Virgin goes for MAX power

With only 24 aircraft, the order currently does not signal a full fleet renewal for Virgin, but shows that the airline has had to get in early to secure slots for the aircraft, given that Boeing has set a goal of 1000 firm MAX orders by the end of the year.

As it is, Virgin will receive its first aircraft more than two years after the first customer delivery of a 737 MAX.

Although the order is for the 737-8, it is possible that the door may be left open to also order the larger 737 MAX 9 (or 737-9), which may offer an interim step between the 737-8/737-800 and the widebody A330-200s.

As part of the same announcement, Virgin said that it will delay delivery some of its 47 737-800s until after 2016, but will still take 31 new aircraft between 2013 and 2016. It also expects to dispose of all of its 737-700s by the end of 2013.

Mr Borghetti added that the airline will “continue to review its fleet strategy to ensure we align fit-for-purpose aircraft to markets and maintain maximum flexibility in capacity management.”
Specifically, it appears that those aircraft scheduled to arrive between 2013 and 2016 could be used to grow the fleet if additional capacity is required, or if there is a downturn in the market they could simply replace older 737s which are reaching the eight year mark, often a time when low cost carriers turn their fleets over.
The deferrals are will also give Virgin some additional cash in the short term, which could either be held, or more likely invested in other capital expenditure.
In that scenario, it appears almost certain that it will look to add more A330s to its fleet, particularly as the capabilities of the aircraft give Virgin a number of options to expand both domestically and internationally.
Domestically, the A330s could continue to take over services on the lucrative trans-continental market, where Virgin’s 737s and A330s are now competing against Qantas’s 747-400s and A330s, including a number of the latter featuring the Skybed in business class.
Alternatively, the A330s could also be used to add more international services, particularly in conjunction with alliance partners Singapore Airlines and Etihad Airways.
That could see it launch Brisbane-Singapore-Abu Dhabi services to supplement Etihad’s services, while it could also consider services from Perth, Sydney or Melbourne to Singapore in conjunction with Singapore Airlines.
Virgin’s MAX order will also likely put some pressure on Qantas to firm up its plans for replacing its own 737-800s, some of which are already 10 years old.

Qantas currently has 78 of the competing A320neos on order, most of which are earmarked to go to Jetstar, but some could be diverted to Qantas, particularly since it abandons plans to use some aircraft for its premium Asian carrier.

With the first neos to be delivered in 2016, that could allow for Qantas and Jetstar to gain some competitive advantage in the domestic market before Virgin’s first MAXes are delivered three years later, unless Virgin is able to secure earlier slots through a lessor.

Meanwhile, Boeing has revealed at the Farnborough Airhsow that the 737- 8 will have a 540nm (1,000km) increase in range to 3620nm (6,708km) in a 162-seat two class configuration, although Virgin uses a 172-seat configuration.

The other MAX marks will also have similar increases, with the MAX 7 (737-7) quoted at 3,800nm (7,042km) and the 737-9 at 3,595nm (6,662km) range.

The 737-8 will also have a higher maximum takeoff weight of 82.2 tonnes, an increase of four per cent over the 737-800. Combined with an as-yet unquantified reduction in operating empty weight, the MAX is expected to have a bigger payload, which is likely to allow for more freight to be carried on some services.

However, that additional weight is likely to come with a penalty of longer runway requirements, which could pose problems at some of the regional airports where Virgin currently flies its 737-800s.