Virgin Australia to fly Melbourne-Hong Kong from July

Virgin Australia has chosen Melbourne-Hong Kong as its first route to North Asia, with the inaugural flight set to take off on Wednesday July 5.

The airline said on Tuesday it would operate the route five times a week with Airbus A330-200s as part of a proposed alliance with HNA Group-affiliated carriers.

Flight times show the service will operate as a morning departure from Melbourne on Mondays and Wednesdays, while on Tuesday, Thursday and Saturday Virgin has scheduled an overnight flight arriving in Hong Kong in early morning.

The reciprocal Hong Kong-Melbourne service departs in the early evening for a morning arrival into Melbourne.

Cathay Pacific (three daily flights) and Qantas (daily) are the only two airlines currently offering nonstop flights between Melbourne and Hong Kong.

“Virgin Australia’s entry into Hong Kong and Greater China is a key pillar of our international strategy, allowing us to tap into Australia’s fastest growing and most valuable inbound travel market,” Virgin Australia chief executive John Borghetti said in a statement.

Ticket sales will begin on Wednesday, Virgin said.

The airline’s A330-200s are configured with 20 business class seats with direct aisle access for every passenger and 255 economy class seats.

On Monday, the Australian Competition and Consumer Commission (ACCC) granted interim authorisation to the alliance with HNA Group and its affiliated carriers, paving the way for ticket sales to begin.

The ACCC said it had decided to grant interim authorisation given the tie-up “appears likely to result in some public benefit and limited public detriment”. A final decision was expected in the coming months.

Virgin’s alliance with HNA Group-affiliated carriers would involve codesharing, reciprocal frequent flyer benefits and cooperation on joint-pricing and scheduling of services between Australia and Hong Kong and Australia and mainland China.

There were also other areas of cooperation to achieve “cost synergies through aircraft scale and utilisation benefits as well as benefits from using catering, ground handling, cargo and other operational benefits”.

The application to the ACCC said the alliance would offer travellers more choice and increase competition, noting Qantas and Cathay Pacific had a combined 99 per cent share of passengers and capacity on nonstop services between Australia and Hong Kong in 2015/16.

Virgin also plans to operate between Australia and mainland China, likely to be Beijing. However, no start date has been announced.

The codeshare agreement would cover Virgin Australia, Hong Kong Airlines, Hainan Airlines, Beijing Capital Airlines and Tianjin Airlines’ services between Australia and mainland China and Hong Kong, including services via New Zealand and on routes within HNA Group airlines’ domestic networks, the application said.

Virgin said on Tuesday its Hong Kong service would allow passengers to connect to 13 destinations in mainland China.

Hong Kong Airlines is unable to operate to any of Australia’s four major gateway cities – Brisbane, Melbourne, Perth and Sydney – as there is no more capacity for Hong Kong carriers under the current bilateral air services agreement. Currently, Hong Kong Airlines serves Cairns and the Gold Coast.

Flight Number/Routing
Days of operation
Time of departure
Time of arrival

VA89 MEL-HKG

VA87 MEL-HKG

VA87 MEL-HKG

Tuesday, Thursday, Saturday

Monday

Wednesday

00:35

10:25

09:40

08:15

18:05

17:20

VA86 HKG-MEL

Monday, Tuesday, Wednesday, Thursday, Saturday      

19:50

07:20+1

Australian Aviation

Virgin Australia plans late March kick-off for Hong Kong

Virgin Australia is powering towards the launch of flights to Hong Kong, with tickets expected to go on sale by the end of next month.

This will of course be preceded by the announcement of which Australian city will anchor the flights – will they be Sydney-Hong Kong, Melbourne-Hong Kong or Brisbane-Hong Kong?

Melbourne is said to be on the starting grid for the Airbus A330 flights, which will dovetail into connections from Hong Kong to mainland China on Hong Kong Airlines, which is part-owned by Virgin stakeholder and Chinese aviation colossus HNA Group.

