Wirraway
9th Jun 2004, 05:31
Dow Jones
INTERVIEW:Australia Virgin Blue Eyes JV Stake In SE Asia
By Abdul Hadhi
Wednesday June 9, 11:57 AM (Singapore)
SINGAPORE (Dow Jones)--Australian budget airline Virgin Blue Holdings Ltd. is open to forming a joint venture in Southeast Asia but won't settle for anything less than a 25% stake, the Australian carrier Chief Executive Brett Godfrey told Dow Jones Newswires late Tuesday.
Virgin Blue isn't rushing even though full service rival Qantas Airways Ltd. has already raced ahead and expects its Singapore-based yet unnamed budget venture to take to the skies in November.
"Thai Airways has spoken to us and so has AirAsia," Godfrey said.
"But the minimum (stake) has to be above 25%. What's the use of just having 10%. We are not interested in doing a cheap joint venture. We have a very good brand," Godfrey added.
Despite Virgin Blue's measured approach, a joint venture in Southeast Asia appears to be an eventuality as the Australian airline does plan to add routes to this region and believes it will be workable only with a partner.
Malaysia's AirAsia, for example, has been able to expand its reach far beyond its original expectations with its Thai joint venture which brought China and India within a four hour short haul horizon.
Virgin Blue, which counts founder Richard Branson and Australian transport group Patrick Corp. as its two biggest shareholders, operates a fleet of 46 aircraft operating largely in Australia and New Zealand currently but intends to add Fiji, New Caledonia and Vanuatu to its list of destinations from September.
Godfrey, however, ruled out partnering Tiger Airways and Jetstar, which are related to Singapore Airlines and Qantas respectively.
"That only leaves AirAsia and (Singapore-based) Valuair," Godfrey added.
Another factor driving Virgin Blue toward Asia is the region's relatively low rate of penetration despite the burgeoning of such carrier s in recent years.
The market share of budget airlines is a very low 2% in Asia, according to data from Giovanni Bisignani, director general of the International Air Transport Association.
The promise of a potentially huge untapped market has resulted in three budget carriers to fly from Singapore alone by the end of the year, let alone other startups in Thailand, Malaysia and Indonesia.
By contrast, such budget carriers have 16% of the market in Europe, 23% in North America and 30% in Australia, Bisignani revealed.
Ticket Prices Increased Due To High Oil Prices
Meanwhile, Virgin Blue has raised its ticket prices by A$6 to account for the higher oil prices.
"Our first half to September is 50% hedged (for oil). After September, (hedging) is considerably less)," Godfrey said.
For the moment, the higher tickets prices should counterbalance the rising oil prices and Godfrey doesn't expect it to affect the airline's earnings.
Virgin Blue has an annual net profit target of A$150 million.
Godfrey, however, is less optimistic over the longer term.
The U.S.' huge appetite for the commodity as well as continued security concerns in major oil exporting countries in the Middle East suggests oil prices may not retreat all that much, Godfrey believes.
At the IATA annual general meeting held in Singapore on Monday and Tuesday, Bisignani described oil prices as the fifth horseman of the apocalyse.
If oil prices average US$33 a barrel, airlines will break even, and at US$36 a barrel, they will report a collective loss, he warned.
=========================================
INTERVIEW:Australia Virgin Blue Eyes JV Stake In SE Asia
By Abdul Hadhi
Wednesday June 9, 11:57 AM (Singapore)
SINGAPORE (Dow Jones)--Australian budget airline Virgin Blue Holdings Ltd. is open to forming a joint venture in Southeast Asia but won't settle for anything less than a 25% stake, the Australian carrier Chief Executive Brett Godfrey told Dow Jones Newswires late Tuesday.
Virgin Blue isn't rushing even though full service rival Qantas Airways Ltd. has already raced ahead and expects its Singapore-based yet unnamed budget venture to take to the skies in November.
"Thai Airways has spoken to us and so has AirAsia," Godfrey said.
"But the minimum (stake) has to be above 25%. What's the use of just having 10%. We are not interested in doing a cheap joint venture. We have a very good brand," Godfrey added.
Despite Virgin Blue's measured approach, a joint venture in Southeast Asia appears to be an eventuality as the Australian airline does plan to add routes to this region and believes it will be workable only with a partner.
Malaysia's AirAsia, for example, has been able to expand its reach far beyond its original expectations with its Thai joint venture which brought China and India within a four hour short haul horizon.
Virgin Blue, which counts founder Richard Branson and Australian transport group Patrick Corp. as its two biggest shareholders, operates a fleet of 46 aircraft operating largely in Australia and New Zealand currently but intends to add Fiji, New Caledonia and Vanuatu to its list of destinations from September.
Godfrey, however, ruled out partnering Tiger Airways and Jetstar, which are related to Singapore Airlines and Qantas respectively.
"That only leaves AirAsia and (Singapore-based) Valuair," Godfrey added.
Another factor driving Virgin Blue toward Asia is the region's relatively low rate of penetration despite the burgeoning of such carrier s in recent years.
The market share of budget airlines is a very low 2% in Asia, according to data from Giovanni Bisignani, director general of the International Air Transport Association.
The promise of a potentially huge untapped market has resulted in three budget carriers to fly from Singapore alone by the end of the year, let alone other startups in Thailand, Malaysia and Indonesia.
By contrast, such budget carriers have 16% of the market in Europe, 23% in North America and 30% in Australia, Bisignani revealed.
Ticket Prices Increased Due To High Oil Prices
Meanwhile, Virgin Blue has raised its ticket prices by A$6 to account for the higher oil prices.
"Our first half to September is 50% hedged (for oil). After September, (hedging) is considerably less)," Godfrey said.
For the moment, the higher tickets prices should counterbalance the rising oil prices and Godfrey doesn't expect it to affect the airline's earnings.
Virgin Blue has an annual net profit target of A$150 million.
Godfrey, however, is less optimistic over the longer term.
The U.S.' huge appetite for the commodity as well as continued security concerns in major oil exporting countries in the Middle East suggests oil prices may not retreat all that much, Godfrey believes.
At the IATA annual general meeting held in Singapore on Monday and Tuesday, Bisignani described oil prices as the fifth horseman of the apocalyse.
If oil prices average US$33 a barrel, airlines will break even, and at US$36 a barrel, they will report a collective loss, he warned.
=========================================