- Jun 20, 2002
Virgin Blue is stepping up its push to break into the lucrative Pacific route with the formation this month of a high-level 10-member team to test the airline's chosen business model...
The Age said:Virgin Blue is stepping up its push to break into the lucrative Pacific route with the formation this month of a high-level 10-member team to test the airline's chosen business model.
One issue the team is examining is the possibility of the airline landing somewhere other than the existing major ports for flights from Australia.
Virgin Blue CEO Brett Godfrey told The Age last night the airline had already solicited interest from some airports "outside the traditional mainstream of Los Angeles and San Francisco and we will be talking to others".
Using alternative airports could reduce costs. Communities looking for economic stimulation could offer attractive deals, the benefits of which could be passed on to Virgin Blue customers.
The seriousness of Virgin Blue's efforts is shown by its external recruiting of senior executives to spearhead the Trans-Pacific Project Team.
Rod Nelson, a former CEO of Air Niugini and also of Hazelton Airlines, is leading the group, reporting directly to Mr Godfrey, for whom the Pacific enterprise is a pet project.
Rod Mahoney, an expert in aircraft selection, has come directly from Airbus Industrie, where he headed its representation in the Asia-Pacific region. Gordon McKenzie, formerly with Virgin Atlantic and Virgin America, brings international airline experience to the domestic carrier. Also on the team is Tony Wheelens, a former senior negotiator for the Government on airline agreements, who will be working on the vital issue of access to enough flights to make the route viable for Virgin Blue.
Virgin Blue needs approval from the United States Government to fly at least a daily service to have the critical mass to start up. It would eventually need to fly between 14 and 21 services a week, which would include a service from Melbourne.
Current arrangements for new Australian entrants to the US market would only permit four services a week. The Australian Government has already started talks in Washington to increase Australian access, and Virgin Blue is fairly confident it can get enough flights.
The airline's representatives are preparing to be back in Canberra next month to brief ministers and senior officials on their progress. They tested the water with ministers late last year.
Cabinet would almost certainly be sympathetic to a Virgin Blue bid to fly the route. Earlier this year, the Government rejected Singapore Airlines' application to do so.
With the recent Toll takeover of Patrick Corporation, Virgin Blue will be controlled by Toll. Toll chief Paul Little has said it will take up to 18 months to decide the future of Patrick's 62 per cent holding in the airline.
Mr Godfrey said the ownership change "shouldn't make a difference" to the plans for the Pacific route "provided we could substantiate the final business plan to the full board".
The sale of Virgin Blue to foreign interests would cloud the future of its Pacific aspirations, as the rights to fly the Pacific rest predominantly with Australian and US-owned airlines.
The Virgin Blue Pacific route team is examining models of service, including having single- or two-class flights.
The team's project will take several months. Virgin Blue has previously said it would take two years from February this year before it could be set to fly the route. But it is likely to come under Government pressure to start earlier.