VIRGIN BLUE RAISES STAKE IN TRANS-TASMAN SHOWDOWN
12 August 2008
Matt O'Sullivan
VIRGIN BLUE'S decision to increase flights across the Tasman by its New Zealand-centric Pacific Blue subsidiary has reinforced the carrier's intention to create an Asia-Pacific network.
Pacific Blue's trans-Tasman flights will include nine return services between Sydney and Auckland, beginning in October. The services will add 169,000 seats to the route each year.
The Virgin offshoot will boost its fleet to nine aircraft early next month when it takes delivery of another 180-seat Boeing 737-800 to fly the popular Auckland-Sydney route.
Virgin's tentacles will stretch beyond Australasia and the Polynesian islands - including Fiji, Samoa and the Cook Islands - to the United States in December when its international offshoot, V Australia, begins 10 return flights a week on the trans-Pacific route.
Virgin Blue confirmed yesterday it was on track for its first scheduled flight between Sydney and Los Angeles on December 15.
A Shaw Stockbroking analyst, Brent Mitchell, said yesterday: "They struggle to make money in New Zealand but they see it as part of a long-term plan to be able to link in with the US services."
Pacific Blue, which comprises a small part of Virgin's overall operations, last month announced a daily service between Melbourne and Auckland. This will boost total seats on the route by 131,000 a year.
Competition on the trans-Tasman route remains fierce between Air New Zealand, Qantas, and Gulf carriers such as Emirates. Virgin clearly believes the route is lucrative, having chosen to add an aircraft to the route instead of leasing its planes to the other carriers.
A Deutsche Bank analyst, Cameron McDonald, said the ability of carriers to maintain passenger numbers on the trans-Tasman route would be helped by the strength of the Australian dollar against the kiwi.
A slowdown in the economies on both sides of the Tasman might not be altogether negative for airlines because travellers could favour New Zealand over jetting to Europe or the US, he said.
"[Virgin] are trying to manage the capacity as best they can, so they clearly think the market is there to take delivery of that [extra Boeing] aircraft," he said.
Shares in Virgin rose 2.5c to 94c yesterday due largely to falling oil prices. It has doubled its market value since reaching an all-time low in late June.
© 2008 Copyright John Fairfax Holdings Limited
Sydney Morning Herald
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