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Wednesday, September 1, 2010

Virgin Blue Partners with Etihad Airways

In what can be termed as a watershed move, Virgin Blue which is Australia's second largest airline announced a the tie-up between its international full service arm V Australia with Etihad, the flag carrier of United Arab Emirates. The decision has clearly come to counter the competition with Australia's flag carrier Qantas. Virgin Blue is on a revamping spree and this move has been made to enhance the international penetration. As per the sources, the partnership with Etihad is scheduled to be submitted to the Australian Competition and Consumer Commission (ACCC) in due course of time.

Virgin Blue Partners with Etihad Airways

The deal will enable the two V Australia and Etihad to offer a joint route network of more than 100 destinations besides making V Australia the first Aussie airline to operate to the Middle East since almost two decades. Initially, every week, there will be 27 flights between Australia and Abu Dhabi. This means, passengers will get the benefit of joining Etihad's onward flights booked on a single V Australia ticket. Presently, the Etihad network is spread over 65 long and short haul destinations across Africa, Asia, Australia, Europe, Middle East, and North America.

Etihad customers will be able to use all the services of Virgin Blue. The deal has opened up 45 destinations for the Etihad customers spanning Australia, New Zealand and the Pacific Islands, as well as destinations in South Africa and Los Angeles in the US.

A code share on all services from Abu Dhabi is part of the Virgin Blue's partnership with Etihad, while 'EY' code of Etihad would be present on all Pacific Blue, V Australia, and Virgin Blue flights. In addition to codeshare agreement, V Australia would operate three flights every week from Sydney to Abu Dhabi with effect from February 2011 and three flights every week from Brisbane to Abu Dhabi starting February 2012. Needless to say, the alliance with Etihad means redefinition of operations for V Australia and a vast global network.

Sources quoted Mr James Hogan, the CEO of Etihad as saying that the partnership with V Australia and Virgin Blue would become a major relationship like the existing ones with American Airlines and ANA.

The partnership between the two airlines will have the many services of both the airlines integrated. These include frequent flyer programs namely Etihad guest and Velocity as well as ground services such as lounge access etc. Sources indicate that the members of the loyalty programs will be able to earn and redeem miles on the services of both airlines with effect from October 1.

Experts believe this to be a hugely symbiotic relationship which is all set to boost the competition providing travellers with an enhanced choice and mutually benefiting both Etihad and Virgin. The Virgin Blue Group gets to access the network that includes Asia, Africa, Europe, the Middle East, and the UK while Etihad will get access to Australia and pacific routes which is a critically important market for the airline.

Interestingly, nearly a week back Virgin Blue had announced that it would increase its services toJohannesburg and Phuket. However, in order to serve the new connections to Abu Dhabi fromBrisbane and Sydney, the airline is going to exit these routes from February 2011. Instead, there would be an increase in the number of Pacific Blue services to Phuket. From 17th September, 2010 weekly flights from Perth to Phuket would be raised from 2 to 3 as indicated by the sources.

Mr John Borghetti, the CEO of Virgin Blue was quoted as saying that the poor performance in these routes was the reason behind this decision. Mr Borghetti further went on to say that possibilities of making any profits on these routes in the near future were pretty remote. Virgin Blue is a small player in the African route and the Phuket route also proves sub-optimal for its Boeing 777-300ER. Last week, Virgin also ordered the axing of the Sydney-Nadi services of V Australia.

It is reported that Virgin Blue conducted the second stage of its network review. The findings of this review necessitated an overhaul of the routes of V Australia. The review also pointed out the requirement of introducing the larger A330-200 aircraft on many routes from Perth to the East Coast. Virgin Blue is in a better position to serve Abu Dhabi and Los Angeles. The airline is intent upon following a two key hub strategy with Abu Dhabi and Los Angeles as its hubs. Virgin Blue also anticipates feeding passengers onto the Etihad and Delta networks from Abu Dhabi and Los Angeles.

Besides the agreement with Etihad, Virgin Blue is expected to get the results of the agreement with Delta by September 2010. It includes code sharing as well as route planning on the Trans-pacific route. In addition, the airline is awaiting the result of its code share and planning deal with Air New Zealand.

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