Virgin Blue wants US route: report
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Thurs "The Australian"
Virgin eyes US options
By Steve Creedy, Aviation writer
July 08, 2004
VIRGIN Blue yesterday rejected claims it had applied for the rights to fly to San Francisco and Los Angeles but confirmed it was exploring the possibility of US services.
Reports of the airline's interest in the lucrative Pacific route helped wipe 2.8 per cent off the value of Qantas shares, which dropped 10c to close at $3.45.
Qantas shares may also have been hurt by increasing indications the flying kangaroo faces a stoush with flight attendants over plans to base 400 long-haul cabin crew in London.
Virgin flagged its interest in the US in May as one of 15 possibilities being explored by the unit as it tries to identify expansion opportunities.
The airline has also indicated an interest in expanding into Asia.
Other possibilities are understood to include a freight airline, a ground handling business or regional operations.
Virgin's interest in the US comes as foreign carriers like Singapore Airlines and tourism interests are pressuring the federal Government to open up the Pacific to more competition.
The low-cost carrier confirmed yesterday it had written to the Transport Department canvassing options for US services. But officials said the inquiries were preliminary and "a lot more analysis" was needed before there was a concrete proposal.
"Much water has to pass under the bridge before this project would grow into a real airline," said Virgin chief executive Brett Godfrey. "It's one of many opportunities and it's still very embryonic.
"You would appreciate that because of the long lead time you need to get the ball rolling and have the business development unit modelling and analysing the opportunity."
Mr Godfrey said the US proposal was no different from Virgin Blue's examination of opportunities in Asia.
"Sometimes you have to turn over a few stones to find a few gems," he said.
Three carriers - Qantas, United Airlines and Hawaiian Airlines - fly directly from Australia to the US but Air New Zealand competes strongly on the route via Auckland and several airlines offer competitive packages through Asia or the Pacific.
=======================================
Thurs "Sydney Morning Herald"
Virgin tempted by flights to LA
By Scott Rochfort
July 8, 2004
Qantas's stranglehold over the Australia to Los Angeles route was under fresh challenge yesterday after Virgin Blue confirmed it could launch an airline on the route.
Virgin Blue said it was engaged in "advanced work" on setting up a new airline, from investigating landing slots at Los Angeles airport to now lodging an "explor-atory document" with the Australian Government.
"It may be a good idea or it may be a bad idea," said David Huttner, Virgin Blue's head of strategy. "It's not going to happen before Christmas, put it that way. It's going to take a while but we'd be very silly if we never looked at this thing."
Mr Huttner said the airline would not be restricted to flying to the US West Coast, but could fly to destinations such as London, Johannesburg and into Asia.
Given Virgin Blue's lack of expertise in running full-service long-haul operations, there are suggestions it could part-own the airline with its so-called sister airline, Virgin Atlantic.
The mere talk of Virgin flying to the US sent Qantas shares tumbling 10c to $3.45, given that the Flying Kangaroo makes about one-third of its international profits from the LA route.
With Singapore Airlines' plans to enter the route still being blocked by the Australian Government, Mr Huttner said it would be prudent to look at it before it was finally opened up.
"Why would you give away to these guys before you explored all your options?" he said.
But there is talk that Virgin's new airline could represent a more covert way for Singapore to enter the Los Angeles route, given it owns 49 per cent of Virgin Atlantic.
"Singapore Airlines know they might be banging heads with governments for quite a while to get permission to fly from Australia to Los Angeles," said one analyst.
"If you can't crack it one way it could crack in another way."
But some suggested it could be payback for Qantas ruffling Singapore Air feathers with its plans to set up a low-cost airline at Changi.
If so, Singapore Air could give the new airline favourable leasing arrangements on the spare fleet of five 747-400s. Singapore Airlines spokeswoman Samantha Stewart declined to be drawn on the issue, only to say the airline still wanted to fly trans-Pacific flights from Australia.
"In this particular case, this is all speculative and a hypo-thetical and we don't get into hypotheticals," Ms Stewart said.
Despite Qantas's insistence that the route was competitive, the airline controls more than two-thirds of direct flights to the US, which in turn attract most of the high-yielding business traffic.
The financially crippled United Airlines is its only direct competitor on the route.