A spokesperson for Virgin Australia confirmed to Australian Business Traveller that pending interim approval by the ACCC, the airline planned to begin promoting the route from late March.

The Hong Kong service will be followed by direct flights to a major city in mainland China, again from an as-yet-unknown Australian port.

While Beijing was previously earmarked for that service, Virgin Australia CEO John Borghetti last week told Australian Business Traveller that other cities were also under consideration.

“It’s complex… slots at Beijing and Shanghai are not easy to get, so it’s a balancing act between where you want to fly and where you can get slots.”

“Fortunately we can get a feed from HNA from almost any city,” he added, indicating that Virgin is looking further afield than the two most obvious candidates.

“It’s a work in progress, (and) just like with Hong Kong we won’t announce anything until it’s secured.”

Qantas and Cathay Pacific all offer daily flights to Hong Kong from Sydney, Melbourne and Brisbane, with Cathay rolling out its latest Airbus A350 to Melbourne and Brisbane.

Regardless of which city plays host to Virgin’s Hong Kong flights, expect to see keen discounting on all fares – not just economy – and potentially the lure of bonus frequent flyer points or status credits as airlines fight for their share of a market that’s set to become a lot more competitive.

 

Australian Business Traveller

Virgin Australia defers Boeing 737 MAX deliveries to 2019

Virgin Australia plans to delay the arrival of the Boeing 737 MAX in its fleet until the end of 2019 and extend leases on its its current 737-800NGs amid subdued market conditions.

The decision to postpone first delivery of Boeing’s next generation narrowbody, announced on Friday, means some $350 million of planned capital expenditure related to its order of 40 737 MAX aircraft has been deferred to beyond the 2018/19 financial year.

Virgin has 40 737 MAX aircraft on order. The airline group had said previously it expected to start receiving MAX aircraft in 2018. However, Virgin’s first 737 MAX is now scheduled to arrive in the “final quarter of the 2019 calendar year”.

“Existing leases on some Boeing 737NG aircraft may be extended in order to support the group’s capacity requirements,” Virgin said in its 2016/17 first half results release on Friday.

Virgin’s initial order for 23 737 MAXs made in July 2012 had the aircraft being delivered from 2019 to 2021. Then in August 2014, Virgin brought forward first delivery to 2018. The airline group then converted orders it held for 17 737-800s into 737 MAX 8 orders, lifting its total order book for the type to 40 frames in August 2015.

Currently, the Virgin Australia group of airlines has 79 737-700/800 aircraft – 75 are flying in Virgin colours while four are in the Tigerair Australia fleet. The Boeing website shows Virgin also has four unfilled 737-800 orders.

In other fleet news, Virgin said the last of its 18 Embraer E190s will leave the fleet by the end of calendar 2017, which was part of cost reduction and fleet simplification efforts.

Separately, Virgin has put a “mid-2017” start date for nonstop flights to Hong Kong as part of a commercial partnership with shareholder HNA.

Virgin announced plans to start services from Australia to Hong Kong and Beijing in May 2016. In its application to Australia’s International Air Services Commission (IASC) seeking the necessary traffic rights to mount flights to North Asia, Virgin had set a June 1 2017 start date for both services.

While nonstop flights from Australia to mainland China were still on the cards, Virgin said it now planned to start those flights “in further stages of the agreement” with HNA.

The proposed alliance between Virgin and HNA, which covers codesharing on Virgin and HNA airlines’ flights between Australia and Hong Kong, Australia and China and the carriers’ domestic networks, reciprocal frequent flyer benefits and cooperation on route planning, sales, distribution and marketing, will require Australian Competition and Consumer Commission approval.

In terms of the first half results, Virgin reported a statutory net profit after tax loss of $36.1 million, slumping back into the red from net profit of $45.7 million in the prior corresponding period.

Underlying profit before tax, which removes one-off items and was regarded as the best indication of financial performance, was $42.3 million, a decline of 48 per cent from $81.5 million in 2015/16 first half.

