Giving Qantas the blues?

Two years on the airline group is certainly stimulating the market but not in a way that was envisaged at the time.

Virgin Australia is the new face of Virgin Blue and the airline is attempting what has not been done before – moving from the low cost /low fare model to an upmarket premium airlines albeit at value prices according to the PR spin.

And it could well be that Qantas will be in a spin if Virgin Australia pulls it off.

The blue has gone from Virgin but the blues may well be going to Qantas is the simple but blunt warning from Sir Richard Branson who unveiled Virgin Australia in Sydney last month.

Sir Richard promised to revolutionise travel in Australia with the new look Virgin Australia just as he did 10 years ago when Virgin Blue, effectively put Ansett out of business.

But this time his sights, and those of CEO John Borghetti, are squarely on Qantas with a rebranding of the low fare airline as Virgin Australia pitched as an upmarket classy product aimed at the corporate market.

“I’m absolutely thrilled with the new look and feel of Virgin Australia’s domestic product and I know it will shake up the Australian travel market on an even larger scale than it did 10 years ago,” said Sir Richard.

“And yes the blues may be going to Qantas,” said Sir Richard.

Speaking with Contrails Sir Richard said that the new branding, product and service offering “will transform Virgin Australia into a contemporary dynamic airline with a product to compete with the best and better than Qantas.”

As this is being read, possibly on a shiny new Virgin Australia A330 on the Sydney to Perth route travellers will be able to judge that call.

But while business and corporate passengers on that aircraft on that route may laud Virgin Australia the rest of the network is a challenge.

On key long haul routes Qantas is bringing additional heavy metal in the form of internationally configured 747-400s and A330s to hold onto passengers, while on all transcontinental routes the airline can boast that 90 per cent of flights are twin-aisle.

Virgin Australia will not have its 737 fleet reconfigured with the new business class till December and another two new build A330s do not arrive till early next year.

Analysts expect that in 2012 the airline will actually add about four to six A330s and CEO John Borghetti does not deny that a fleet of four of a type is not realistic.

And so realistically it will be later in 2012 before Virgin Australia really starts to test corporate loyalty to Qantas.

However that may well change if some Qantas unions decided to tear the airline to pieces with senseless strikes.

And one of the magic ingredients – Sir Richard – that drives staff loyalty at Virgin Australia is not moving on as some analysts suggest.

“To quote Mark Twain the rumours are greatly exaggerated and to my dying day I will always be involved in some way with airlines,” Branson told Contrails.

Recent moves by Virgin Atlantic to consider an equity partner have fuelled speculation in the British press that Sir Richard was considering exciting the airline business.

“Certainly because of the British Airways / Iberia tie up we are looking to bring another partner on board but that is all.”

And perhaps the looming global tie ups were a factor in Singapore Airlines finally agreeing to allow Virgin to use the brand outside Australia and within the Asia/Pacific region.

On the tantalising prospect of a Virgin Australia / Singapore Airlines alliance Sir Richard would only say “we will see what else develops in the future.”