, are very important. Yes, look, it is a challenge, and it's not just fuel here in Australia. It's also airports. So airport infrastructure, there's about a $10 billion pipeline of investment. The industry cost base is rising. So in that environment, how do we keep competitive fares? Australians are used to very, very competitive fares. Over a decade they've been coming down. Over the last 12 months they have gone up, and these cost pressures will flow through to consumers. However, it's not just a case of cost up, price up. Pricing is very much driven by price points in the market, the overall value proposition we've got in there, competition, how much capacity is in the market. So all of those factors are being taken into account. But as an industry, there will be some impact because it is challenging to just pass fuel prices straight through because of these other dynamics. It is, it is the key challenge. Well, since I've come into Virgin in July last year, one of the things that we have been focused on is that strengthening of the international proposition, and I've just spoken to those, so it's very pleasing to have that well underway. The 2 other key things we've been focusing on are our customer experience You can't lose sight of your customer. And so a lot of investment in airports, automation, the Wi-Fi on board the aircraft, some really interesting innovative use of mobile technology with check-ins at cruise ship terminals. And then the last part of the puzzle for me is around digital capability, and a lot of fun stuff around skill sets for Alexis with voice controlled devices, but those types of things will be actually really critical in the future. So investing and making good progress on digital. We've got a new Virgin app that's out, getting really good feedback on it. So they're the, they're the fun things that people see outside of the business. Technology is also being used internally to drive efficiencies, which for us is really, really crucial. Thank you, Rob.

Copyright policy: All transcripts on this site are the copyright of CAPA - Centre for Aviation. Our reproduction policy is as follows: you may quote up to 400 words of any transcript on the condition that you attribute the transcript to CAPA - Centre for Aviation and link to the original video page. All other use is prohibited. While we aim for 100% accuracy in the transcript, there may be some minor transcribing errors.