Revenue dipped 0.9 per cent to $2.63 billion, Virgin said in a regulatory filing to the Australian Securities Exchange.

A slide presentation accompanying the financial results showed Virgin booked $69.8 million in restructuring changes in the 2016/17 first half as part of its “Better Business” program, which aims to reduce costs through fleet simplification and operational efficiencies in catering, maintenance and fuel consumption. Virgin said the program was on track to achieve net free cash flow savings of $300 million by the end of 2018/19.

Virgin chief executive John Borghetti said there was “continued subdued trading conditions in the domestic market”.

“Going forward, the group will stay focused on strengthening our financial position by further optimising the balance sheet and building a lower cost base,” Borghetti said in a statement.

“Due to uncertainty in external market conditions, we are unable to provide further guidance at this time.”

Australian Aviation

Virgin Australia keeping powder dry on Hong Kong details

Virgin Australia plans to lodge its application for a commercial alliance with Chinese shareholder HNA in the coming days with a view to starting nonstop flights to Hong Kong in “mid-2017”.

While the airline first raised the prospect of flying to Hong Kong as early as May 2016, there has been little detail about the nature of its proposed operations to North Asia beyond the fact the services would be mounted in partnership with HNA.

On Friday, the airline put a “mid-2017” start date for nonstop flights to Hong Kong from a yet-to-be-announced Australian city, and flagged a series of codeshares on HNA carriers’ flights between Australia and Hong Kong, Australia and China, as well as on the carriers’ domestic networks.

The tie-up would also involve reciprocal frequent flyer benefits and cooperation on route planning, sales, distribution and marketing, Virgin said.

The airline would seek interim approval from the Australian Competition and Consumer Commission (ACCC) as a first step, which would allow ticket sales to begin, ahead of a longer-term authorisation.

Virgin Australia chief executive John Borghetti said the application to the ACCC would highlight the domination of the Australia-Hong Kong market by two carriers – Cathay Pacific and his former employer Qantas.

And he estimated that the process to secure interim approval would take about four weeks.

“We are hopeful it will be very quick,” Borghetti told reporters during the company’s first half results presentation on Friday.

“The reason for that is that Hong Kong is really just a route that is covered by two carriers. Cathay and Qantas have got it by the throat and we intend to break that duopoly and bring real competition on the route.”

Virgin said it planned to serve Hong Kong with Airbus A330 aircraft. Borghetti said the airline had secured all the necessary takeoff and landing slots for its flights.

However, the airline has not confirmed the aircraft would come from its existing fleet of six A330-200s, which are predominantly used on trans-continental services from Perth to Australia’s east coast capitals.

Also, the A330-200 will begin flying Perth-Abu Dhabi three times a week from June 9.

Borghetti described the question of aircraft deployment for Hong Kong as “quite a complex tapestry” and declined to comment further, citing competitive reasons.

Any removal of A330-200s from the Perth route would represent something of a downgrade in the passenger experience for business class travellers, given the Airbus widebody features recently installed B/E Aerospace Super Diamond reverse herringbone seats with direct aisle access compared with standard business recliners on the Boeing 737-800.

Borghetti acknowledged this was a consideration when mulling over fleet options for the new Hong Kong service and the impact on flights between Perth and Australia’s east coast.

“Don’t assume that if we take an A330 from that route we haven’t taken into account what product will be available on the 737,” the Virgin chief executive said.

While Virgin’s announcement of May 2016 had also mentioned daily nonstop flights to Beijing would begin from June 1 – indeed the airline has secured the necessary traffic rights from Australia’s International Air Services Commission (IASC) – on Friday Virgin said it now planned to start those flights “in further stages of the agreement”.

And Borghetti raised the possibility that Beijing may not be Virgin’s first destination in China.

