Virgin Australia CEO nixes Star Alliance, SkyTeam

By David Flynn, March 27 2014
Virgin Australia CEO nixes Star Alliance, SkyTeam

Virgin Australia has all but ruled out joining Star Alliance or SkyTeam, with CEO John Borghetti saying he "doesn't see the merit" in any of the global airline alliances.

"There are no plan to join an alliance and there's no need for it" Borghetti told Australian Business Traveller on the sidelines of last month's financial results briefing.

"You never say no to anything forever, but I just don't see the merit in it and I don't what we would gain."

"Whatever alliance we might go into, we would have to forfeit at least one of the anti-trust immunity deals we've got (with current partner airlines) and I'm not about to do that, so I just don't see a business case for it."

Having stitched up his own bespoke alliance on a 'best fit' basis with partners including Air New Zealand, Delta, Etihad and Singapore Airlines, Borghetti maintains that such bilateral agreements "are more more important that the multilaterals (of alliances)."

Trans-Tasman turf war

So what is on Borghetti's radar? He tips a greater focus on the 'high yield' business travel market and taking the trans-Tasman alliance with Air New Zealand to a new level.

"Trans-Tasman is in good shape and the alignment with Air New Zealand has been nothing short of superb" he admits, "but the best thing about that is there is still a lot more that we can do together, and you will see that happen over the next nine months or so."

And to nobody's surprise, the business travel segment remains in Borghetti's crosshairs.

"Corporate and government travel is a high yield market, we've got some of that and now we're going to be going harder to get more of it" Borghetti predicts.

This will see Virgin Australia further encroach on Qantas' oft-quoted 'line in the sand' of a 65% market share – a battle front which Virgin claims it's already broken – but Borghetti remains fixed on revenue rather than ratio.

"I've never seen anywhere in the world a business, let alone an airline, absolutely make market share target its strategy. Market share is usually a consequence of strategy, it's not the strategy."

"If you have a strategy of market share at all costs, well, you're going to go broke! Now maybe that's the right strategy for Qantas, that's not for me to say, but it certainly is one that'd I'd never deploy because I don't care about market share, I care about a high revenue mix."

Mum's the word on fleet plans

One thing Borghetti won't be drawn on is his forward fleet plan, beyond the delivery of an eighth Airbus A330 in September this year.

This will be the sixth new A330, alongside the first two which were bought 'pre-loved' from another airline, and is the last on Virgin's current A330 order sheet.

And that's all that Borghetti will say on that score.

"When you have a competitor who (says) it's going to put at least two aeroplanes on for every plane you are going to put on, why would I tell my competitor how many planes I'm going to put on?'' he asks.

Follow Australian Business Traveller on Twitter: we're @AusBT


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.

Cathay Pacific - Asia Miles

25 Apr 2013

Total posts 543

I don't see alliance benefits too...but I definitely see codesharing benefits. I don't own Velocity points (since I don't fly Virgin), but I do own AsiaMiles so if Virgin Atlantic (or Virgin Australia if they started an HKG service) codeshared with a OneWorld airline (preferably CX because I know their booking system better), it would be the only way I could fly Business on these airlines 

12 Jun 2013

Total posts 741

I don't mind Virgin not being in an official alliance. I do think they could use a few more partners though, and some better integration with the partners they have.

I needed to book a complicated itinerary recently to the US, within the US, and back from the US. Theoretically no problem on Virgin and Delta, but the booking engine was having none of it. As far as I can figure out there's no way to book a multi-stop or open-jaw itinerary on Virgin, at least on the website.

Then there's the weird gaps in the network. I'm looking at the website right now, and while there's many cities you can book to, there's some important ones you can't. You can get to Vancouver or Ottawa, but not Toronto. Not a single city in South America (not even on Delta via LAX). And there must be a gazillion small cities that are operated by Delta or Air Berlin which don't show up as booking possibilities on the Virgin website -- why?

Qantas - QFF Platinum

20 Mar 2012

Total posts 213

Agree Hugo, you cannot book a multi stop booking online with VA and after I contacted the call centre they priced the trip $9k higher than the return booking was online (I was adding a stopover in LAX for MEL-JFK booking)

Ended up booking MEL-JFK return and then contacted the call centre again and they changed the itinerary to add the stopover free of charge....

Virgin Australia - Velocity Rewards

07 Mar 2013

Total posts 61

You could go to South America with Etihad via AUH.. 

Qantas - Qantas Frequent Flyer

07 Mar 2014

Total posts 73

I have always found website searchers to be useless once things get even slightly complex. Either it will give no options, a ridiculous price or thousands of options for long transits because there are thousands of options that are a few dollars cheaper than the actual flights you want and many will just sort these complex itineries by price.

