Virgin Australia cautious about international routes for Airbus A330

By David Flynn , February 3 2014
Virgin Australia cautious about international routes for Airbus A330

Virgin Australia says it won't rush into putting its Airbus A330s onto international routes, despite the aircraft being suitably configured for medium-range international flights to destinations such as Asia.

The airline is set to receive the last in its order of eight A330s this September, and is currently evaluating that aircraft's role in the Virgin Australia network.

But Virgin's chief commercial officer Judith Crompton says a new international destination would need to be "extremely commercially viable", compared to the efficiencies offered by using partner airlines such as Air New Zealand, Delta, Etihad and Singapore Airlines.

"We're now spending the time evaluating what we're actually going to do with that A330, so over the next couple of months we should actually have a decision on that" Crompton told The Australian.

"Because it comes in September, I would probably like to have it in the selling system for wherever we're sending it to over the next couple of months, so we can maximise all of those revenue opportunities."

Virgin's fleet of seven A330s is currently fully committed to the airline's 'Coast to Coast' service of trans-continental flights between Sydney, Melbourne, Brisbane and Perth.

Virgin Australia CEO John Borghetti has hinted that the A330 fleet's business class cabin will undergo an upgrade with new fully flat-bed seats replacing the current angled lie-flat designs, in response to Qantas' planned A330 Business Suite.

Read: Up close – Qantas' new Airbus A330 business class 'suites'

Singapore is often mooted as a potential A330 route for Virgin Australia, however this would see Virgin competing with its partner and 20% stakeholder Singapore Airlines which already offers several flights per day from most Australian capital cities, with several on its flagship Airbus A380s.

Singapore is also a heavily saturated route says Carolyn Holmes, Sydney-based aviation analyst for J.P. Morgan.

"As one example, using the BITRE data we estimate that since the Qantas/Emirates partnership, in the six months ending September 2013, Qantas International has added 56% more seats or 197,000 on its Australia-Singapore routes while Singapore Airlines has added 8.2% or 136,000" she says, while "new entrant Scoot has added a further 79,000 and Tigerairways 21,000."

This has seen Qantas' "seat utilisation ratio" on Singapore flights fall from 78.6% to 69% over that period, Holmes reflects, with Singapore Airlines seeing its own seat utilisation edge down from 79.2% to 76.1%.

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David

David Flynn is the Editor-in-Chief of Executive Traveller and a bit of a travel tragic with a weakness for good coffee, shopping and lychee martinis.

03 Feb 2014

Total posts 2

Why not do a Syd or Mel to Honolulu?

Qantas - Qantas Frequent Flyer

17 Aug 2012

Total posts 2223

why

Qantas - Qantas Frequent Flyer

17 Aug 2012

Total posts 2223

Actually, here's a thought: fly to Hong Kong.

For Virgin Australia's network, this is not a saturated route. Currently, their only partner on the route is Virgin Atlantic, which has exactly one flight a day; this compares favourably to Singapore, which has up to four flights a day ex-SYD and ex-MEL.

The only consideration is the strength of the competition, which has five flights a day in total ex-SYD - 4 CX and 1 QF.

07 Oct 2012

Total posts 1256

why not MEL- HKG  or even PER - HKG

Definitely MEL/HKG or MEL/NRT or even SYD/NRT.

The main players are OW airlines. It's too cosy... Especially NRT sectors!

Qantas

10 Sep 2011

Total posts 162

Would love VA to fly into Tokyo, with at least domestic connections covered by ANA. Niseko ski trip with Virgin please!

07 Aug 2012

Total posts 197

But what does VA bring to the SYD-HKG route that isn't already on offer?

CX has the majority of the market with its frequency and onward connections from HKG.
QF has the only F product and the draw of an A380 on most days.
VS probably shouldn't bother as it could easily fill the plane HKG-LHR. With DL's ownership it's a matter of time until SYD leg is ditched and the aircraft used LHR-US.

VA may fill the role that VS currently occupies by offering the lowest fare, but is that the role you want?

