Air Macau-Virgin Blue in LCC venture

[Wirraway]

http://www.travelweeklyweb.com/articles/standard.asp?isArticle=1776&pCat=6&rmenu=articles

Air Macau-Virgin in LCC venture
Ian Jarrett
30 August 2004 (GMT+8)

MACAU - Australia's Virgin Blue and Air Macau are planning to launch a joint venture, low-cost carrier, based in Macau, in the first quarter of 2005.

The two carriers are in the process of working out final details and a deal is expected within weeks.

Sources in Macau have confirmed the joint venture negotiations to TravelWeekly.

The Macau-based carrier would be the first LCC to operate in China and would have a head start on other operators who are looking at the opportunities for budget airlines on the mainland.

Air Macau has access to 31 routes throughout mainland China, but currently operates nine scheduled flights to Beijing, Shanghai, Nanjing, Xiamen, Haikou, Kunming, Shenzhen, Guilin and Chengdu.

Air Macau also has 42 air agreements to other destinations outside mainland China, but is currently only using rights to Bangkok and Manila.

The Macau government has been protective of Air Macau until now but sees a joint venture arrangement with an established LCC operator like Virgin Blue as a means of fast-tracking tourist numbers to the island.

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[Wirraway]

Thurs "Sydney Morning Herald"

Virgin has eyes for Macau, maybe
By Scott Rochfort
September 1, 2004

Virgin Blue is looking at the former Portuguese enclave, Macau, as its entry point into Asia, in a bid to tap into the burgeoning Chinese aviation market.

Following months of speculation that Virgin was looking to set up an airline in South-East Asia, the airline is now in talks with Air Macau over a bid to service China from the territory best known for its casinos.

The South China Morning Post reported Virgin was in talks for Air Macau to waive its 25-year concession as the territory's only home-based carrier.

Given Air Macau only services nine of the 31 Chinese destinations to which it has flying rights, Macau Airport is keen to attract more passengers to the territory.

Yet it is not clear if the deal will involve a possible equity tie-up with Air Macau, or its main shareholder, China National Aviation Corp.

But Virgin's head of communications, David Huttner, played down the talk and compared it to speculation early this year about Virgin setting up an airline with the Malaysian low-cost airline AirAsia.

As Virgin's talks with AirAsia's boss Tony Fernandes came to nought, Mr Huttner said: "Everyone wants to hype up these things. I can't do anything about that.

"We have a thorough vetting process and like all the proposals that come into us we expect very few to make it through."

Mr Huttner said Virgin also was looking at several options including expanding into India, despite the Indian Government barring any foreign ownership of airlines in the country.

Several analysts expressed caution about the Macau deal, noting several airlines already have pulled the pin after holding talks with Air Macau. The most notable of these was the founder of Ireland's Ryanair, Tony Ryan, who went on to form a partnership with Singapore Airline's new low-cost venture, Tiger Airways.

One analyst also raised concern about Virgin forming a partnership with CNAC, the commercial arm of the Civil Aviation Administration of China. While any such partnership could yield Virgin unfettered access into China, the analyst described CNAC and Air Macau as an "iceberg".

But the Centre for Asia Pacific Aviation's managing director, Peter Harbison, said Macau airport was a "sexy option", noting Macau's access to China and the fact that it was not yet awash with low-cost airlines.

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[Gnadenburg]

Does Mr Harbison know how many parking slots available at Macau? Isn't Macau the airport with the runway out to sea and with very limited terminal space?

A LCC of any great size, would need to have mainland bases for aircraft surely.

Why would Chinese government give favourable business conditions to a foreign, and very visibly British, air carrier?

Would a cross straights air agreement between Taiwan & China cripple a Macau based LCC or is casino expansion enough to sustain?

Will Virgin Blue F/O's undercut other pilots in the region to get a Macau based command? The only question I can answer and a definite yes. Phillipino pilots could not under cut the mainland Chinese; only Virgin Blue managed that as demonstrated by their Hong Kong overnight allowances for sim. :p

[smokestak]

Gnadenburg

the only thing for sure is that it will not be VB FOs undercutting anyone for command pay based in Macau. As has been evidenced with Virgin Bro, each new aviation venture is considerd a seperate business entity with absolutely no rights to bid anywhere for anything.