Virgin Blue plans for high-flying future

A glimpse of where Virgin Blue expects to be within five years was given by its co-founder and CEO, Brett Godfrey today when he told the aviation media it has a previously secret ‘airline of the future’ unit working on its renewal and growth.

Some features of that future will be:

• A single brand for V Australia, Virgin Blue and Pacific Blue,
• The offering of ultra low fares and a more spacious economy product on the same aircraft
• A wireless, paperless, portable device based process for booking flights, checking in, making changes, and earning and tracking loyalty points and status, and
• Internet on all flights

But before that happened V Australia’s contribution to profits would outstrip that of Virgin Blue’s domestic operations.

Godfrey then signed contracts with the management of Emirates in Australia to put the V Australia code on its A380 and 777 flights between Sydney and Melbourne and Auckland from 25-26 October, a move that leaves its own Pacific Blue services untouched.

In a clear sign that Virgin Blue was exploiting the tensions between the Qantas full service and Jetstar budget priced brands, he said Virgin Blue now flew more departures each day on domestic routes than either Qantas brand, and almost as many as Qantas mainline and Jetstar combined.

“We are the only airline to offer a premium product on all of our domestic flights,” he said. “And we are the only Australian carrier to offer a fully flat business class bed on all of our flights to America, as in fully flat, not angled flat, or wedgied flat.”

It would extend premium economy seating to all Pacific Blue operations, which are trans Tasman, NZ domestic and regional Pacific and SE Asia in scope. And premium economy would itself be upgraded in the near future.

Godfrey said it was simply wrong to declare that some routes were only leisure and others only business, when it fact there were always people disposed to buy a premium product to any destination and it was better to offer them a buying opportunity on every flight.

He said Virgin Blue had deliberately put itself in the middle of the market by choice, and was not trapped in a pincer movement between the low cost models like Jetstar and Tiger and the legacy full service high cost model of Qantas.

Godfrey said Virgin Blue always expected another low cost airline to enter the Australian market and saw its remaining in that territory as the real trap it escaped from in its early years.

He described a head on conflict between two low cost carriers like Jetstar and Tiger in a market the size of Australia as being like trench war fare.

“It’s a contest about who can lose the most money,” he said. “Our opportunities to make good margins are much better in the middle than at the extremities of low cost where there is no customer loyalty to anything but price.”

He also predicted that in the future the pure low cost carrier carriers typified by Ryanair would be seen as ‘legacy’ LCCs, clinging to a one size fits all formula that was vulnerable to the flexibility of low cost base higher quality products such as Virgin Blue’s new world carrier format concept, which would also experience change.

Looking further into the future, maybe 10 years, Godfrey saw the trend to trade liberalisation eventually lessen the sheltering of national airline brands by governments.

This could, and he stressed, hypothetically, lead to the likes of Singapore Airlines and Qantas merging. “I say tongue firmly in cheek, but do not dismiss the prospect of, Virgin Blue one day buying out Qantas….as the world becomes more accepting of free trade…and the value of regional consolidations and trade offs overcome the resistance to deals affecting national brands.”