Virgin Blue is adding Embraer jets to its fleet in a move that could boost its domestic network and bring more competition to Qantas Airways.
Virgin Blue has ordered 11 Embraer 190s and three Embraer 170s, with options for six more. Deliveries are set to start in 2007. Virgin Blue will join the UK's flybe and US carrier JetBlue Airways as low-fare players operating Embraer jets. Inflated lease rates and long delivery waits for Boeing 737s may have pushed Virgin Blue toward a second aircraft type for its fleet, but Brett Godfrey, Virgin Blue's chief executive, cites a more strategic reason. Virgin's current fleet of 737-700 and -800s is good for key routes, he explains, "but it is not optimal on all markets".
Godfrey claims the Embraers will allow Virgin Blue to "right size" aircraft to its network by offering more frequencies to serve the corporate market and by deploying the smaller jets on thinner routes or at quieter times of day. This would free up 737s for more use on trunk routes and also allow the carrier to be more competitive in markets where QantasLink uses 717s or BAe 146s.
Smaller jets with higher loads might also allow Virgin Blue to fly nonstop on routes where it now stops. Godfrey has not said where he will deploy the Embraers, but one clear candidate is Sydney-Canberra, a busy, short-haul route that Qantas now enjoys by itself.
Unit costs will be higher on a smaller aircraft, but Godfrey claims it will "more accurately match seat capacity and frequency to passenger demand". Virgin Blue reasons that higher load factors will cut trip costs and boost the bottom line. Similar analysis convinced flybe and JetBlue to make the same move.
Source: Airline Business
