Virgin Australia is dropping Abu Dhabi from its route network as the airline concentrates its international long-haul flying on the United States and North Asia.
The airline said in a statement on Monday it would no longer commence Perth-Abu Dhabi nonstop flights that were slated to begin in June with Airbus A330-200 equipment.
The decision to not proceed with the new route, which was first announced in September, came on top of Virgin ending its three times weekly Boeing 777-300ER Sydney-Abu Dhabi flights in February.
“Subsequent changes in market conditions have made the route no longer viable for Virgin Australia,” Virgin said.
“Virgin Australia will continue to explore opportunities to bring choice and competition to travel from Perth.”
Cutting capacity to Abu Dhabi highlights Virgin’s increasing focus on North America, where the airline is returning to the Melbourne-Los Angeles route from April 4 after a two and a half year absence.
Meanwhile, Virgin was seeking the green light from competition regulators to establish an alliance with HNA Group and Hong Kong Airlines to launch nonstop services to Hong Kong and mainland China later in 2017.
On a broader level, Los Angeles will be the only hub of an alliance partner that Virgin will serve with its own aircraft. Virgin has never served Singapore since forming a major alliance with Singapore Airlines (SIA) in 2011. At the same time, SIA has grown in Australia by adding extra frequencies to to the major capitals, launching flights to Canberra and using its regional wing SilkAir to serve Cairns and Darwin in the top end. (See the March edition of Australian Aviation for a profile of SilkAir’s Australian operations.)
Cancellation of the proposed Perth-Abu Dhabi service suggests Virgin was likely to use the Airbus A330-200 that would have been deployed on the route for its venture to North Asia.
Virgin’s international flying posted underlying earnings before interest and tax (EBIT) of $800,000 for the six months to December 31 2016, an improvement from an underlying EBIT loss of $30.8 million in the prior corresponding period.
The financial details included Virgin’s trans-Tasman (served as part of an alliance with Air New Zealand) and South Pacific network, as well as its flights to Bali from Brisbane, Port Hedland and Sydney, with the performance of its long-haul network not detailed separately.
Abu Dhabi has been the most expendable part of Virgin’s international network, with the airline regularly suspending service to the United Arab Emirates (UAE) capital since the inaugural service took off in 2011 whenever its Boeing 777-300ERs had to be taken offline for scheduled maintenance or cabin upgrades.
It also means Virgin will no longer serve the hub of its alliance partner and major shareholder Etihad Airways, continuing a trend of airlines cutting capacity to Abu Dhabi in recent times.
A recent research note from aviation thinktank CAPA – Centre for Aviation cites two examples – Airberlin cancelled its Dusseldorf-Abu Dhabi service in March 2017, while Alitalia stopped flying between Venice and the UAE capital in October 2016. There have also been reduced services from Air Seychelles and Jet Airways.
However, Virgin is the first airline that Etihad holds equity in that will exit Abu Dhabi completely. Etihad Regional, a regional carrier baed in Switzerland flying across Western Europe, never served Abu Dhabi.
CAPA suggested partner airlines faced difficulties in securing seats beyond Abu Dhabi on Etihad flights. Further, there was no much demand for Abu Dhabi as a destination.
“As understood by CAPA, the problem partner airlines have faced in Abu Dhabi is that because it is a hub with minimal local demand, onward connections on Etihad are key to ensuring the success of Abu Dhabi services,” CAPA said in the research note dated January 30.
“However, partners have severe difficulty accessing Etihad inventory. Etihad’s own organic growth means that the capacity is in demand. What capacity is available to partners is actually in demand – because of Etihad’s numerous partners.”
“Partners have told CAPA they feel the partnership in practice is unsustainable and vastly different from the basis on which it was sold.”