“Slots at Beijing and Shanghai and a lot of the what I would call Tier 1 Chinese cities are not easy to get and so it’s a balancing act between where you want to fly, where you can get the slots, how do you get the feed,” Borghetti said.

HNA Group owns or has partial stakes in 19 carriers, including Virgin.

Of those, Beijing Capital Airlines, Hainan Airlines and Hong Kong Airlines currently serve Australia with their own aircraft. A fourth, Tianjin Airlines, was scheduled to begin nonstop flights between Melbourne and Chongqing in September 2017.

Currently, Virgin places its VA airline code on Singapore Airlines (SIA) and SilkAir services from Australia to Hong Kong and numerous points in China via Singapore. SIA/SilkAir and Virgin have an extensive alliance and frequent flyer agreement that was extended for a further five years in 2016. SIA is also one of Virgin’s major shareholders.

Borghetti said there would be no impact from the proposed alliance with HNA on Virgin’s arrangements with Singapore Airlines and SilkAir.

 

Australian Aviation

Tigerair Australia cancels more Bali services, with Virgin Australia to pick up stranded passengers

Is Tigerair weighing down Virgin's results? (Seth Jaworski)

Virgin Australia will operate two flights from Bali to Australia on Thursday in an effort to return passengers stranded by the sudden cancellation of Tigerair Australia services by Indonesian authorities.

On Wednesday, Tigerair Australia was forced to suspend all its services between Australia and Bali due to what the airline said were “new administrative requirements” from Indonesian authorities.

In addition to the four flights cancelled on Wednesday, Tigerair said in a statement on its website a further five services – Thursday’s TT1 MEL-DPS, TT24 DPS-PER, TT25 PER-DPS, TT16 DPS-ADL, TT19 PER-DPS and Friday’s TT2 DPS-MEL – have also been cancelled.

“Tigerair Australia is still working with the Indonesian Government to resume flights to and from Bali as soon as possible,” it said.

“Virgin Australia plans to operate two flights from Bali tomorrow (Thursday) in order to bring as many affected customers back to Australia as possible. The passengers that will be accommodated on these flights will be contacted directly.

“Customers currently in Australia who are affected by the cancellation of tomorrow’s Tigerair services will be offered a full refund.

“Tigerair Australia sincerely apologises for the inconvenience caused by these cancellations.”

The airline, which is owned by Virgin Australia, advised passengers holding tickets for travel between Bali and Australia to monitor the Tigerair website for the latest updates.

Indonesian authorities say Tigerair was in breach of its licence conditions, according to media reports in Indonesia.

Indonesia’s Directorate General of Civil Aviation (DGCA) said Tigerair did not comply with its charter flight permit for flights to Bali.

The DGCA said Tigerair was only able to sell tickets for passengers originating in Australia and not Indonesia under its license.

Indonesia’s Directorate General of Civil Aviation’s head of cooperation and public relations Soebagio Agoes was quoted as saying all foreign airlines operating in Indonesia must comply with the regulations in their flight permits.

Media reports noted Tigerair’s approvals to operate flights from Adelaide, Melbourne and Perth to Bali were for the period October 30 2016 to March 25 2017, meaning the move to suspend the airline comes with a little over two months remaining on its licence.

Tigerair began flights to Bali in March 2016, taking over the Adelaide, Melbourne and Perth to Bali routes from parent Virgin.

The low-cost carrier is using three Virgin Boeing 737-800s that have been repainted in Tigerair livery to operate its first international services. The aircraft, which remain on Virgin’s air operator’s certificate (AOC) and are flown by Virgin pilots alongside Tigerair cabin crew, feature 180 seats in an all-economy configuration with five extra-legroom rows available for purchase as an optional extra.

Tigerair was currently in the midst of applying to Australia’s Civil Aviation Safety Authority (CASA) for two changes to its AOC. The first was for the addition of the 737 onto its AOC as it transitions from Airbus A320s to 737-800s, with pilot training for the 737 already underway.

