Virgin vexed as Air Pacific upgrades
"The Australian"
Virgin vexed as Air Pacific upgrades
By Steve Creedy
June 27, 2003
VIRGIN Blue's proposed international services face a stiff fight to wrest market share from Air Pacific as the Fiji-based airline upgrades its fleet and expands its services.
Air Pacific yesterday took delivery of a second leased Boeing 747-400 from Singapore Airlines and predicts passenger numbers will grow 14 per cent in 2003-04.
Chief executive John Campbell would not be drawn on a price war with Virgin, but said the airline would aggressively protect its market share.
"We've got no intention of walking away from what we've worked fairly hard to build up," he said.
Mr Campbell said Air Pacific was aware of the low-cost carrier's application for capacity, as well as moves to get twin-engine operation clearance and international licensing.
He said Virgin's capacity application indicated the low-cost carrier was looking at daily 737-800 operations, using a similar configuration to its domestic operations.
He expected them to "cherry-pick" mature routes and predicted initial services to Fiji would be from Brisbane and/or Sydney.
"I think they'll be an extremely aggressive competitor and they'll certainly come at us with price," he said.
"I expect they'll come at us with reasonable frequency and they'll give us a pretty tough time for a market share.
"I'm not sure they will grow the market hugely. It's a reasonably mature market already, so we think it'll probably be a market share battle, rather than us keeping what we've got and Virgin adding another layer on top."
Yesterday's 747-400 delivery is part of a long-term strategy by Air Pacific, which is 46 per cent owned by Qantas, to boost its wide body fleet.
After a disastrous year following the Fiji coup, the airline's financial performance is back on track with its 2002-03 pre-tax profit up 160 per cent to $F25.14 million ($20.2 million) on a 14.2 per cent rise in revenue to $F407 million.
It had already boosted its fleet with the addition of three next-generation 737s and a Boeing 767-300ER. The two ex-Ansett International 747s, fresh from a major overhaul and on five-year leases from Singapore with options to extend, were something of a windfall. Ansett had reconfigured them in a hard-to-lease two-class configuration with a generous business class seat pitch, and both classes had been fitted with personal video screens.
The first of the new aircraft is already delivering significant efficiency gains over its 747-200 predecessors, which were payload-constricted in typical Nadi take-off conditions: a 5-knot tail wind and 30C night temperature.
Mr Campbell said the 400s could normally take off with almost a full payload of passengers and freight, and a planned 400m runway extension would lift all restrictions.
Fuel efficiency on Sydney services had been about 13 per cent better than the older 747-200s, and the airline expected even better figures on US services.
Mr Campbell said the airline expected to be flying daily to the US in 2007-08 and anticipated further expansion in Australia, with Sydney eventually supporting double daily flights.
The airline was also looking at eventually flying daily 300-seater services to Melbourne, Auckland and Brisbane.
It has plans to acquire four A330-300s between 2005 and 2011, although it has yet to sign a purchase agreement, and Singapore is lobbying enthusiastically in favour of leased Boeing 777s.
"We've not signed a purchase agreement and in today's climate we serve our interest best in keeping a lot of tension on the process," Mr Campbell said.
"We're not in negotiations with SQ to lease 777s at the moment. They're promoting the idea to us."
Steve Creedy flew to Nadi courtesy of Air Pacific and Boeing.
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