Virgin Australia CEO John Borghetti says the airline's new hook-up with Singapore Airlines completes his airline's "major alliance strategy".
It will transform Virgin Australia into a global airline that can connect passengers to more than 400 international destinations -- and Borghetti agreed it would "unequivocally" create a nightmare for Qantas international operations, he said, in response to a question from journalists.
Borghetti has already sewn up strategic partnerships: with airlines serving the Middle East and Europe, in Etihad; trans-Tasman and beyond, through Air New Zealand; and is awaiting final US government approval for its tie-up with Delta.
"This is a huge step forward for us," he said today at the signing of the contract with Singapore Airlines at the International Air Transport Assocation annual general meeting in Singapore today.
According to Borghetti, the alliance will also allow Virgin passengers to fly to Silk Air destinations -- the regional wing of Singapore Airlines.
However, the Virgin CEO refused to be drawn on whether Virgin Australia would fly its own planes to Singapore, but admitted that "anything is possible."
Singapore Airline CEO Goh Choon Phong said "we continue to want to seek growth for Singapore Airlines itself," suggesting the alliance involved using Singapore planes out of Australia.
When we asked Borghetti what was the biggest win out of this for the Australian business traveller, he ticked five items off his fingers. "A more extensive network, access to Singapore Airlines' loyalty program, more competitive pricing for the corporate market, the potential for opening new routes, and adding additional capacity to existing ones."
Borghetti also highlighted the flexibility the Singapore Airlines alliance would provide for business travellers to China and India.
"Most people who travel from Australia to India don't go in and out of the same port -- they come in through one port and go out through another. China is exactly the same thing. Through the Singapore Airlines network network we have the capability and flexibility to meet that."
Star Alliance membership? Not this year...
Borghetti also deflected questions about whether Virgin was looking at joining Star Alliance, Singapore Airlines' international alliance, saying, "the relationship between Virgin Australia and Singapore AIrlines shouldn't be confused with anything else other than that."
"You know, we've got so much stuff going on at Virgin Australia that that is really not in our thinking at the moment. That is something we'll think about in 2012 and beyond."
Singapore Airlines' Goh added, "you can take it that we won't stop here", and Borghetti followed up, "and neither will we", suggesting that both airlines have plans to grow the alliance.
Virgin Australia passengers need not fear being dumped onto the new low-cost carrier -- which Mr Goh called "long haul, mid haul" today -- that Singapore Airlines is setting up.
The hook-up excludes it, with Singapore Airlines saying the new carrier will operate "autonomously".
Virgin Australia is lodging its proposal with the Australian Competition and Consumer Commission today and hopes to have the airline alliance in full operation by the end of the year.
"We can now compete much more vigorously against larger players in our own market," Borghetti said.
Frequent flyer program to be "elevate"d
Borghetti reiterated that in the next few months Virgin would be relaunching its frequent flyer program for its 2.5 million frequent flyers -- a third the size of Qantas' valuable member base.
"The growth potential this opens up for all of Australia -- and let's not forget regional communities which are very important, including mining businesses -- it will be very very competitive program, and very elevated from where it is today," he said.
(Borghetti's choice of words was interesting, given Virgin America's frequent flyer program is called "Elevate". We wondered if this was a slip suggesting the name of the new Virgin Australia program, although apparently 'elevate' is often used in Virgin Australia in training in regards to improving service, which could be why it's front-of-mind for Borghetti.)
"Frequent Flyer participation is an important part of this partnership," he said.
"One of the propositions we haven't been able to offer in the past is for Australian-based customers to redeem Singapore Airlines KrisFlyer points, so this will open up the world for that."
With additional reporting by Dan Warne