The second is to secure approval to operate international flights under its own AOC, rather than the current arrangement for its services to Bali.

Jetstar said on its website it would provide special discounted fares to affected Tigerair customers stranded in Bali on its services to Adelaide, Perth and Melbourne.

However, it cautioned that because it was currently the peak school holiday period there were “limited seats available”.

“Affected Tigerair customers should contact Jetstar customer service to make a booking. Customers will need to provide their Tigerair itinerary when checking-in to their flights at Denpasar Airport,” Jetstar said.

Australian Aviation

Virgin Group changes representative on Virgin Australia board

VIRGIN AUSTRALIA AIRCRAFT SYD APR15 RF 5K5A1324

UK-based Virgin Group has replaced its representative on the Virgin Australia board.

Virgin Australia said in a statement on Tuesday John Patrick (JP) Moorhead has stepped down from the board, effective immediately.

He has been replaced by Warwick Negus as Virgin Group’s nominated representative.

Negus is currently a board member of Australian Securities Exchange-listed companies Washington H Soul Pattinson and Bank of Queensland. Previously, he was the chief executive of fund manager Colonial First State Global Asset Management and has also worked at Goldman Sachs.

Moorhead was chief financial officer at Virgin Group until September, when he resigned to become chief operating officer at investment company Eight Roads.

He has served a little over a year on the Virgin Australia board, having been appointed as a director on September 22 2015.

Virgin Group holds about eight per cent of Virgin Australia shares and is one of the airline’s major shareholders alongside Etihad Airways, Singapore Airlines, HNA Group and Nanshan.

 

Australian Aviation

Competition regulator issues draft determination rejecting proposed Virgin Australia-Alliance Airlines charter partnership

FOKKER 50 ALLIANCE HBA JUL13 RF IMG_9934 crop

Australia’s competition regulator has knocked back Virgin Australia/Virgin Australia Regional Airlines (VARA) and Alliance Airlines’ proposal to work together in the charter market on joint tendering for corporate fly-in/fly-out (FIFO) contracts, arguing the tie-up would reduce the number of players in the market.

In a draft determination published on Monday, the Australian Competition and Consumer Commission (ACCC) said the proposed charter alliance would, if approved, have left just Qantas, Cobham Aviation Services and Virgin/Alliance Airlines as major FIFO providers in Western Australia.

Further, the ACCC said this would mean just two suppliers – Qantas and Virgin/Alliance – would be competing for the majority of FIFO services.

“The charter alliance will largely eliminate competition between VARA and Alliance Airlines in providing FIFO services to corporate customers in Western Australia,” ACCC commissioner Sarah Court said in a statement.

“The ACCC considers that the likely public benefits will not outweigh the significant public detriment likely to result from VARA and Alliance Airlines coordinating their FIFO services in Western Australia.

“Therefore, the ACCC’s preliminary view is that this alliance is likely to materially reduce competition for the supply of FIFO services in Western Australia.”

Virgin and Alliance said they would provide the ACCC with additional information in an effort to convince the regulator of the benefits of their proposed alliance.

Virgin said in a statement: “We believe the proposed alliance will support competition and create substantial public benefits. We will review the ACCC’s concerns and work with them to provide additional information as necessary.”

Separately, Alliance told the Australian Securities Exchange in a regulatory filing: “Alliance and the Virgin Australia Group will review the ACCC’s concerns and provide additional support for the alliance which we believe will support competition and create substantial public benefits.”

Further, Alliance said the ACCC ruling did not have any impact on the pair’s existing areas of business, including Alliance operating a number of routes on behalf of Virgin under a wet lease arrangement.

In their application to the ACCC lodged in August, Virgin and Alliance said their proposed charter alliance would allow them to compete more effectively against the “one-stop shop” offering from Qantas.

By combining their respective strengths, VARA and Alliance would better match what Qantas was currently able to offer, including through check-in on multi-leg itineraries featuring both RPT and charter flights.

