Virgin Blue CEO John Borghetti is set to attack Qantas' "near-monopoly" on the Australian business travel market, declaring that "No competitor is invincible."
"Can we do it? Many people have asked that question" Borghetti mulled at the airline's annual general meeting. "Of course we can do it... the corporate and business end of the market is effectively controlled by one player, one player with a significantly higher cost base. From our perspective we have everything to gain from this (and) our competitors have everything to lose.”
Repositioning Virgin Blue away from its roots as a purely low-cost carrier, Borghetti wants to reclaim the middle ground as a full-service airline and boost its share of the business travel market from 5 percent to 20 percent over the next two years.
That goal was behind Virgin Blue's AFL sponsorship, snatched last week from nine-year partner Qantas in a deal estimated to be worth $8 million a year for the airline, with sponsorship and extensive travel deals.
"You can't achieve an extra 5 or 10 per cent of the corporate market without taking some corporate clients, quite clearly, so yes it was a deliberate strategy to win the Australian Football League" Borghetti told Virgin Blue shareholders at the AGM, his first at the helm since departing Qantas in May as executive general manager following a 36 year career at the flagship carrier.
Borghetti's deep inside knowledge inside of Qantas is now influencing his playbook at Virgin Blue. A new brand is on the cards, crafted by Hans Hulsbosch – the designer who most recently vamped up Qantas' famous flying kangaroo livery – which is likely to eventually bring together Virgin Blue and offshoots V Australia, Pacific Blue and Polynesian Blue.
Borghetti says the new brand will "position the airline in the middle, attracting the leisure market but also appealing to the corporate traveller."
"To achieve our objective you need to understand (the competition's) competitive strengths and weaknesses as well as your own and have a very, very focused strategy, which, may I add, we do."
Part of the formula to win corporate accounts involves strengthening Virgin Blue's reach into West Australia. Borghetti today announced that its third and fourth Airbus A330s, due for delivery in 2012, will fly routes from Brisbane or Melbourne to Perth, in addition to the A330 Sydney-Perth services announced earlier this month and due to start in May 2011.
"These great aircraft will be particularly appealing to the corporate sector and with our low cost base we can offer competitive, value for money corporate fares,'' Borghetti said.
While not abandoning the leisure market, Virgin Blue chairman Neil Chatfield observed the airline's "initial no frills, low-cost carrier model is well behind us. That segment has become highly commoditised and best left to others.''
The carrier has also signed a codeshare deal with WA regional airline SkyWest to provide connections from Perth to Albany, Broome, Carnarvon, Esperance, Exmouth, Geraldton, Kalgoorli, Karratha, Kununurra and Monkey Mia. Luggage will be through-checked from Virgin Blue to Skywest flights and passengers will be able to earn Velocity reward points on the Skywest legs.
Borghetti also noted that Virgin Blue would invest in building its own infrastructure at Perth Airport with an eye on stepping into the "international precinct'' in 2013.