Virgin Blue is moving ahead with plans to enter the Australia-US market with its new V Australia unit preparing to launch late next year.
Australia's second largest carrier aims to start selling tickets to the USA next May ahead of a November 2008 launch. Virgin Blue announced in late July it had selected the V Australia name for its new transpacific flights after considering almost 6,000 entries in a public contest. Virgin Blue cannot use the Virgin name for this operation without the consent of Singapore Airline because of an earlier deal between SIA and the Virgin Group. SIA has been repeatedly denied access to the Australia-US market.
The Australian government has awarded V Australia 10 weekly nonstops to the USA and the airline has applied to the US government for similar approval. United Airlines, which currently codeshares with Virgin Blue on flights within Australia, is opposing V Australia's US application. United, which serves Australia from Los Angeles and San Francisco, claims the US government should use this occasion to force Australia into an Open Skies bilateral.
United sought the same thing last year when it unsuccessfully opposed Jetstar's application for flights to Hawaii. An Open Skies accord would boost United's chances of using fifth freedoms between Japan and Australia.
Virgin Blue chief executive Brett Godfrey estimates V Australia's startup costs on the US route will be A$70 million ($60 million), excluding the cost of new Boeing 777-300ERs, and it will take 18 months to show a profit. Godfrey predicts V Australia will claim 12% of the nonstop Australia-US market.
V Australia has not yet specified routes but Godfrey previously suggested it may serve more than one US gateway. Its choices are linked to the unresolved issue of interlining and codesharing with US carriers. United may be unwilling to interline or codeshare with V Australia if they both end up operating the Sydney-San Francisco or Sydney-Los Angeles route. Virgin Blue could instead hook up in San Francisco with new San Francisco-based low-cost carrier Virgin America, but its initial US network may not be big enough to suit V Australia. "Virgin Blue is continuing to pursue codeshare and interline partnerships, both for our domestic operations and V Australia flights between Australia and the USA," Godfrey says.
He adds that "Virgin Blue would consider joining an alliance on the right terms, and the larger we grow, particularly with international expansion, the more attractive we probably become as a recruit".
Source: Airline Business