“Currently, Qantas is in a superior (and in part unique) position to provide a full suite of corporate-related services which include charter services, RPT (domestic and international) services and frequent flyer and lounge benefits, to corporate customers on the east coast and central Australia,” the application said.

“Corporate customers have given both of the applicants feedback during tender processes that Qantas is the only provider of the ‘one-stop shop’ on a national basis.

“In a situation where some customers are looking to package their national air services requirements in order to get a more competitive ‘global’ price offer from Qantas, the charter alliance will enable the applicants to match that integrated product offering and compete head to head with Qantas.

“This enhanced competitive position will increase overall competition for corporate charter customers, and particularly competition against Qantas, which is a substantial public benefit for Australian corporate customers.

“Corporate customers, particularly companies with a large FIFO workforce, view these ancillary benefits as highly desirable because the provision of a comprehensive frequent flyer program is a key employee benefit that can be used to attract a higher skilled workforce in a market where there is a shortage of suitable workers.”

The application noted VARA operated a fleet of 14 Fokker 100s and two Airbus A320s based at Perth Airport, while Alliance operated five Fokker 50s, eight Fokker 70s and 15 Fokker 100s from operating bases at Brisbane, Townsville, Cairns, Adelaide, Perth, Melbourne and Auckland.

Based on their respective fleets, Virgin could not offer a charter solution involving aircraft fewer than 100 seats, while Alliance was similarly restricted for charter clients requiring an aircraft with more than 100 seats.

“The charter alliance is a commercial response to the limitations of each of VARA and Alliance Airlines’ current charter and FIFO service capacity,” the application said.

“Through the charter alliance, the applicants will be able to offer customers a more compelling, competitively priced product than each applicant could provide separately.”

The application said the charter alliance would exclude government customers, charter brokers and ad-hoc charter customers.

The ACCC acknowledged there would be some public benefits from the alliance through operational efficiencies, the increased flexibility and optimisation of aircraft utilisation through combining their fleets, and combining VARA’s (Virgin Australia’s) national regular passenger network with Alliance Airlines national charter network.

However, it was not persuaded that these benefits would ultimately be a gain for customers.

“It is unlikely that the benefit of these efficiencies will be substantially passed through to corporate customers in Western Australia. The ACCC has therefore placed less weight on these potential public benefits,” the ACCC said.

Interested parties have until January 27 2017 to respond to the draft determination. The ACCC said it was seeking submissions “particularly from FIFO customers”.

 

Australian Aviation

Virgin Australia and Air New Zealand plan night-time flights from Queenstown to Brisbane, Sydney

An aerial view of the expanded international terminal at Queenstown Airport. (Queenstown Airport Corporation)

Virgin Australia is the latest airline to undertake evening services to and from Queenstown.

The airline said it planned to operate a night-time departure from Queenstown to Brisbane on Fridays and Sundays during the winter ski season between June and September 2017.

At the same time, Virgin’s trans-Tasman alliance partner Air New Zealand has scheduled night-time Queenstown-Sydney flights for Saturdays and Sundays during the month of July.

Virgin Australia airlines group executive John Thomas said the new flights would enable travellers to enjoy a full day of skiing before travelling home.

“As the popularity of Queenstown grows, particularly during the ski season, we are excited to be offering even more flexible scheduling options for our guests with these new night-time Ski Shuttle services,” Thomas said in a statement on Tuesday.

The two carriers said their combined schedule would feature 38 flights a week between Australia and Queenstown during the 2017 ski season.

In May 2014, New Zealand’s Civil Aviation Authority (CAA) granted provisional approval for Queenstown Airport to extend its operating hours into night flight operations, subject to the airport meeting a number of conditions such as runway improvements and the installation of a comprehensive aeronautical lighting package.

Other requirements from the NZ CAA and Australia’s Civil Aviation Safety Authority (CASA) included a customised crew selection and training package; employing the full capability of the existing Required Navigation Performance (RNP) technology; and changes to on-board flight procedures to reduce pilot workload on final approach.

