When Australian low-cost carrier Virgin Blue announced its plans to withdraw from New Zealand service, travel industry experts predicted that the move was aimed at cutting costs. But the airline has reported a steady profit throughout 2010, cutting down on conjecture that it was failing to hit revenue targets and fuelling industry discussion that it may expand further into other markets.
Given the airline’s recent partnership with UAE-based Etihad Airways, it appears the speculators were right. Virgin Blue plans to expand its travel fleet over the next twelve months to compete in markets formerly dominated by Australian national carrier Qantas. The airline plans to bring new aircraft into operation by the end of the year, opening routes throughout Asia and North America.
Virgin Blue’s estimated profit for 2010 current sits at around AUD $20 million – a significant boost from its massive losses throughout 2009. The company was rumoured to be facing bankruptcy after losses of almost $160 million were publicly reported just one year ago. With its profits now secure and usage up, the company aims to take Australia’s lucrative business travel market from Qantas.
Chief Executive John Borghetti aims to reposition Virgin Blue as Australia’s go-to airline, pinching dominance from Qantas Airways. The large airline has held Australia’s top domestic travel spot and its top international booking position over the last decade, with low-cost subsidiary JetStar gaining control of the country’s lucrative low-cost domestic routes.
Despite the economic downturn, Australia’s predominantly city-based population has booked flights at a fairly consistent rate. While Virgin Blue remains popular with leisure travellers and holidayers, its repositioning as a leading business airline is unlikely to affect the company’s brand. For tourists within Australia, it also represents an opportunity for increased fare competition internationally.
