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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