07 Oct 2012

Total posts 1256

Assuming VA holds corporate accounts, it might be a selling point offering direct AUS-HKG as oppossed to AUS-SIN-HKG

Qantas - Qantas Frequent Flyer

17 Aug 2012

Total posts 2223

Yes, but they are the opposition, not by members of their own coalition. Yes, SYD-HKG has a strong service but unlike SYD-SIN is controlled primarily by the opposition.

The value there is that it strengthens the 'virtual network' by doubling frequency to HKG, or offering a new nonstop to HKG. It is not inconceivable that the HKG route could be run out of MEL, leaving SYD to VS; VA and VS could then cross-codeshare the two flights to provide some sort of structure.

I personally think that VA should pull the five 77Ws from LAX, refurbish them to the new VS product, then send them to HKG ex-MEL and BNE to link up with the VS flight to SYD, but I have my regional bias.

07 Aug 2012

Total posts 197

SYD-HKG certainly is controlled by the opposition, but not really by a weak QF. CX is the formidable competitor and VA would have a hard time grabbing much market share from them.

Re: 77W to HKG, I think this is way too much plane to fill for VA, even with potential connections on VS to LHR. Ideally the 77W will come off AUH sooner rather than later as EY can easily use their much larger fleet.

I wonder what VA were thinking when they ordered this many A332s if they didn't have a plan for it? Surely you don't order planes and then come up with routes just prior to the plane's delivery?

VA may see more value by taking XFA or XFB off domestic and using this it for an international leisure route. The incoming new A332's superior J would then end up on domestic.

Qantas - Qantas Frequent Flyer

17 Aug 2012

Total posts 2223

What bugs me about the 77Ws is that they don't actually have enough of them to run LAX properly.

I tend to see HKG as more of an opportunity to get into China without having to either fly too far southwest (SIN, KUL, CGK) or too far northeast (ICN, NRT) without having to

Qantas - Qantas Frequent Flyer

17 Aug 2012

Total posts 2223

having to fly into China proper.

I do agree that the A330 is the right plane for them, though.

04 Feb 2014

Total posts 6

It will never happen!!! VA will start using the A330's on the busy Mel/Syd run in the morning's then continue them onto trans continental flights to Perth

04 Feb 2014

Total posts 6

It will never happen as they have an agreement in place with Virgin Atlantic to codeshare mel/syd/hkg and soon to have one in place with Cathay!

07 Oct 2012

Total posts 1256

yes why?

12 Jun 2013

Total posts 744

Because there's not much traffic and what traffic there is is pretty low-yield and they're already gone to the trouble of making a deal with Hawaiian?

am
am

15 Apr 2011

Total posts 586

Because it's a leisure route that isn't suited to the sort of airline that Virgin wants to be these days. There's very little corporate traffic, and competition from Jetstar and Hawaiian means that fares are very low. 

Hong Kong, Tokyo or China are all more likely.

04 Feb 2014

Total posts 6

Because there is no money in that route for VA!

LR
LR

Qantas - Qantas Frequent Flyer

28 May 2012

Total posts 76

And compete with JQ and Hawaian?

Virgin Australia - Velocity Rewards

28 Jul 2013

Total posts 81

Would MEL>BKK be an option..? Currently I believe there is only 1 full service airline (TG) that flies direct?

AlG
AlG

04 Nov 2010

Total posts 674

Yes, I can see Hong Kong making a lot more sense than Singapore but it would be very much 'end-point' in nature unless that had a Chinese codeshare partner to take you to the mainland and I'm not sure that the SYD-HKG market would be big enough where there's already Qantas and Cathay Pacific in this.

Qantas - Qantas Frequent Flyer

17 Aug 2012

Total posts 2223

Okay, a new idea to expand their reach in northeast Asia: fly to Seoul, partner with Korean and codeshare the living daylights out of ICN; or fly to Tokyo, partner with All Nippon and codeshare the living daylights out of NRT.

X
X

British Airways - Executive Club

24 Jan 2012

Total posts 74

This is certainly the smarter move, and I would not be surpised if VA took this option.
A BNE-NRT flight would be profitable as there is no other carrier which offers this route nonstop and there is plenty of business travellers to support this.
MEL-NRT could be on the cards, but I think they'll skip SYD-NRT as both QF and JL fly this route.