Construction work began in November 2015 and was completed by April 2016.

It was hoped the addition of evening flights at Queenstown Airport would allow the airport to better cater for the rising popularity of the city as a tourist destination, which had placed the airport under some pressure at peak periods, particularly during the winter months.

The airport has also expanded its terminal facilities to deal with the increased demand.

The first evening flights at Queenstown began earlier in 2016, when Air New Zealand started night-time flying on the Auckland-Queenstown route and Jetstar scheduled some Melbourne-Queenstown services.

Air New Zealand chief revenue officer Cam Wallace said: “Air New Zealand introduced the first domestic evening services between Auckland and Queenstown in May this year, and is pleased to be part of an alliance initiative to now offer customers trans-Tasman night flights.”

 

Australian Aviation

Virgin Australia top on-time honours for October

It was a tight bunch at the top of the punctuality tables in October, with Virgin Australia and its regional arm taking the honours for on-time performance.

Figures from the Bureau of Infrastructure, Transport and Regional Economics (BITRE) showed Virgin Australia regional had the highest percentage of on-time arrivals in October with 85.2 per cent of its services arriving within 15 minutes of schedule. The figure was unchanged from the previous month.

Regional carriers finished one-two in terms of on-time arrivals, with QantasLink in second place at 84.5 per cent. Virgin was third at 84.3 per cent.

Meanwhile, Virgin led the pack for on-time departures at 87.3 per cent, up 0.3 percentage points from September. Regional Express (Rex) was a close second at 86.9 per cent, followed by Virgin Australia Regional at 85.7 per cent

The battle for passengers has led to a strong emphasis on punctuality for airlines in an effort to attract and retain customers, particularly those in the lucrative corporate and government travel sector.

Among the low-cost carriers, Tigerair Australia again finished ahead of rival Jetstar in the punctuality stakes.

Tigerair achieved an on-time arrivals rate of 78.9 per cent in October, down 3.7 per cent from September, while its on-time departures was 3.2 percentage points lower in the month at 81.5 per cent.

Jetstar had 72.4 per cent of its flights arrive on time, while more than three in 10 of its flights left the game more than 15 minutes later than the scheduled departure.

Tigerair chief executive Rob Sharp said recently improving on-time performance has been an area the Virgin Australia-owned carrier had invested heavily in.

“We’ve put processes in place that are designed to be dependable, replicable. We’ve also enhanced infrastructure access – infrastructure has been a key element to turning the business around on the operational side,” Sharp told delegates at the CAPA – Centre for Aviation Australia Pacific Aviation Summit in Brisbane on August 4.

“Partnering with best-of-breed engineering and also investing in a number of customer innovations which have also improved on-time performance.”

The monthly BITRE report also noted Rex had the lowest number of cancellations in the month at 0.5 per cent, followed by Tigerair at 1.1 per cent.

At the other end of the scale, QantasLink (2.8 per cent) and Virgin Australia Regional (2.4 per cent) had the highest number of cancellations.

The figures showed Ayers Rock Airport had the highest percentage of on-time arrivals at 95.1 per cent in October, while Moranbah Airport topped the list for on-time departures at 94 per cent. There were no capital city airports in the top 10 for either on-time arrivals or departures.

On-time arrivals for October (figure in brackets indicates percentage point change from previous month)
Virgin Australia Regional 85.2% (0)
QantasLink 84.5% (+1.2)
Virgin 84.3% (-0.8)
Rex 84.0% (+0.7)
Qantas 83.2% (-3.8)
Tigerair 78.9% (-3.7)
Jetstar 72.4% (-4.4)

Virgin network 84.4% (-0.7)
Qantas network 83.9% (-1.1)

On-time departures for October (figure in brackets indicates percentage point change from previous month)
Virgin 87.3% (+0.3)
Rex 86.9% (+0.7)
Virgin Australia Regional 85.7% (-2.7)
QantasLink 85.6% (+0.8)
Qantas 84.6% (-3.3)
Tigerair 81.5% (-3.2)
Jetstar 69.5% (-4.9)

Virgin network 87.2% (+0.1)
Qantas network 85.1% (-1.2)

(Source: BITRE)

Australian Aviation

Virgin Australia tells shareholders at AGM market conditions challenging

Virgin Australia chief executive John Borghetti says the airline group is making good progress in efforts to cut costs and position the business for sustainable growth and profitability amid challenging market conditions.

