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alliances

Feb 17, 2017

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A Hong Kong Express A320, part of the alliance deal?

While there are no earth shattering new developments in Virgin Australia’s previously announced intention to fly to Hong Kong and China in its own right it today shed a little more light on the details.

In a statement VAH Holdings said:

Virgin Australia today announced details of its alliance agreement with HNA Aviation, Hong Kong Airlines and HK Express, with the airlines submitting an application for authorisation of the proposed alliance to the Australian Competition and Consumer Commission.

Subject to authorisation, the airlines plan to:

·         Introduce new direct services between Australia and the Hong Kong Special Administrative Region of the People’s Republic of China (Hong Kong), as well as Australia and The People’s Republic of China (mainland China) operated by Virgin Australia;

·         Codeshare on each other’s flights between Australia and Hong Kong, between Australia and mainland China and on each other’s domestic networks; and

·         Co-operate in relation to route planning, sales, distribution and marketing, frequent flyer programs, lounge access and other activities.

As part of the first stage of the alliance, Virgin Australia plans to introduce flights between Australia and Hong Kong in mid-2017. The airlines are seeking interim authorisation of the proposed alliance to enable the introduction of these services as well as the commencement of codeshare arrangements.

Virgin Australia Group CEO John Borghetti said: “This new alliance will be a game changer for travel between Australia and China, providing significantly more competition and choice for travellers.

“The alliance will accelerate and support our access to the Chinese market, which is Australia’s fastest growing and most valuable inbound travel market.

“HNA Aviation fly nearly 100 million passengers each year and we look forward to working collaboratively with them to drive inbound visitation to Australia, resulting in significant benefits for the Australian tourism industry and broader economy.

Virgin Australia said the flights from the unspecified Australian city to Hong Kong would be flown by its A330-200s.

There is no specific reference in the announcement to anything being flown to Australia from Hong Kong or China by the other parties to the agreement.

There may be significance in the reference to Hong Kong Express which is the low cost brand in the new alliance, in that there are no non-stop flights between Australian cities and Hong Kong by a low cost carrier.

VAH Holdings also announced subdued half year financial results already reported earlier this year when it filed second quarter earnings. Underlying profit before tax fell by $39.2 million to $42.3 million in the half year to December 31, and the statutory loss after tax for the period was $21.5 million.

Domestic sectors flown by Virgin Australia were cut by 4.7 percent in the half year compared to the same period a year earlier.

All of Virgin Australia’s popular and passenger friendly E-190 jets will have left the airline by the end of this year, and first delivery of an order for 40 Beoing 737 MAX jets has been put off to the last quarter of calendar year 2o19. The more than $350 million capital expenditure program for MAX acquisitions has been deferred to beyond FY19.

The statement doesn’t refer to the MAX model. Previously Virgin Australia has spoken about the 737 MAX 8 model, similar in size to its current 737-800s.

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2 comments

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2 thoughts on “Virgin Australia says more about Hong Kong, China flights

  1. JW (aka James Wilson)

    Regarding flights from Hong Kong to Australia by the ‘other parties to the agreement’, it’s my understanding that all of the available capacity into the four Australian ‘gateway’ cities (Sydney, Melbourne, Brisbane & Perth) by Hong Kong-designated airlines has already been taken by Cathay Pacific. There is no additional capacity available into those cities until such time as the Air Services Agreement between Australia and Hong Kong is renegotiated. Until that happens, other Hong Kong-designated airlines can only operate into smaller ‘regional’ ports such as Adelaide, Canberra and Cairns.

  2. Ben Sandilands

    That was my understanding too, but I was unable to hear all of the media conference. There are so many unanswered questions, but clearly the answers will be driven by HNA, and if China is the growth engine on these routes, then I would have thought Virgin would have its eye on the supposedly recently totally opened skies between the PRC and Australia for non-stop flights, since Qantas already has non-stops to Beijing and Shanghai.

    I just hope the interim approvals for the service being sought aren’t handled by the same talent that did the interim deal to Denpasar for Tiger.

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