Alternatively, I wouldn't be surpised if VA entered the China market, flying to PVG out of BNE. Or PEK out of MEL.

Qantas - Qantas Frequent Flyer

17 Aug 2012

Total posts 2223

Yes. They need to codeshare with someone flying into SYD.

Virgin Australia - Velocity Rewards

31 Jan 2012

Total posts 108

I would say that VA will fly where they are told to fly by NZ EY and SG

04 Feb 2014

Total posts 6

Wrong!!

29 Aug 2013

Total posts 4

Do a MEL-PVG (Shanghai). Apart from Chinese airlines, there is no other airlines offering both direct flights, and premium services. Qantas has a daily service between SYD-PVG, so MEL-PVG seems viable to me.

04 Feb 2014

Total posts 6

Va already has a code share agreement to fly to PVG with SQ

VA5516 MEL to SIN

VA5550 SIN to PVG

Virgin Australia - Velocity Frequent Flyer

18 Apr 2013

Total posts 23

 I have never been very cluey when it comes guessing which destinations airline choose to fly and why, but one destination that seems very under serviced directly by both legacy and LCC is Vietnam. To those in the know could this be a possible choice? Cheers

X
X

British Airways - Executive Club

24 Jan 2012

Total posts 74

Not likely. This is an OD (Origin / Destination) market only. The tough visa requirements, as well as lack of connectivity means people don't fly onwards from Vietnam which restricts the number of people you can sell seats to. The nearby hubs of SIN and BKK (and even KUL to some extenet) have many more connecting flight options, so a larger potential of people to sell to.

Vietnam is also a leisure market, which means, no high yield fares from the Business Cabin or last minute Economy purchases.

OD markets only work if you have a large population who support you. This is why India and China work as OD flights.

Qantas - Qantas Frequent Flyer

17 Aug 2012

Total posts 2223

KUL is okay, I guess, but unless they can tap into some deal with MH it'll be an O&D flight and KUL already has 5x daily flights ex-MEL and ex-SYD - 3x daily on MH and 2x on D9.

07 Oct 2012

Total posts 1256

Im pretty confident the only port VA may fly their A330s to in SE-Asia is Singapore. I cant see SQ allowing a service to KL

Qantas - Qantas Frequent Flyer

17 Aug 2012

Total posts 2223

What for? SYD-SIN is 7x daily, largely controlled by SQ.

04 Feb 2014

Total posts 6

As is MEL-SIN  3X DAILY Flights by SQ

07 Oct 2012

Total posts 1256

I did say may.  I very much doubt a Singapore service is on the cards for VA. There has been a lot of capacity added to Singapore recently and load factors have dropped accordingly. But if Singapore is unlikely, in my opinion KL is no chance.

With the extensive partnership / ownership between VA & SQ, it would be unlikely that SQ would be okay with a VA service to a nearby hub.  If VA flew to Singapore it would at least feed into SQ, VA would also benefit with an enormous number of connections. If they fly into KL, they will feed into SQ's competitor.

Qantas - Qantas Frequent Flyer

17 Aug 2012

Total posts 2223

At the end of the day, there are two main sticking points: 1) existing allied hubs, and 2) codeshared connections from the new destination.

Suddenly my idea of flying to ICN seems quite good...

07 Oct 2012

Total posts 1256

Yes, I would agree that North Asia makes better sense.

Qantas - Qantas Frequent Flyer

17 Aug 2012

Total posts 2223

The upside to North Asia is that you have plenty of new, nonconflicting partners such as NH/All Nippon Airways and KE/Korean Air (JL/Japan Air Lines and OZ/Asiana Airlines are with QF) to codeshare out of, giving lots of new destinations and connections that should prove quite useful.

The downside is that you're very far north, and need to backtrack for the really useful connections like PVG/Shanghai Pudong.

07 Oct 2012

Total posts 1256

True - JAL & QF are close, but I would suggest OZ is ripe for the taking as their relationship with QF is only a codeshare. In any case ICN is good for Northern China, Korea + Japan. Shanghai is pretty well covered by Singapore.

