The Hong Kong Question

Virgin Australia is about to set out on its great Asian adventure. Flights from Melbourne to Hong Kong will launch in June, with Beijing to follow later. Can it really challenge the incumbents? Will the move revive its battered fortunes or spark a damaging price and capacity tussle with rivals?

When Virgin Australia chief executive John Borghetti announced in March the launch of five times weekly services from Melbourne to Hong Kong from July, with Beijing on the menu later – the carrier’s first foray into Asian skies – he described the move as a key pillar of the airline’s strategy, allowing it to tap into Australia’s fastest growing and most valuable inbound travel market.

It was hardly a lightbulb moment. Asia, and particularly Greater China, has long been recognised as the world’s aviation growth engine. The question many analysts and industry observers are asking is: why has it taken so long? For years, Virgin’s long-haul ambitions seem to have been in the opposite direction, across the Pacific to the US, a highly competitive market, and westwards to the Gulf, where it has now been forced to dumped its services to Abu Dhabi for lack of results.