Eight months after angering Qantas for noting there was "a compelling case for additional airline activity between Australia and the US", the Federal Tourism Minister, Joe Hockey, welcomed the proposed entry of Virgin and "any opportunity to increase competition".
"But do put in the proviso that Qantas have responded," he said. "Since my comments, Qantas have responded by increasing the number of flights to the west coast of the US."
After recently introducing its first direct service from Brisbane to LA, Qantas now flies 28 direct services a week to the US.
========================================
Virgin eyes US options
By Steve Creedy, Aviation writer
July 08, 2004
VIRGIN Blue yesterday rejected claims it had applied for the rights to fly to San Francisco and Los Angeles but confirmed it was exploring the possibility of US services.
Reports of the airline's interest in the lucrative Pacific route helped wipe 2.8 per cent off the value of Qantas shares, which dropped 10c to close at $3.45.
Qantas shares may also have been hurt by increasing indications the flying kangaroo faces a stoush with flight attendants over plans to base 400 long-haul cabin crew in London.
Virgin flagged its interest in the US in May as one of 15 possibilities being explored by the unit as it tries to identify expansion opportunities.
The airline has also indicated an interest in expanding into Asia.
Other possibilities are understood to include a freight airline, a ground handling business or regional operations.
Virgin's interest in the US comes as foreign carriers like Singapore Airlines and tourism interests are pressuring the federal Government to open up the Pacific to more competition.
The low-cost carrier confirmed yesterday it had written to the Transport Department canvassing options for US services. But officials said the inquiries were preliminary and "a lot more analysis" was needed before there was a concrete proposal.
"Much water has to pass under the bridge before this project would grow into a real airline," said Virgin chief executive Brett Godfrey. "It's one of many opportunities and it's still very embryonic.
"You would appreciate that because of the long lead time you need to get the ball rolling and have the business development unit modelling and analysing the opportunity."
Mr Godfrey said the US proposal was no different from Virgin Blue's examination of opportunities in Asia.
"Sometimes you have to turn over a few stones to find a few gems," he said.
Three carriers - Qantas, United Airlines and Hawaiian Airlines - fly directly from Australia to the US but Air New Zealand competes strongly on the route via Auckland and several airlines offer competitive packages through Asia or the Pacific.
=======================================
Thurs "Sydney Morning Herald"
Virgin tempted by flights to LA
By Scott Rochfort
July 8, 2004
Qantas's stranglehold over the Australia to Los Angeles route was under fresh challenge yesterday after Virgin Blue confirmed it could launch an airline on the route.
Virgin Blue said it was engaged in "advanced work" on setting up a new airline, from investigating landing slots at Los Angeles airport to now lodging an "explor-atory document" with the Australian Government.
"It may be a good idea or it may be a bad idea," said David Huttner, Virgin Blue's head of strategy. "It's not going to happen before Christmas, put it that way. It's going to take a while but we'd be very silly if we never looked at this thing."
Mr Huttner said the airline would not be restricted to flying to the US West Coast, but could fly to destinations such as London, Johannesburg and into Asia.
Given Virgin Blue's lack of expertise in running full-service long-haul operations, there are suggestions it could part-own the airline with its so-called sister airline, Virgin Atlantic.
The mere talk of Virgin flying to the US sent Qantas shares tumbling 10c to $3.45, given that the Flying Kangaroo makes about one-third of its international profits from the LA route.
With Singapore Airlines' plans to enter the route still being blocked by the Australian Government, Mr Huttner said it would be prudent to look at it before it was finally opened up.
"Why would you give away to these guys before you explored all your options?" he said.
But there is talk that Virgin's new airline could represent a more covert way for Singapore to enter the Los Angeles route, given it owns 49 per cent of Virgin Atlantic.
"Singapore Airlines know they might be banging heads with governments for quite a while to get permission to fly from Australia to Los Angeles," said one analyst.
"If you can't crack it one way it could crack in another way."
But some suggested it could be payback for Qantas ruffling Singapore Air feathers with its plans to set up a low-cost airline at Changi.
If so, Singapore Air could give the new airline favourable leasing arrangements on the spare fleet of five 747-400s. Singapore Airlines spokeswoman Samantha Stewart declined to be drawn on the issue, only to say the airline still wanted to fly trans-Pacific flights from Australia.