Not a perfect situation, but its okay for a virtual network.

Qantas - Qantas Frequent Flyer

17 Aug 2012

Total posts 2223

True, but KE also fly to SYD. It boils down to which airline wants to bite. It's good for upper China, and I suppose you could justify it as far south as Shanghai, but it's still nowhere near as good as Hong Kong or Guangzhou.

The problem both QF and VA face is that the best port to access China is Hong Kong, but that HKG has been fortified by CX.

07 Oct 2012

Total posts 1256

CAPA has previously indicated that VA & CX may get into bed one day. That would be an issue for QF. But I don't see it... but who knows?

Qantas - Qantas Frequent Flyer

17 Aug 2012

Total posts 2223

Difficult. There's SQ in the way, right?

07 Oct 2012

Total posts 1256

Agreed. It would be nice for QF & CX to join forces against SQ.... but they just don't seem to like each other.

07 Oct 2012

Total posts 1256

Well given VS just pulled out of SYD-HKG we may need to adjust our ideas :-)

Qantas - Qantas Frequent Flyer

17 Aug 2012

Total posts 2223

gawd noooo

There goes the virtual network idea of flying MEL-HKG and linking to the VS flight!

20 Feb 2012

Total posts 128

yes but Air NZ can leverage SQ

it is more likely that CX does not want a partner- they can go it alone and have already stated they want to up frequencies to SYD and Mel ( but restrictive Australia does not allow) 

VA offers nothing CX wants CX did not want to work with QF why VA?

That though IMO whould change if Jetstar HK is formed- CX-VA partnership is inevitable.

we forget that only 15 years ago CX hated BA/QF ( and the sentiments continue- they have a good reason BA/QF were against the esistence of CX) they were closer to LH and other star members-  CX joined OW just cause it was the only one left...

Air NZ on the other hand could have expanded with CX but dictator Lufthansa stopped that- hence the SQ partnership.

Also I believe no non Chinese/HKG airline is allowed to put their code on HKG- CHINA routes so unless one is based in HKG a virtual network is impossible. (  Please correct me on this If I am mistaken)

 

gosh airline Politics is complex!- the only clear thing is that SQ/CX are still the industrial heavyweights in Asia

07 Oct 2012

Total posts 1256

CX don't need extra access atm... if they want to add capacity they should upgauge their equipment first.

Ah, VA may offer access to a growing percentage of Australian corporate accounts. 

Lots has changed in international avaition in last 15 years. Lots will change in the next 15 years.

Foreign airlines cannot codeshare into China from HKG. However, this does not prevent interlining from my knowledge.

20 Feb 2012

Total posts 128

why should CX upgauge?

CX expands with frequency and they have shown that they do not mind 5 daily flights on long haul routes, 

hence CX does need extra access - problem is QF is influencing the Australia govt to block CX...  as a means to try and force the HKG government to give permits to the illegal Jetstar HK,,,

I wounded what will happen now that VS is pulling out of Sydney- Hong Kong?

Virgin Australia - Velocity Rewards

18 Jun 2013

Total posts 26

With VS pulling out of HKG , it does provide an opening for VA when they get there extra A330's later in the year to target HKG . They could then codeshare with VS to LHR & would need a codeshare partner out of HKG into China to make it a viable proposition . Personally I would love to see them hit Japan , NRT or even HND ( as a point of difference) and codeshare with the likes of ANA. 

Qantas - Qantas Frequent Flyer

17 Aug 2012

Total posts 2223

That's what I said in the other thread, actually!

The problem is that if they codeshare ex-HKG, they're stick with Korea and Japan - apparently there are political restrictions on codesharing into China ex-HKG, so they might need to later launch a PVG route or something.

Would there be a political restriction on VS and VA cross-codesharing on SYD-PVG-LHR and then codesharing local connections ex-PVG?

Cathay Pacific - Asia Miles

25 Apr 2013

Total posts 544

Anyone think that the A330 could replace the 737 on routes from SYD to DPS? 6 hour recliners are not the best thing.

Qantas - Qantas Frequent Flyer

17 Aug 2012

Total posts 2223

Actually, you might be onto something!


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