Borghetti told shareholders at the company’s annual general meeting in Brisbane on Wednesday there had been little change in market conditions since Virgin reported a statutory loss after tax of $34.6 million for the three months to September 30 2016.

“As evidenced by our recent trading update for the first quarter of FY2017, industry trading conditions continue to be challenging,” Borghetti said in prepared remarks.

“In this environment, we are actively managing capacity in our domestic and international network, with total sectors flown in the first quarter of FY2017 defining 2.3 per cent on the prior corresponding period.

“We will continue to look at ways of growing our revenue in smart, sustainable ways.”

As part of efforts to improve its balance sheet and reduce costs, Virgin is withdrawing all 18 Embraer E190 jets and between four and six ATR 72 turboprops over the next three years.

The airline group’s low-cost unit Tigerair Australia will also transition from an all-Airbus A320 fleet to the Boeing 737 during that time.

Moreover, the company was targeting improving operating efficiencies in crew and ground operations, as well as in maintenance, engineering, procurement and its supply chain in what it has labelled its Better Business program.

Borghetti told shareholders Virgin has sold four Embraers E190, with the sale of a fifth aircraft due to be completed by the end of November.

Further, the request for proposal process for the ATRs and the remainder of the E190 fleet was “well underway”.

“On operating efficiencies, we have made significant progress in organisational rightsizing from the top down,” Borghetti said.

“For example we have created a single point of accountability for each of our operating business segments and reduced management positions.”

The Better Business program was targeting $300 million in net free cash flow savings per year by the end of 2018/19.

Virgin chairman Elizabeth Bryan said the airline group would be “tenacious in implementing the Better Business program”.

“In doing so, we will become more resilient, which will put us in good stead amidst continued uncertainty in both the domestic and global aviation environments,” Bryan told shareholders in prepared remarks.

“We are an industry challenger to a much larger and iconic Australian institution; always a precarious journey.

“And although we have weathered the last three years when we had to fight for our right to exist, this has of course taken its toll and we are now in the process of strengthening the company and improving our financial foundation.”

Shareholders voted to approve the appointment of new directors from Virgin’s two new Chinese shareholders – Nang Qi from HNA and Dr Chien-tsung Lu from Nanshan.

“I look forward to working closely with all of our new directors over the coming year and I believe they will each bring enormous value to the board,” Bryan said.

“It is important that board remain independent and are refreshed periodically in line with the principles of good corporate governance.

“Going forward, you will continue to see evolution in the board’s membership to support independence, good governance and the future of the Virgin Australia group.”

Bryan welcomed its two new Chinese shareholders and thanked “longstanding major shareholders” UK-based Virgin Group, Singapore Airlines and Etihad Airways for their support in the 2016/17 equity raising, as well as all other shareholders that participated in the capital raising.

The chairman also had a word of reassurance for the company’s smaller shareholders.

“While you are relatively small in number compared to other listed companies, I want to reaffirm you are top of mind in the board’s work and decision-making process,” Bryan said.

Also, Singapore Airlines’ nominee Marvin Tan and Virgin Group’s nominee David Baxby, as well as independent non-executive director Samantha Moystyn, were re-elected to the board.

Separately, Virgin has appointed Ken Dean, who currently sits on the Energy Australia and BlueScope Steel board, as a new independent, non-executive director.

 

Australia Aviation