"In this particular case, this is all speculative and a hypo-thetical and we don't get into hypotheticals," Ms Stewart said.
Despite Qantas's insistence that the route was competitive, the airline controls more than two-thirds of direct flights to the US, which in turn attract most of the high-yielding business traffic.
The financially crippled United Airlines is its only direct competitor on the route.
Eight months after angering Qantas for noting there was "a compelling case for additional airline activity between Australia and the US", the Federal Tourism Minister, Joe Hockey, welcomed the proposed entry of Virgin and "any opportunity to increase competition".
"But do put in the proviso that Qantas have responded," he said. "Since my comments, Qantas have responded by increasing the number of flights to the west coast of the US."
After recently introducing its first direct service from Brisbane to LA, Qantas now flies 28 direct services a week to the US.
========================================
Last edited by Wirraway; 7th Jul 2004 at 15:49.
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This is and will continue to be fun to watch play out. Branson may have himself a true World airline very soon. If he can grasp a good international market on the US West Coast with assistance from SIA, then he will have a huge impetus for a US domestic startup. A couple of US majors will be shaking. United Airlines has just failed to get a government loan guarantee and can't have too many options left to get out of bankruptcy.
I don't suffer from insanity. I am enjoying every minute of it.
I don't suffer from insanity. I am enjoying every minute of it.
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The only slot-controlled airports in the US were LGA, JFK, ORD, DCA (circa 2000)
I am pretty sure that JFK & ORD are no longer slot-controlled, and DCA has onerous restrictions about range of flights etc.
The other restriction maybe the US-AUS bilateral airservices agreement but again, my understanding is that its very liberal, and in any case, if UA can operate SFO-SYD, so can an Aussie carrier. Didn't Ansett plan a SYD-SFO service connecting to UA's hub?
The new Intl terminal at SFO has expanded gate availability (and seen a drop in flights since 9/11)
I am pretty sure that JFK & ORD are no longer slot-controlled, and DCA has onerous restrictions about range of flights etc.
The other restriction maybe the US-AUS bilateral airservices agreement but again, my understanding is that its very liberal, and in any case, if UA can operate SFO-SYD, so can an Aussie carrier. Didn't Ansett plan a SYD-SFO service connecting to UA's hub?
The new Intl terminal at SFO has expanded gate availability (and seen a drop in flights since 9/11)
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Fifth freedom rights apply to carriers other than those from the State where the flight is to originate. In other words Emirates et al might be in a queue but an Australian owned carrier only has to have the required AOC etc and work within the Australia-US bilateral agreement. And since QF voluntarily gave up their rights SYD-SFO they would have a hard case to argue that VB shouldn't use it. I don't know all the fine print of the bilateral and it may be that there's some global limit on AUS-US capacity. If thats the case then QF may have to relinquish some capacity to allow fair competition. I doubt that's the case though. Far more likely that VB would simply apply, as Ansett did and would get the rights it wants. Qantas can't preach how ultra-competitive it is and yet sit on lucrative rights that in the end are publicly owned. We all know that the route is underserved.
And the new terminal at SFO seems to have room for more use, at least that's how it seems every time I operate there.
I have no special interest in seeing VB on the route other than the jobs it will create for younger pilots and cheaper fares/direct SFO services for the passengers. That seems enough for the policy makers to work with.
Fifth freedom rights apply to carriers other than those from the State where the flight is to originate. In other words Emirates et al might be in a queue but an Australian owned carrier only has to have the required AOC etc and work within the Australia-US bilateral agreement. And since QF voluntarily gave up their rights SYD-SFO they would have a hard case to argue that VB shouldn't use it. I don't know all the fine print of the bilateral and it may be that there's some global limit on AUS-US capacity. If thats the case then QF may have to relinquish some capacity to allow fair competition. I doubt that's the case though. Far more likely that VB would simply apply, as Ansett did and would get the rights it wants. Qantas can't preach how ultra-competitive it is and yet sit on lucrative rights that in the end are publicly owned. We all know that the route is underserved.
And the new terminal at SFO seems to have room for more use, at least that's how it seems every time I operate there.
I have no special interest in seeing VB on the route other than the jobs it will create for younger pilots and cheaper fares/direct SFO services for the passengers. That seems enough for the policy makers to work with.
