Virgin Australia CEO John Borghetti has been looking for Asian partners for his airline for some time.
In response to a question during a conference call with Australian Business Traveller this week Borghetti outlined the scope and timescale for his plans: "I mean all of Asia", he said, and said that the new routes would come by the end of 2011.
"It could be one, or two, or three, or four," he said. "The important thing is that we have a strategy that works for us in the long term. It will be a complete strategy."
The strategy will need to cover four further parts:
- South Asia: Bangladesh, India, Pakistan
- Southeast Asia: Indonesia, Malaysia, Singapore, Thailand
- Northeast Asia: Korea, Japan
Virgin Australia's existing partner Etihad uses its Abu Dhabi hub to deliver Virgin Australia's passengers onwards to Middle Eastern, European and African destinations, covering that part of the global network.
That makes a further tie-up with an Asian airline somewhat tricky: Etihad and the new partner could well be in competition for Virgin Australia's passengers.
But neither Virgin Australia nor Etihad seem to be concerned about three-way tie-ups. Their two-way partnership recently added Air New Zealand, with all three airlines codesharing on their Kangaroo Route (and Kiwi Route) flights.
So who are the potential suitors for Virgin Australia? What are their strengths and weaknesses -- and what would it mean for business travellers?
Malaysia has an impressive Australian network, with flights to Adelaide, Brisbane, Melbourne, Perth and Sydney on wide-body Airbus A330, Boeing 747 and Boeing 777 planes. As an existing Virgin Australia Velocity Rewards frequent flyer program affiliate, there's an existing relationship that could be increased as part of Borghetti's plans.
Geographically, its hub at Kuala Lumpur (KUL) is well-suited for the Kangaroo route to Europe, with flights to Paris, Frankfurt, Rome, Amsterdam and London. This might create problems with Virgin Australia's existing arrangement with Etihad, of course.
Kuala Lumpur is best suited for Southeast Asian destinations. The airline has an unsurprisingly high number of flights around Malaysia, plus flights to Indonesia, Singapore, Thailand and other important destinations for Australian business travellers.
Malaysia Airlines isn't part of any of the global airline alliances -- which makes it a likely fit for Virgin Australia, especially since the two airlines already have a frequent flyer partnership. Malaysia also has existing frequent flyer partnership affiliations with Virgin Atlantic and SkyTeam airlines Delta (also a Virgin Australia joint venture partner), Air France-KLM and Alitalia, plus Star Alliance's ANA and Swiss.
For business travellers, a Malaysia Airlines partnership would involve the least change: existing frequent flyer programs, no additional integration with a global alliance, and a similar experience to the Etihad partnership.
A part owner of Virgin Atlantic, Singapore Airlines is a natural business fit for Virgin Australia. The airline has existing flights to Adelaide, Brisbane, Melbourne, Perth and Sydney, and an extensive international network to Europe. Its subsidiary SilkAir also flies to many Southeast Asian destinatins.
Singapore Airlines is also a key part of the existing Star Alliance. There's no Australian Star Alliance airline, and Virgin Australia's trans-Tasman joint venture partner Air New Zealand is also in the Star Alliance, so a move to tie up with Singapore would be a real challenge to Qantas.
The feeder traffic from Virgin Australia to international flights out of Australia on Singapore Airlines -- and other Star Alliance carriers
Thai Airways, United Airlines, Asiana and Air China (not to mention Air New Zealand) -- would be a remarkable coup, and it's hard to believe that the Star Alliance hasn't been courting Virgin Australia already.
Of course, John Borghetti's master plan is for bilateral rather than multilateral agreements, although he's named Star Alliance and SkyTeam as potential future options. (Clearly, with Qantas as a oneworld anchor, that alliance is out of the question.)
"One day we may want to do that, but right now what we're focused on is strong bilateral alliances such as the three or four that we're part of today," he told Australian Business Traveller, mentioning Virgin Australia's bilateral agreements with Air New Zealand, Delta, Etihad and Aerolineas Argentinas.
A partnership with Singapore would make the most changes to the business traveller's experience. It would very likely bring with it additional Star Alliance involvement, with frequent flyer programme alterations, increased codesharing and a much higher level of integration.
With flights to Bangkok's new Suvarnabhumi airport from Brisbane, Melbourne, Perth and Sydney, Thai is another geographically sensible possibility for Virgin Australia. It's probably less likely than either Malaysia Airlines or Singapore Airlines, though -- with fewer destinations in Southeast Asia and a hub location further north, a partnership with Thai would open up more Indian destinations and Kangaroo route opportunities.
Often overshadowed by its larger neighbour -- and Star Alliance partner -- Singapore Airlines to the southeast, Thai has a big home hub airport that isn't anywhere near capacity. Thailand's popularity as a holiday destination could also be attractive to Virgin Australia's recent focus on improving services in the back of the plane.
And, of course, Thai is another Star Alliance airline, so the caveats about an early entry into an alliance for Virgin Australia still stand. For business travellers, the move would probably be somewhere between Malaysia Airlines and Singapore Airlines in terms of changes.
Next week, we'll take a look at the likely Chinese, Japanese and Korean airlines that could be part of Virgin Australia's plans.