Virgin Blue may establish new 'ultra low cost carrier' to tackle Singapore's Tiger Airways

Singapore
Source: Flightglobal.com
This story is sourced from Flightglobal.com

Australia's Virgin Blue has conceded it has moved away from being a pure low-cost carrier but adds it is now considering establishing an “ultra low-cost carrier”, a move that comes just weeks after Singapore-based low-cost carrier Tiger Airways disclosed it would be establishing a domestic operation in Australia.

A Virgin Blue spokeswoman in Brisbane says the airline’s chief executive, Brett Godfrey, yesterday remarked at its half yearly results briefing that “Virgin Blue has moved off the market being a pure low-cost carrier and we now think it is quite prudent to consider whether or not Virgin Blue should even establish its own low-cost brand, its own ultra low-cost carrier”.

The spokeswoman is quick to stress that “he is not saying we plan to do it” but that “it is something we as a group are considering”.

She says Virgin Blue mainline still has a low-cost base but in more recent times it has focused more on attracting higher-yield traffic, so having a new low-cost carrier would allow the group to better cater to the growth in the low-cost carrier market segment.

Virgin Blue still operates aircraft in all-economy class configurations but in more recent years has, for example, tried to win over wealthier travellers such as businesspeople by offering loyalty programmes, more comfortable airport waiting lounges and extra legroom through the use of exit-row seating.

Godfrey’s remarks come after Tiger Airways disclosed on 9 February that it would be launching a low-cost domestic carrier in Australia in this year’s second half using five Airbus A320s.

Tiger chief executive Tony Davis has claimed there is room in the market for a new low-cost carrier.

Virgin Blue’s spokeswoman downplays suggestions that Godfrey’s remarks are in response to Tiger.

“It is not so much in response [to Tiger] but the airline’s potential competition,” claims the spokeswoman.

The spokeswoman also says that if Virgin Blue were to establish an ultra low-cost carrier it might have Boeing 737-800s in all-economy configuration of 189 seats, as opposed to Virgin Blue’s 737-800 all-economy 180-seat configuration.

She adds that some of Virgin Blue’s 14 Embraer 190s and six Embraer 170s on order might also be assigned to an ultra low-cost carrier because these smaller capacity aircraft might be better suited to serving secondary airports and opening up new routes.

While Virgin Blue considers starting an “ultra low-cost carrier” it is also in talks to firm up an order for as many as 13 Boeing 777-300ERs for a new long-haul carrier it plans to launch in 2008.