Transforming the long haul market

The move is as breathtaking as it is smart and would effectively steal away Qantas’ status as Australia’s premier long-range airline.

Countless surveys have shown that passengers prefer non-stops yet Qantas couldn’t commit to the 777-200LR four years ago, because in part Boeing, couldn’t commit to year round Sydney –London performance.

The fact that the 777-200LR could easily do Perth-London all year round didn’t register on Qantas’s “then” Sydney centric radar, despite that fact that Qantas’s share of Perth-Europe traffic is the lowest of any major airline into Perth.

Now V Australia is going to take the headlines and passengers away from Qantas.

The move is part of a global plan for Virgin branded airlines that was revealed to Australian Aviation in February when the airline’s first 361-seat Boeing 777-300ER was delivered for the Sydney to Los Angeles route.

Virgin Blue CEO Brett Mr Godfrey and Sir Richard Branson, the airline’s major shareholder, discussed making Perth a hub for routes to Britain and South Africa.

Sir Richard first raised his vision of London to Perth non-stop flights in late 2003 but aircraft availability and capability were obstacles.
Boeing’s 777-200LR, which entered service in early 2006, set the non-stop record for a commercial jet aircraft when it flew 21,600km east from Hong Kong to London over the US in November, 2005, in 22 hours and 42 minutes.

Virgin Atlantic had planned London to Perth non-stop flights with 270-seat 787-9s from 2014 but that aircraft’s production problems have seen that date push out by more than three years.

Depressed aircraft prices are giving Virgin Blue a chance to fast track expansion plans as Australia’s economy appears set for take-off again and its operations from Perth are expanding.

Some may suggest that the move is too bold but the stars could not be better aligned for the airline group.

Aside from China, Australia’s economy has been the least affected by Great Recession as it is now dubbed.

And the vibe in Perth, centre of Australia’s resource boom is upbeat with the catch cry – “what recession”?

A Virgin Blue spokesman would only confirm that it had executives in the US looking to replace many of its 737s from 2011 and that now was a good time to shop for aircraft.

“We’re often talking with Boeing and any aircraft manufacturer would certainly take that opportunity to make further presentations and typically that includes hypothetical modelling of aircraft options,” the spokesperson said.

“We always keep an open mind as to opportunities and changing market conditions. Network planning and fleet strategy is part of that.”
Also on the radar are 787s suggests on source and it may well be that the 777-200LR commitment will be a lease ahead of 787-9 deliveries later next decade.

For the Virgin Blue group the buy of 777s and possible 787s will bring yet another dimension to its “new world airline” strategy.

Clearly it is no longer the low fare leader and has been for some time focused on being a value leader.

Now it can add innovation leader with these new non-stops.

However the days of conservatism at Qantas, that have stifled some market opportunities, appear to be over with CEO Alan Joyce due to announce in November a series of new initiatives that are expected to reflect more flexibility and a product more in line with a changed market.

But just as Joyce rained on Sir Richard and Godfrey’s low cost airline mantle with Jetstar so the tables may be turning.

When Ansett was teetering in mid 2001, Sir Richard played his cards perfectly and sensed the airline was failing.

Now he and Godfrey sense the time is right to boldly expand into a more premium product that could provide some unwelcome turbulence for Qantas.