Virgin Territory

Indeed, Virgin chief executive John Borghetti flagged the move as early as April 2012, when he told reporters on board factory-fresh A330-200 VH-XFD at Airbus headquarters in Toulouse that the fleet had been designed with an onboard product good enough to fly internationally. (A product that has since been substantially upgraded. ) Moreover, the A330-200’s 7,250nm nominal range meant it is capable of reaching cities such as Tokyo, Mumbai, Beijing and Honolulu from Australia, making it “ideally suited” for international flights.

“We have got the flexibility of putting it domestically or internationally depending how the market is, depending on where our needs are,” Borghetti said on April 24 2012.

At the time, that need was domestic. Australia’s mining sector was fuelling strong demand for travel to Perth and Virgin was focused on getting the A330s on those trans-continental routes. Qantas too bulked up its east-west network, even deploying for a short time the Boeing 747-400 on Sydney- Perth.

But the slowdown in resources activity in recent times has, in some ways, forced a rethink.

Virgin A330s could be seen sitting on the tarmac at Perth Airport on weekends, while the airline downgauged some cross-country services to the Boeing 737-800 in response to market demand, and launched seasonal A330s flights to Nadi in April 2015.

And now, Virgin signalled that its “needs” for the A330 are in the international market.

The airline announced in September that its A330-200s, configured with 20 business and 255 economy seats, would enter long-haul service for the first time from June 9 2017 on the Perth-Abu Dhabi route three times a week as part of a shakeup of its international network.

Alongside the redeployment of the A330s off trans-continental routes and onto the Abu Dhabi service, Virgin also announced changes to its Boeing 777-300ER operations.

It is withdrawing from Sydney-Abu Dhabi, returning to Melbourne-Los Angeles and slightly tweaking the schedule of its North American services to get more out of its five 777-300ERs.

A More Efficient A330-200 Fleet

Although schedules are yet to be firmed up, figures from Virgin indicate there would be a reduction of 3. 5 return services a week between Perth and Australia’s east coast capitals in order to open up the new Perth-Abu Dhabi route.

While business class passengers may not appreciate the product downgrade from the enclosed fully-flat A330-200 seats to the standard recliners on the Boeing 737-800, the reality is the downturn in mining activity and declines in bulk commodities prices has led to a drop in demand for travel to Perth.

Therefore Virgin’s A330s could be better utilised elsewhere without ceding the market to rival Qantas, which itself has pulled capacity out of Perth and redeployed aircraft onto more lucrative, money-making routes.

Aviation consultancy CAPA – Centre for Aviation said in a research note having the A330-200s on domestic and international routes would help lift the type’s fleet utilisation.

“The total return trip time means Virgin cannot use a single aircraft to operate the service, but the ability to run domestic services to/from Perth offsets any loss,” CAPA said of the Perth-Abu Dhabi announcement.

“Redeploying widebody aircraft from the domestic Australian market has been a priority following the downturn in the resource boom that was concentrated in Perth and drove widebody service between Perth and cities in eastern Australia. “The resource boom coincided with a capacity war between Qantas and Virgin that has since subsided. Qantas has moved faster and more deeply to reduce domestic widebody services in both east-west and triangle markets. ” Also, Etihad chief executive Peter Baumgartner said the changes to the two carriers’ Australia-Abu Dhabi network offered passengers more choice, noting Virgin’s new flights opened up new two-way connections to destinations such as Athens, Beirut, Geneva, Istanbul, Dar es Salaam, Entebbe, Khartoum and Nairobi.

“Australia is a critical part of our network, and we will continue to add capacity in order to meet the growing two-way demand for business and leisure travel,” Baumgartner said in a statement.

Overall, the total Etihad/Virgin network out of Australia will grow to 42 flights a week, from 39 a week currently.

“Virgin’s Abu Dhabi service from Perth appears operationally pragmatic,” CAPA said.

“Yet there may also be a strategic component: Qantas is weighing nonstop Perth-London service. Over the years Virgin and Mr Borghetti have rightfully advocated a virtual long-haul network for the airline instead of many online points, but Virgin may not be willing to forgo any online/own metal presence en route to Europe. ”

Boeing 777-300er Network Changes To Focus On Los Angeles

Virgin is resuming nonstop services between Melbourne and Los Angeles from April 4 2017 with a five times weekly offering after it pulled off the route in October 2014, when it had four flights a week from Brisbane and three flights a week from Melbourne, meaning it was not strong in either market.

While Virgin said at the time the decision to consolidate its Los Angeles schedule was made to lift its Brisbane-Los Angeles flights to daily, the impending arrival of nonstop Melbourne-Los Angeles services from United with Boeing 787-9s and the already stiff competition from Qantas would have undoubtedly played some role in the move.

The extra flying time on its five 777-300ERs comes from the withdrawal of Sydney-Abu Dhabi services from February 4 2017 and scaling back of Brisbane-Los Angeles to six flights a week.

There will also be a schedule change on one Brisbane-Los Angeles- Brisbane rotation, which will be an evening departure from Brisbane and a morning departure from Los Angeles.

Currently, all Virgin and alliance partner Delta Air Lines’ trans-Pacific services – indeed the bulk of flights between Australia and the US mainland – take off from Australia in the morning and leave Los Angeles late at night.

All up, the changes mean an extra four return flights a week between the US and Australia.

“The United States is a key market for Virgin Australia and this enables us to service Los Angeles from the three biggest gateways in Australia – Brisbane, Melbourne and Sydney,” Borghetti said.

