Virgin Blue: Los Angeles will be our second international hub

Virgin Blue is still waiting for the US government to drop its staunch opposition to an alliance with Delta Airlines, but that hasn’t stopped the carrier from calling out Los Angles as one of its two key international hubs.

Virgin Blue CEO John Borghetti is a firm believer in the ‘virtual network’ model for V Australia, his carrier’s international arm.

Rather than spend up on aircraft, Borghetti sees a partnership with ‘right-fit’ airlines as the smarter choice.

As a slide from the company’s latest financial presentation notes, this removes the need to be part of an alliance – and according to Virgin Blue doesn’t turn V Australia into “a competitor to key airlines in growth markets”.

Under Borghetti’s virtual network model, V Australia will provide ‘strategic distribution’ of passengers into Los Angeles and Abu Dhabi.

The former taps Delta’s reach into the North American market while the later relies on Etihad for the Middle East, Europe and the UK.

A flurry of purple lines on Virgin Blue’s ‘global alliance network’ map (below) also marks the regional traffic afforded through the alliance with Air New Zealand, but Auckland is more about a trans-Tasman a hop than a regional hub.

V Australia and Etihad launched their first joint service earlier this month while Virgin Blue expects to reach ‘full codeshare’ status with the Kiwi carrier by mid-2011.

For now, that leaves Delta as the only ball still in play. Although the US Department of Transportation previously rejected the tie-in in September last year, both airlines have since promised not to reduce flights between Australia and America if approval was forthcoming. The deal has already been approved by the Australian government.

Borghetti has also spoken of his desire to line up with an Asian airline to snare Asia-Pacific business travellers, which could mean a third international hub being dotted on the map.

Borghetti has cited Hong Kong, Singapore, China, India, Japan and Korea as key targets, admitting that Virgin Blue’s network needs “mainstream Asian ports (to) attract the corporate traveller”.

And with only four international-class Boeing 777s in the V Australia fleet, “the only way we can become a truly competitive international airline in this country … is through these alliances, because to go out and spend three, four, five billion dollars’ worth of shareholders’ money on I think 30 or 40 aeroplanes is just not practical.”

"Our international strategy recognises that it is impossible for any airline based at this end of the world to offer a global network on its own" he says. "Even 50 or 60 aircraft devoted to international services would not be enough. However, if you have the right alliances and partnerships you can offer hundreds of destinations with just a small fleet of international aircraft."

David Flynn

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.