Just give the airline a ring and they should be able to sort it quick smart. Good luck!

30 Aug 2013

Total posts 444

I dont mind VA not being part of an alliance if their 'virtual alliance' was clear to understand. There are so many exceptions, caveats, exclusions etc (lounge access for short-haul intl is a classic example) that I dont understand what I'm entitled to. If your customers dont understand a policy then it is not working, and VA have never bothered to consider this.

Qantas - Qantas Frequent Flyer

07 Mar 2014

Total posts 73

I get the feeling that Star Alliance really really really want/need VA to sign up. Australia is a massive continental hole in their network considering Australia's size and popularity with RTW travellers.

30 Aug 2013

Total posts 444

Only domestically is there a hole. It's extremely well serviced by NZ, SQ, TG, UA, CA etc.

09 Sep 2012

Total posts 141

That is still quite a hole, and it would be more accurate to state that  Sydney is well-served by those other airlines, only some of which "service" other major cities.


19 Jun 2013

Total posts 56

Maybe the alliances work better for the passengers (points & tier credits; unquestioned lounge access - dependant on your tier of course ; network and lots more) than the airlines, but VA's current "virtual alliance" has some very severe limitations, an important one for me at this time being the mis-match between product offerings, esp. Premium Y, which VA have on their services to LAX & AUH only. Other than that, it is NZ only, and DL kind-of. The two most important ones ( EY & SQ) do not have PY.

25 Feb 2013

Total posts 65

If JB doesn't see the merit in an alliance he obviously doesn't use his own product to fly overseas. I love VA, but I'm getting a little tired of not having simple benefits like lounge access on half the international flights I do using their partners, just because those partner airlines rely on their alliance lounegs in those ports.

It's a big black hole in VA FF program, and TBH although I love everything they do it's the only major one which constantly makes me wonder if I made the right choice ditching QF (in addition to the holes in their virtual network, but it's the same non-alliance issue really). An alliance would be simple, their virtual network is horribly sparse and almost impossible to understand.


19 Jun 2013

Total posts 56

Maybe the answer is to join up to Delta's FFP, esp. if they will do a status match, where all/most VA domestic flights/fares get full tier creds, and get the lounge and other perks on VA, AND finally, you have access to all the SKYTEAM network benefits, along with VS as well, (which to get back to my original gripe, was another carrier with a good PY offering, except they've essentially dealt themselves out of VA's game).

Virgin Australia - Velocity Rewards

17 Jan 2014

Total posts 7

Virgin really needs to add a proper business class trans-tasman, works deluxe on NZ A320 or  the old Pacific blue "Premium" Economy is normally my only option. 

Emirates Airlines - Skywards

07 Sep 2012

Total posts 151

Matt - I use Virgin for almost all my local travel, and am very happy with it, but for my regular trans-tasman jaunts I use EK almost every time, and whenever I'm in J. There's daylight between Trans-Tasman J class on EK, and the cut-rate barely premium economy quality offering on the rest, and the price is usually cheaper on EK as well.

Qantas - Qantas Frequent Flyer

25 Feb 2014

Total posts 21

Well hopefully JB reconsiders after what QF has just announced with changes to the FF...pretty much forcing you to fly them or JQ or you will be penalised with points and SC..

Virgin Australia - Platinum

21 Dec 2012

Total posts 90

Great, so we continue to suffer in Adelaide with effectively no chance of redemption through Singapore for J and F and a forced shuttle through Sydney or Melbourne to fly Etihad.

Qantas - Qantas Frequent Flyer

10 Jan 2013

Total posts 713

I see only two drawbacks with VA not being in a OW or *A type alliance - no lounge shopping/swapping, and it's harder to use Velocity points to book flights on non-VA metal.

They are minor annoyances to me, and generally the "special relationships" packaged by Virgin Australia are fairly decent.

Any Business Traveller who flys overseas a lot will avoid Virgin, unless they can get a code share flight on a Virgin plane. If you fly around australia a lot and do not fly overseas, then its less important. As I mainly fly overseas with only occassional domestic flights I will avoid Virgin for that reason. On the other hand I may not be a profitable customer, so it does not matter to Virgin. In the ends its all about the $$$, so whatever makes sense to Virgin from a bottom line point of view will happen.

But I must say, if Virgin ever joined Star Alliance, I will be flying with them every time around OZ.


06 Sep 2012

Total posts 7

I switched domestically entirely to VA more than a year ago and am delighted to have done so. The knowledge, vision and insight of John Borghetti makes Alan Joyce and Leigh Clifford look like - Alan Joyce and Leigh Clifford.

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