Virgin Blue’s new aircraft to take on Qantas

An article in The Herald Sun says that Virgin Blue aims to take on Qantas’ dominance of the regional air travel market with the arrival of $600 million worth of new passenger planes.

The 74-seat aircraft built by Brazilian company Embraer Aerospace, due to be launched tomorrow, is the first of 20 new planes for Virgin Blue, worth $30 million each.

Virgin Blue plans to use the planes to challenge the turbo-prop models used by Qantas and Rex Aviation in regional markets.

Virgin Blue managing director Brett Godfrey, talking to BusinessDaily on the airline’s seventh anniversary, said the company was embarking on a twin pronged growth strategy.

He is is aiming to build market share on regional routes and win long haul passengers by offering discount fares.

He plans to offer discount fares on Qantas’ most profitable route, the Pacific between Australia and United States.

The exact details of these new fares are unclear but Mr Godfrey is believed to be considering prices of less than the $1800 special deals that are occasionally offered.

Mr Godfrey also said he would like to put another route into service to ports in North Asia, such as Hong Kong and Japan.

“No I won’t be taking the airline to Europe,” he said noting he might take on Virgin Atlantic on the Hong Kong-Australia leg.

By the end of next year Virgin Blue will have a fleet of 80 aircraft including seven 350-seat Boeing 777s, due to begin arriving late next year along with the last planes from Embraer.

As part of the expansion plans, Virgin Blue holds options for another seven Boeing 777s, worth in excess of $2 billion.

Virgin Blue’s 19 other planes in the order from the Brazilian manufacturer – five E170s and 14 E190s – will be delivered over the next 12 months.

Mr Godfrey is coy on the exact routes and destinations the planes will fly, but admits planning to woo potential custom from politicians and influential public service mandarins in Canberra, a market that’s long been a monopoly of Qantas.

Mr Godfrey said Canberra was “a perfect fit” for the E-series planes.

“The E-series jet will have the widest economy seat of any passenger jet operating and the other great thing about the E-jets is the schedule flexibility they will allow and the capability they will give us to fine tune our network,” he said.

“With the new aircraft we will do new flying and be able to increase frequencies and be better able to match capacity and schedules with demand.”

Virgin is also looking at airports in more than 20 cities and towns across rural Australia, including places as far apart as Devonport on the north-west coast of Tasmania and Emerald in southern Queensland.

During the past few months evaluation teams were despatched to Albury, Armidale, Bathurst, Burnie, Dubbo, Mildura, Tamworth and Wagga to check on likely ticket sales from local travel markets, suitability of airstrips and requisite facilities in air small air terminals.

Six centres in Western Australia and three in the Northern Territory were also checked.

The new planes are expected to generate profits on routes where Virgin Blue’s much larger Boeing 737’s lose money.

While the brand is virtually unknown to Australian travellers, the Brazilian airframe builder does enjoy an enviable reputation with 78 airlines in 45 countries. The manufacturer boasts that everyday 175,000 people fly on various types of Embraer aircraft.

Report by The Mole