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Jul 6, 2017

Virgin’s Asia era takes off, but some ‘exciting’ questions persist

Virgin pitches for China's new gold mountain, but we'd like to know more

Maybe this Qatar Airways seat is something like the new Virgin domestic J class seat?

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?

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7 comments

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7 thoughts on “Virgin’s Asia era takes off, but some ‘exciting’ questions persist

  1. reeves35

    Whilst direct aisle access is nice, you have to wonder how necessary it is on flights of up to 4-5 hours. Realistically you will probably only get up to go to the loo once on a flight this long. Some US airlines have fitted their 757s and 737s with comfortable premium offerings but retained 4 abreast. A 737 just isn’t wide enough for anything else unless you are prepared to give up a huge amount of real estate from Economy class.

    What would’ve been an ideal product would’ve been the old J product that VA previously had on their A330s. It was comfortable even though angled lie-flat (once again hardly an issue on a 4 or 5 hour flight) and offered great passenger space. What I’m not sure is if they will fit 4 abreast in a 737, though I suspect they’d have fitted in the 6″wider A320.

  2. ghostwhowalksnz

    The disappearance of widebodys on transcontinental routes cant be far away. Once you were getting 6 and 5 per day from Melbourne and Sydney respectively to Perth and that was just Qantas.
    With a name like Virgin in the chinese market, that cant translate too well. maybe keep the red colour and have some thing using “Cherry”-无辜

  3. Zarathrusta

    I think Virgin made a real mistake when one-lining it’s single aisle fleet. The A32xyeo line has far more flexibily across it, and containerised cargo. If ME3 carriers can use them for routes into Europe, they will make an OK J class here.

    1. Creeper

      Likewise I think it’s a odd move shifting Tiger from Airbus to 737 (and hand me downs might I add).

      The A321neo (or LR) is s very attractive option for Tiger flying Australia-Asia and would have been a game changer.

      1. ghostwhowalksnz

        The reason both full service Australian airlines use 737’s is its better range-payload capacity than the A320. The 737-800 being ideal , 2 class seating of 174 for Qantas is better than what you get in an A320, plus it flies further.

        1. Ben Sandilands

          Not true. The Qantas 737-800 purchase according to Peter Gregg and Geoff Dixon and I think James Strong at the time was clinched by the incredibly low price obtained by taking over an order that QF business partner AA didn’t want to fill because of the aftermath of 9/11. Apart from SE coast flights to Denpasar, there were then and are now no routes where the range limits of single aisle jets are tested other than from Wellington on particularly adverse days when runway length and single engine out limitations cut in. Jetstar chose the A320 because it works in seamlessly with the A321, and there are no range issues for them with the NEOs, assuming they don’t continue to favor the 787-8s on routes where demand exceeds slots and so forth. Not that they are likely to get many NEOs before 2020 on recent guidance. In my opinion, Virgin Australia is delusional if it thinks for a second that single aisle jets will be competitive against Qantas A330s, or in a few instances, 787-9s, on Australian transcontinental routes to Perth. It doesn’t matter how good it makes the promised new domestic single aisle business class of it can’t sell it in sufficient numbers, and across peak and off peak scheduling.

          1. ghostwhowalksnz

            Since Qantas was an existing 737 user at the time, no wonder they jumped at the chance to get a bigger fleet required after Ansett collapse.
            As for the range limitations of the A320, I do notice that only Virgin and Qantas offer non stop services from Perth to Brisbane – 4 @ per day ( with a single overnight flight from Tiger on A320). is there limited payload issues that rule Jetstar out ? Its around 4 1/2 hrs flying time, the flight the other way is 5 1/2 hrs, which indicates less than a full cabin on an A320. ( Its less flying time Cairns to Perth, which Jetstar does fly)