Issues & Trends – August 2010

DJ, QF set for domestic corporate market war

THE Virgin Blue Group has rolled out the first phase of a revamp under new chief executive John Borghetti, abandoning its New Zealand domestic operation from October 18, boosting Australian domestic capacity and rejigging the international services operated by Pacific Blue and V Australia.

Borghetti’s hike in domestic Australian capacity will be implemented in tandem with a nearly 10 per cent increase in Qantas domestic seats by year-end, setting the stage for a pitched battle between the two airline groups on this front.

Virgin Blue’s focus will be on Australia’s east coast routes – where corporate travellers are the key to market share and yield – and results achieved by the long foreshadowed release of a new Virgin Blue business class product will be crucial to the success of its new moves.

Virgin Blue will also be strengthen-ing its trans-Tasman presence, clearly laying the groundwork for its proposed alliance with Air New Zealand to launch a fresh assault on the Qantas Group’s two brands policy across “the ditch”.

Announcing the moves, Borghetti said Pacific Blue would expand as an international medium haul airline with operations across the Tasman, the Pacific Islands and South East Asia.

“By restructuring our Pacific Blue operations we are now able to free up our long haul V Australia aircraft to capture the growing demand for travel to the USA,” he said.

“By year-end, V Australia will be fully devoted to international long haul business more suited to the B777 fleet, with Fiji serviced by Pacific Blue.”

The Virgin Blue revamp includes:

• Brisbane-Hamilton (New Zealand) flights have increased from three to four flights a week (Sydney – Hamilton flights ceased last month);
• Denpasar-Melbourne direct flights have increased from five flights a week to daily;
• Perth-Phuket services have increased from two to three flights a week;
• Brisbane-Dunedin services increase from three to four flights a week;
• Christchurch-Melbourne frequency will increase from four flights a week to daily from October 31;
• V Australia flights to Fiji will be taken over by Pacific Blue from October 19;
• V Australia will offer morning departures Sydney-Los Angeles from October 19 and daily services from December; and
• V Australia will also operate an additional service weekly between Melbourne and Johannesburg; Melb-ourne and Los Angeles; and Melbourne and Phuket from December.

Announcing the moves, Borghetti said the increased domestic capacity is a response to “what our guests tell us they need – more capacity and frequency on eastern seaboard capital city routes, and to key tourist destinations such as the Gold Coast and Uluru”.

Overall, he said the changes will “provide a more attractive schedule for the business market, including better integration of our international and domestic schedules”.