Virgin Australia is looking to start direct flights between Sydney and San Francisco, with Sir Richard Branson admitting that the route is "under consideration" for the airline formerly known as Virgin Blue.
Branson's comments, made during a press conference following the launch of direct Virgin America flights between its San Francisco home base and Chicago, are certain to fuel speculation that the Virgin Australia will go head-to-head with United for a slice of the SYD-SFO direct market.
That's a market which United currently has all to itself, following Qantas' decision to abandon the route on May 10 in favour of a new direct service from Sydney to Dallas/Fort Worth.
(That long-haul route has suffered a bumpy start, with Qantas deliberately leaving passengers' baggage behind at DFW due to concerns over fuel consumption.)
Australian Business Traveller reader Keith Tan was on board the last Qantas flight from San Francisco to Sydney and reported that the comments of Qantas passengers in the SFO lounge indicated "many regular travellers to SFO prioritised the convenience of a direct route and would not hesitate switching their airline of choice to United, especially for United business class, and also said they would welcome the entry of Virgin Australia as a direct-to-SFO alternative."
Analysis: Opportunity knocks for Virgin Australia
Virgin Australia CEO John Borghetti continues to pursue a trans-Pacific alliance with US carrier Delta – raising the possibility that Virgin Australia could add a daily service to San Francisco to complement its Sydney-LAX route, or even move both its flights to San Francisco and leave partner Delta to handle the Sydney-Los Angeles LAX route.
There's no shortage of capacity at SFO. "Unlike other highly-congested airports we have no restrictions on landing slots" Mike McCarron, Director of Community Affairs for San Francisco International, told Australian Business Traveller.
The new proposals
In their most recent submission to the US Department of Transportation (DOT) in support of their trans-Pacific joint venture, Virgin Australia committed to fourteen return flights between Australia and the US each week, while Delta commits to seven weekly returns.
Both airlines currently each operate a daily flight in each direction between Sydney and LA. Virgin Australia also has a plane from Brisbane (four flights a week) and Melbourne (three flights a week) to Los Angeles.
The airlines are proposing to sweeten the deal by expanding the joint venture to cover flights from any city in Australia to any city in the US, whereas the original proposal dealt only with the existing routes between Sydney and Los Angeles.
Both airlines currently fly from LAX to Sydney -- Virgin Australia with a 361-seat Boeing 777-300ER and Delta with a 276-seat Boeing 777-200LR -- making San Francisco the most logical choice.
Why San Francisco?
San Francisco's SFO airport makes sense as a new destination because it's the main headquarters hub for Virgin Australia's sister airline Virgin America. That would fit with Virgin Australia's global strategy of linking in to partner networks in Abu Dhabi (with Etihad), Buenos Aires (with Aerolineas Argentinas), and across New Zealand (with Air New Zealand).
SFO flights would also mean two bites of the US west coast hub cherry: one with Delta's flights from Los Angeles' LAX, and one with Virgin America's SFO flights, meaning more options for connecting flights to US, Canadian and Mexican destinations.
Why not more flights from Los Angeles?
New flights to SFO are more likely than an additional flight via LAX because there are only so many flight times that make sense across the Pacific given time differences, a thirteen-plus-hour flight, and the need to feed connecting traffic from the USA and onwards to the rest of Australia.
As a result, all flights from LA to Australia leave between 2035 (Virgin Australia 12) and 2350 (Qantas flight QF108), with a United, Virgin Australia and second Qantas flight sandwiched in the middle. The flights arrive in Australia between 0525 and 0800 in the morning two days later (given that they cross the International Date Line).
So adding yet more flights from LAX doesn't really make sense -- there's no real market in an early morning flight from LA to arrive in Australia in the late evening, because connecting passengers can't get to LAX that early, and there are only limited connections from Sydney late at night.
Across the Pacific, Delta already flies from Sydney to LAX, and there's no sense in both airlines flying the same route for a total of three daily flights.
If the LAX market needs extra capacity, Delta can upgrade from the 276-seat long-range Boeing 777-200LR it currently uses to 393-seat Boeing 747-400 planes, which it inherited when it merged with Northwest Airlines several years ago.
Connections within the USA
Domestically in the US, Virgin America isn't really a big competitor for Delta, with only a couple of route overlaps. So LAX and SFO flight connections would complement rather than compete with each other.
Here's Virgin America's route map, with San Francisco flights in red and LAX flights in blue.
And here's where Delta flies from LAX, with its hub cities in red and other cities in blue. (Cities in beige with dark blue are major cities reachable via connecting flights.)
There's also a real market opportunity for flights from Australia to San Francisco. Now that Qantas has dropped its Sydney-San Francisco route, United is the only airline flying between Australia and San Francisco.
While we liked United's business class seats and service, United doesn't offer a premium economy service (its economy plus, which is just economy with extra legroom, doesn't count). And United's own CEO admitted to us last year that their regular economy service is "unacceptable".
Premium economy and a better offering at the back of the plane would give Virgin Australia a market advantage for the really long flights for cost-conscious business travellers and for corporate travellers not entitled to business class fares.
There are other draws too: SFO is a much more pleasant and less stressful airport, with a brand new terminal 2 home for Virgin America. It's obviously much more convenient for direct flights to Silicon Valley for the tech industry than connecting through LAX.
Plus, Virgin Australia and Virgin America's newer, more technologically advanced planes with more "wow factor" features like in-flight technology, hookups for iPads and iPhones, funky design, mood lighting and plush premium seats are a natural fit.
A decision from regulators on the Virgin Australia-Delta joint venture is expected within the next few months.