Virgin Australia goes from Space+ to Economy X

Virgin Australia has launched a new Economy X product across its fleet. (Jordan Chong)

Virgin Australia has launched a new Economy X product that replaces its previous Space+ offering and gives passengers what group executive for airlines John Thomas describes as “speed on the ground and space in the air”.

Economy X, which offers extra legroom seats that come with extra perks such as priority boarding, priority screening and dedicated overhead locker space, is being progressively rolled out across Virgin Australia’s domestic and international fleet.

Thomas said more than half of Virgin’s 75 737-800s have been reconfigured with the new Economy X branded seats, which feature a red stripe on the headrest with “Economy X” in white lettering.

The majority of the fleet was expected to be fitted with Economy X by the end of May.

On the Boeing narrowbody, the seats are pitched at 34 inches compared with 30 inches on Virgin’s standard economy seats.

The seats will be available free of charge for platinum members of Virgin’s Velocity frequent flyer program on domestic and short-haul international services.

For everyone else, the seats will be available as an add-on to their purchased fare, starting at $29 for a Sydney-Melbourne flight and rising to $149 for a long-haul Sydney-Los Angeles flight.

The pricing represents an increase from prices of $10-$50 for Virgin’s previous Economy Space+ product. There will also be an increase in the number of seats available as Economy X compared with Economy Space+, which mainly featured the exit rows in the cabin.

Thomas said Economy X was about giving passengers more ways to choose how they wanted to fly.

“What we found was they want speed on the ground and space in the air and that is basically what we give you with Economy X,” Thomas told journalists in Sydney on Thursday.

“We believe that it will revolutionise the domestic travel experience and give our customers that level of choice that’s never been seen in the Australian marketplace in the past.”

Figures from Virgin showed about 20 per cent of economy seats on its 737-800s, 737-700s and 777-300ERs have been rebranded to Economy X, while the percentage was in the single digits for the rest of the fleet. (See table below.)

On Virgin’s long-haul flights, those seated in Economy X will also receive a guaranteed first meal choice and noise cancelling headphones in addition to priority checkin and priority boarding.

Thomas said giving good customer experience “flows directly to be bottom line”.

“The more that you give customers choice, the more that you actually give them control of their experience, the better experience it is for them,” Thomas said.

“And interestingly enough, the better you can make their experience, the more financially profitable you can be.”

Economy X will be offered for sale from Friday March 31 for flights from May 21 2017.

Aircraft
Economy X seats
Economy X rows 
Percentage of  all economy

Boeing 737-800

30

Rows 3-5, 13, 14

 18%

Boeing 737-700

24

Rows 3-5, 10

 20%

Boeng 777-300ER

57

Rows 20-25, 26, 39

 21%

Airbus A330-200

8

Row 28

 3%

Embraer E190

4

Row 12

 4%

ATR 72-500/600

4

Row 1

 6%

Fokker 100

5

Row 12

 5%

Fokker 70

5

Row 11

 6%

Australian Aviation

Virgin Australia to begin inflight internet wifi trial in April

Virgin Australia will begin a trial of in-flight internet wifi from mid-April 2017. (Jordan Chong)

Virgin Australia group executive for airlines John Thomas sitting on a Boeing 737-800 economy X seat. (Jordan Chong)

 

Virgin Australia plans to commence a three-month inflight internet wifi trial on board a Boeing 737-800 from mid-April after naming Gogo and Optus as its technology partners for the service.

The airline plans to utilise the 2Ku technology from Optus for domestic and New Zealand flights, with Intelsat and SES for its other international flights, Virgin said on Thursday.

The aircraft, VH-YIG, has been fitted with the necessary hardware and some internal testing is being undertaken ahead of the service being opened up to the public.

Virgin has signed up Netflix, Stan and Pandora for streaming content for its wifi service.

While internet wifi and streaming content from its content partners will be free for passengers during the trial, the airline said it would “finalise its business model after considering customer feedback and the results of the testing period”.

“That’s actually part of the feedback that we want to get through the process,” Virgin Australia group executive for airlines John Thomas told reporters in Sydney on Thursday.

