The brand promoting media has done a good, and very interesting job in reporting the start of Virgin Australia’s services to Hong Kong from Melbourne (and more) this week.
But some mysteries remain. In theory after changes to the bilateral arrangements between Australia and China last year, Australian carriers can fly whatever they like as often as they like to the PRC, the catch being such matters as slots, workable code-shares, and creating awareness among Chinese consumers, who prefer their own airlines as much as Australians profess an attachment to Qantas. As well as launching into huge markets where no-one knows who you are.
If, as originally stated by Virgin Australia, China is the new gold mountain of the north (they didn’t use those exact words, but they capture the vibe perfectly) then a focus on Hong Kong, which is notoriously protective of its airlines, and wedded it seems to a resistance to things like a Jetstar Hong Kong, does seem a little odd. Why put so much emphasis on the former British colony when all of the PRC beckons?
Virgin Australia, through CEO John Borghetti, and in some reports, minority shareholder Richard Branson, wants an extra 21 slots a week for flights between Australian cities and Hong Kong. That seems exceedingly optimistic a desire given the air services practices of the Special Administrative Region (SAR) that is now Hong Kong.
Not that it isn’t a great idea. But the airport at Hong Kong is chock-a-block until a new runway gets built, and the mindset of the SAR doesn’t seem notably welcoming to the large scale arrival of additional non-SAR capacity it can’t find room for anyhow!
The action between Australia and China is predominantly about serving new non-stop services between our cities and places very few of us have visited. The patronage for these new services by airlines no-one in Australia had heard about until recently is strongly PRC in origin.
With two large PRC equity holders in the HNA group and the less-aviation oriented Nanshan group, exactly how their own fleets will be deployed in participating in Virgin Australia’s interest in China remains unknown. It could prove of huge benefit to Virgin Australia, as well as to the inbound tourism game and increased business ties between both countries. It’s something that the somewhat battle scarred ordinary shareholders in Virgin Australia would no doubt like to know much more about.
Virgin Australia has only 11 widebody jets in its fleet. The six A330-200s are all to be flown to Asia cities, while the five superbly reconfigured and re-equipped 777-300ERs appear fully committed to the US market. Virgin Australia’s current finances strongly suggest that buying or leasing more wide-body jets isn’t a priority.
This has consequences for Virgin Australia in, of all places, Australia. It is to be an entirely single aisle domestic jet operation. But Virgin Australia’s current 737-800s are to be blunt, not bad, but over shorter routes a nil-all draw with Qantas 737-800s. The Qantas A330s in the new business class kit are far more attractive than anything else on offer on domestic routes that support a frequent wide-body service.
Virgin Australia says it has new single aisle domestic business class seats ‘coming’. That’s not good enough. They needed to have ‘arrived’ already. At a guess, the new J class seats might be arranged one on each side of the aisle but inclined quite acutely to the window line to efficiently use space while being able to offer a sleeping configuration similar to those found in Virgin Australia’s 777s, and with less room, in its A330s.
The further question is whether or not there will be sufficient demand, in these meaner times when it comes to corporate travel policies, to justify the investment. That’s a difficult question for all airlines, not just Virgin Australia or Qantas, especially when those seats also take up revenue space that could have been filled by a larger number of economy seats on flights as short as 70 minutes.
These and other questions hang over the future of Virgin Australia. But to return to the better news, it is giving China its best shot after it sorts out Hong Kong, and with very good product and determined on-song partners, what’s not to like about that?