An interesting opinion appeared in yesterday's Australian newspaper:
Virgin poised to take bite of Tiger's market | The Australian
Nabila Ahmed claims that given VA's new partnership with SIA, and the woes Tiger Airways has experienced, that:
While Borghetti has been focused more on taking business travellers from Qantas, it would make sense for Virgin to operate a lower-cost service under a similar model to that run by Qantas and Jetstar.
This is the first time I've heard such VA strategy discussed, and I have my doubts about Nabila's understanding of aviation business. However, if such a thought was serious I don't believe such a strategy would work.
VA seem to be getting the balance of service and low fares right, ensuring leisure and business travellers can enjoy the ride. Setting up a Virgin LCC beneath the current airline would not work. What started off as a strategy to see off Virgin Blue, Jetstar has evolved into an egotistic juggernaut canabilising mainline QF domestically and internationally. Jetstar
was a rare example of a successful dual strategy (spilting cost leadership and differentiation i.e. service, across two group airlines), but in recent years many observers doubt this will long-term be the right strategy for the QF group. I'm sure in 10 years time academics will be writing papers about the demise of Qantas and state that supporting the growth of Jetstar above all other corporate tactics is what wrecked QF.
Sure, establishing a new Virgin airline would allow a lower cost base. Tickets could be offered at a lower price, increasing the market in some respects, but would ultimately eat away at their existing market. I doubt Borghetti wants to go down this path. Even if there was a business case for it, I'd imagine a small part of Borghetti hates extreme LCCs after Joyce destroyed his previous empire.