“In partnership with Delta Air Lines, we will soon offer 25 services each week from Australia to Los Angeles and remain the only trans-Pacific alliance to offer business class guests lie-flat beds with direct aisle access on all services. ”

It was a far from desirable use of aircraft resources.

Etihad will replace Virgin’s three times weekly Sydney-Abu Dhabi flights with three additional frequencies of its own using 777-300ERs, maintaining a twice-daily offering from Australia’s largest city. Currently, the Virgin alliance partner and shareholder flies daily to Perth and Brisbane with Boeing 787-9s, as well as 11 times a week to Sydney and twice daily to Melbourne with a combination of 777-300ER and Airbus A380 equipment.

The changes mean there will be no more premium economy options for travellers on the combined Virgin/Etihad network to Abu Dhabi and beyond, given Etihad does not offer the cabin and Virgin’s A330-200s are configured in a two-class layout with business and economy.

“Etihad having year-round, twice daily Sydney service ensures a consistent product and alignment on a flagship market,” CAPA said.

Virgin’s three Sydney-Abu Dhabi services suffered from long layovers in the United Arab Emirates capital – twice the aircraft was on the ground for 12 hours, while the third service involved a 36-hour layover.

While Virgin did wet lease the aircraft to Etihad for an Abu Dhabi-Kuala Lumpur rotation once a week, it was a far from desirable use of aircraft.

That won’t be the case for Virgin’s Perth-Abu Dhabi A330 operation, with flight schedules showing VA11 departing Perth at 2305 and arriving in Abu Dhabi at 0635 the next day. The reciprocal VA12 takes off less than two hours later at 0820, arriving in Perth at 2325.

Virgin has sacrificed its Sydney-Abu Dhabi services whenever its 777-300ERs had to undergo scheduled maintenance. In 2016, Virgin was absent from the route from February to September as it reconfigured the big Boeing twins with new business class seats and a refreshed premium economy cabin, as well as a bespoke bar and other passenger upgrades.

Indeed, Virgin said in a note to travel agents in June Sydney-Abu Dhabi operations would again be suspended from November 2 to November 19 due to heavy maintenance.

While the improved fleet utilisation was a welcome move, CAPA noted it did come with less flexibility in the event of irregular operations.

“The new schedule is significantly tightened up, but with so little buffer room there may be concern about being able to conduct schedule recovery if or when there is a disruption, or need for extended aircraft maintenance,” CAPA said.

Figures from CAPA showed the changes represented a 29 per cent increase in capacity to North America for Virgin, and a five per cent lift to the overall Australia-mainland US market.

Moreover, the marketshare of the Virgin/Delta alliance would grow three percentage points to 26 per cent. The tie-up is the second largest of the three major airline groupings on Australia-mainland US routes, behind Qantas/ American (57 per cent) and larger than United (17 per cent).

While Qantas, American and United have boosted their presence in Australia in recent times, Virgin and Delta have, until September’s announcement, stood still in the face of growing capacity both in Australia and across the ditch in New Zealand. “Virgin’s addition of four weekly flights to North America presents its response – finally – to the developments over the past two years of United serving Melbourne directly and deploying better aircraft, while American Airlines has entered in partnership with Qantas, and Qantas has relaunched San Francisco,” CAPA said.

CAPA said Virgin’s return to Melbourne may impact on Air New Zealand, noting the Kiwi carrier had a “tidy business” carrying Melbourne-North America traffic via Auckland to Los Angeles, San Francisco, Vancouver and, more recently, Houston.

“That opportunity became more competitive when United started Melbourne-Los Angeles nonstop; Virgin’s Melbourne resumption adds pressure,” CAPA said.

“While Air NZ owned part of Virgin and having a joint venture covering the Australia-New Zealand market, there was a spirit of cooperation in leaving this market to Air NZ.

“With little grace left in the relationship after Air NZ management’s falling out with Virgin, leaving the board and selling down its stake, that cooperation has mostly evaporated. ”

Hong Kong And Beijing Equipment Still Up In The Air

This all leaves the question of aircraft choice for Virgin’s proposed flights to Beijing and Hong Kong, from a so far undisclosed Australian city starting June 1 2017, in partnership with new Chinese shareholder HNA Group yet to be answered.

In its application for traffic rights to Australia’s International Air Services Commission (IASC), Virgin said the two routes would be served daily with A330-200s configured with 275 seats.

However, in July Borghetti indicated there was the flexibility to look at other options, should Virgin believe there was sufficient demand to warrant larger aircraft.

The chief executive was tight‐lipped on what, if any, changes could be made to the fleet for the airline’s expansion to China and Hong Kong.

“We’ve got a few plans there,” Borghetti said during the company’s 777-300ER business class launch in Los Angeles on July 20.

“Don’t forget that we’ve also got through the rationalisation of the fleet, it does at the edges give us more utilisation on certain equipment that has a flow‐on effect. ” CAPA said the beefing up of its Los Angeles schedule will help “reduce the risk and initial losses on Virgin’s planned flights to Beijing and Hong Kong”.

“Virgin is up against significant competition, and airlines far bigger – in network and political connections – than HNA. Greater China flying is a medium and long-term opportunity. Shareholder changes have stabilised Virgin, but with the airline remaining fragile, it needs additional mature flying to offset new endeavours,” CAPA said.

“The Asian services, initially and surely in the long term, will clock up more A330 redeployment than flights to the Middle East. ”