According to Comsec, as at July 2007, 75% of the Australia’s top 200 companies had corporate accounts with Virgin Blue and while they only had 5% of government business at that time this sector is being vigorously targeted with the introduction of the Embraer into Canberra.
Contrary to some previous posts Virgin does has some fleet flexibility. In FY08 VBA’s fleet will be 46% leased and over the following 12 months it will have the option to exit some of these leases.
Virgin has 19 options on Embraers, of which 7 have been delivered but if need be some of those could be deferred or cancelled.
By utilising the Embraers, Virgin will be able to match capacity on routes where load factors drop or operate them on trunk routes during off peak times. Virgin has identified 18% of the Australian market that it does not currently serve and could operate more direct services bypassing hubs.
This strategy is not so readily available to Qantas, where up until now it has withdrawn from unprofitable or non-business routes in favour of Jetstar who still operate aircraft of a similar size.
Virgin has 49% of its fuel hedged in FY08 although I can find no information on their situation in FY 09.