Virgin Blue Chief Executive Godfrey Eyes Asia's `Pots of Gold'
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Virgin Blue Chief Executive Godfrey Eyes Asia's `Pots of Gold'
Bloomberg
Virgin Blue Chief Executive Godfrey Eyes Asia's `Pots of Gold'
April 27 (Bloomberg) -- Virgin Blue Holdings Ltd., Australia's second-biggest airline, has held talks with several Asian carriers, including Malaysia's AirAsia Sdn., Singapore-based Valuair Ltd. and Thai Airways International Plc to set up a discount carrier, Chief Executive Brett Godfrey said.
"Asia is the next big low-cost market opportunity, probably one of the last,'' Godfrey said in an interview. About 3.5 billion people live within 3 1/2 hours flight of Hong Kong, Bangkok, Malaysia or Singapore, he said. "It's a tough market, but if you crack it, there are pots of gold there.''
An Asian budget carrier would extend Brisbane, Australia-based Virgin Blue's rivalry with Qantas Airways Ltd., which earlier this month said it plans to set up a discount airline with Singapore state- owned investment agency Temasek Holdings Ltd. Qantas's domestic discount unit, Jetstar, will begin flying on May 25.
"We won't necessarily follow what Qantas does,'' Godfrey, 40, said. ``Qantas has got 75 years march on us and they've been looking at Asia for 10 years. We're not even four years old.''
Virgin Blue has grabbed more than 30 percent of Australia's air travel market since starting its no-frills service with two planes in 2000. Its Pacific Blue arm began services to New Zealand in January and will add routes to Fiji and Vanuatu by the end of the year.
Virgin Blue shares rose 1 cent to A$2.27 yesterday. The stock, which was sold in a December initial public offer at A$2.25 apiece, has fallen 13 percent from a February high of A$2.61. Qantas shares fell 5 cents to A$3.47. They have risen 1 percent since Virgin Blue shares started trading Dec. 8.
Asian Partner
A move into Asia would have to be in partnership with another carrier because of foreign ownership laws that require a majority partner.
Godfrey said he had been approached separately by Valuair, a Singapore-based discount airline scheduled to begin flying next month, Thai Airways, Thailand's largest carrier, AirAsia, Malaysia's only budget carrier, and a number of other airlines who didn't want to be identified.
Expanding into Asia would be ``opportunistic'' rather than a strategy actively pursued by management, Godfrey said. ``We still have lots of opportunities in Australia, but it would be wrong for us to dismiss anyone who's got an interesting proposition,'' he said.
Virgin Blue's Australian business, which contributes about 95 percent of sales, will remain its main business for the time being, Godfrey said. Small ventures, such as its package holidays unit or freight services, would be added on as opportunities arose, he said.
"Now we've got the airline humming nicely we can afford to look at these things, like Asia, like Blue Holidays, and we can start to build around this wonderful pillar which is Virgin Blue.''
net
To contact the editor of this story:
Peter Vercoe at [email protected]
===========================================
Virgin Blue Chief Executive Godfrey Eyes Asia's `Pots of Gold'
April 27 (Bloomberg) -- Virgin Blue Holdings Ltd., Australia's second-biggest airline, has held talks with several Asian carriers, including Malaysia's AirAsia Sdn., Singapore-based Valuair Ltd. and Thai Airways International Plc to set up a discount carrier, Chief Executive Brett Godfrey said.
"Asia is the next big low-cost market opportunity, probably one of the last,'' Godfrey said in an interview. About 3.5 billion people live within 3 1/2 hours flight of Hong Kong, Bangkok, Malaysia or Singapore, he said. "It's a tough market, but if you crack it, there are pots of gold there.''
An Asian budget carrier would extend Brisbane, Australia-based Virgin Blue's rivalry with Qantas Airways Ltd., which earlier this month said it plans to set up a discount airline with Singapore state- owned investment agency Temasek Holdings Ltd. Qantas's domestic discount unit, Jetstar, will begin flying on May 25.
"We won't necessarily follow what Qantas does,'' Godfrey, 40, said. ``Qantas has got 75 years march on us and they've been looking at Asia for 10 years. We're not even four years old.''
Virgin Blue has grabbed more than 30 percent of Australia's air travel market since starting its no-frills service with two planes in 2000. Its Pacific Blue arm began services to New Zealand in January and will add routes to Fiji and Vanuatu by the end of the year.
Virgin Blue shares rose 1 cent to A$2.27 yesterday. The stock, which was sold in a December initial public offer at A$2.25 apiece, has fallen 13 percent from a February high of A$2.61. Qantas shares fell 5 cents to A$3.47. They have risen 1 percent since Virgin Blue shares started trading Dec. 8.
Asian Partner
A move into Asia would have to be in partnership with another carrier because of foreign ownership laws that require a majority partner.
Godfrey said he had been approached separately by Valuair, a Singapore-based discount airline scheduled to begin flying next month, Thai Airways, Thailand's largest carrier, AirAsia, Malaysia's only budget carrier, and a number of other airlines who didn't want to be identified.
Expanding into Asia would be ``opportunistic'' rather than a strategy actively pursued by management, Godfrey said. ``We still have lots of opportunities in Australia, but it would be wrong for us to dismiss anyone who's got an interesting proposition,'' he said.
Virgin Blue's Australian business, which contributes about 95 percent of sales, will remain its main business for the time being, Godfrey said. Small ventures, such as its package holidays unit or freight services, would be added on as opportunities arose, he said.
"Now we've got the airline humming nicely we can afford to look at these things, like Asia, like Blue Holidays, and we can start to build around this wonderful pillar which is Virgin Blue.''
net
To contact the editor of this story:
Peter Vercoe at [email protected]
===========================================
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With its share price sliding on a virtually daily basis you can bet that VB's incumbents wont be spending money on a venture offshore which they can't control.
Besides, Richard Branson is spending a pretty penny trying to set up shop in the USA and that will either make or break his piggy bank.
Lots of money, patience and deep pockets required for that one.
Besides, Richard Branson is spending a pretty penny trying to set up shop in the USA and that will either make or break his piggy bank.
Lots of money, patience and deep pockets required for that one.
Nunc est bibendum
This strikes me as one of those 'Clayton's' press releases. The one you send out to make it look like everything is going gangbusters but the reality may be quite different.
I've seen them come out from Qantas in the past too. Of course, every now and then it is actually because they ARE going gangbusters so who really knows!
I've seen them come out from Qantas in the past too. Of course, every now and then it is actually because they ARE going gangbusters so who really knows!
