Virgin Blue is not waiting for Qantas to launch its new discount unit, JetStar, before making life difficult for the start-up. Knowing that JetStar will begin at a point between May and July with a fleet of only 14 Boeing 717s, Virgin Blue is exploiting the longer range of its next generation 737s to launch nonstops JetStar cannot match.
JetStar deliberately delayed until late January any announcement of route plans to keep Virgin Blue from spoiling them. Yet, without waiting for JetStar's announcement, Virgin Blue unveiled its own plans for 50 new weekly flights, including transcontinental nonstops between Perth and the Gold Coast. Virgin has also attacked JetStar for adding 10 extra seats to each 717, claiming it "crams as many seats as possible" into the smaller jet. With 125 total seats, the 717's range will be even shorter.
Aware of its vulnerability, JetStar has leased three A320s to arrive in June and July to bridge the gap until it starts receiving new A320s it has ordered. Eventually JetStar will replace all its 717s with 23 A320s of its own, but not before mid-2005. Until then, Virgin Blue believes it has a clear advantage.
Even then, some analysts foresee a struggle by JetStar to keep up with Virgin Blue. With its larger fleet, Virgin Blue will retain the frequency advantage. Once JetStar completes its conversion to A320s, it will achieve the same fleet economies of a single aircraft type that Virgin Blue enjoys now, but JetStar will still have no fleet synergies with Qantas, which continues to fly Boeing narrowbodies.
Source: Airline Business