“I would imagine that what we will see is there will be something if you want to stream videos, there will be something if you just want to use email, there will be something if you want to do texting.”

“It’s about giving people choice.”

Thomas said there was also consideration of passengers getting internet wifi access for free based on the cabin they were sitting in or their frequent flyer status.

Virgin first announced plans to equip its fleet of Boeing 737-800s, Airbus A330-200s and Boeing 777-300ER fleet with inflight internet wifi in July 2016.

Since that first announcement, Thomas said the airline has been evaluating the potential suppliers of the technology in terms of the proven technology and highest level of reliability.

“Gogo has that track record,” Thomas said, noting Gogo had about 150 737s offering internet wifi with its product.

“If you look at the experience in the US and for all of the carriers around the world that do have connectivity, speed really isn’t the issue, the issue here is reliability.”

“People get very upset if the product isn’t reliable.”

The full rollout of the hardware across the fleet would take about 12 months, Thomas said.

Gogo said in early March about 3,000 commercial aircraft and 4,200 business jets were fitted with its internet connectivity technology. Further, about 130 of the 3,000 commercial aircraft had Gogo’s 2Ku technology that leverages its global satellite network.

“2Ku delivers a ground-like performance to aircraft flying around the world today, including the ability to stream video,” Gogo chief executive Michael Small said in a statement.

“Importantly, 2Ku is built on an open architecture and can leverage new technology advancements in the future, which means the technology can provide passengers with a superior connectivity experience now and in the future.”

Optus Satellite Vice President, Paul Sheridan, said: “We welcome the opportunity to provide dedicated satellite capacity to support Virgin Australia and Gogo in the delivery of a premier in-flight customer experience.”

Virgin is among the three major carriers in Oceania preparing to offer inflight internet wifi.

Air New Zealand announced in October its international and domestic jet fleet would be progressively equipped with wi-fi from 2017 utilising the Inmarsat new global GX satellite constellation. Trials were scheduled for the second half of 2017 on a new Airbus A321neo and refitted Boeing 777-300ER.

Meanwhile, Qantas recently delayed the start of its internet wifi service, provided by ViaSat’s global satellite network and the National Broadband Network’s Sky Muster satellites on the Ka band, due to what the airline said were “stability issues”.

(Read more about the connectivity challenge for airlines offering inflight internet wifi in the January-February 2017 edition of Australian Aviation magazine.

Australian Aviation

Virgin Australia clears competition hurdle for start of Hong Kong flights

Virgin Australia Airbus A330-200 VH-XFC about to depart Perth Airport for Bali. (Keith Anderson)

Virgin Australia has been given the green light to commence ticket sales for its proposed Hong Kong flights after the nation’s competition regulator granted interim authorisation for an alliance with HNA Group and its affiliated carriers.

The Australian Competition and Consumer Commission (ACCC) said on Monday it had granted interim authorisation to the alliance.

“Interim authorisation commences immediately and remains in place until it is revoked or the date the ACCC’s final determination comes into effect,” the ACCC decision said.

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.

In February, Virgin applied to the ACCC for an alliance with HNA Group and its affiliated carriers. The parties sought interim authorisation to start ticket sales for Virgin’s proposed Hong Kong flights, likely to be from Brisbane, Melbourne or Sydney.

The flights are slated to begin in mid-2017 with Airbus A330-200s, according to the airline’s application to Australia’s International Air Services Commission (IASC) for the necessary traffic rights to serve Hong Kong.

In February, Virgin also announced further details regarding its alliance with HNA Group carriers, Hong Kong Airlines and HK Express, which covers 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 are 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 applicants 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 planned 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.

However, as bilateral restrictions prevented codesharing between Hong Kong and mainland China, Virgin would offer interline connections from Hong Kong into 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.

Virgin said in a statement to the Australian Securities Exchange on Friday afternoon it welcomed the ACCC’s decision.

“The Virgin Australia Group will announce further detail on the route, on sale date and when flights will commence soon,” the company said.

Australian Aviation

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