Virgin Blue Airlines.

 

Background Information.

 

Virgin Blue was co-founded by British businessman Richard Branson, the founder of the  Virgin Group and former CEO Brett Godfrey. It was established as Virgin Blue in November 1999 in Brisbane. The Virgin Blue name was the result of an open competition - it was a play on the predominantly red livery and the Australian slang term of ‘blue’ or ‘bluey’ that referred to a red-headed male.

Virgin Blue was launched in August 2000, with two Boeing 737-400 aircraft, one of which was leased from then-sister airline Virgin Express. It initially offered seven return flights a day between Brisbane and Sydney, this has since been expanded to cover all major Australian cities and many holiday destinations.

The timing of Virgin Blue's entry into the Australian market was fortunate as it was able to fill the vacuum created by the failure of Ansett Australia in September 2001. Ansett's failure allowed Virgin to grow rapidly to become Australia's second domestic carrier, rather than remaining a cut-price alternative to the established players. It also gave Virgin access to terminal space without which growth would have been significantly limited. Delays in negotiating access to the former Ansett terminal at Sydney Airport forced the airline to use its original terminal there - a collection of prefabricated buildings without aerobridges longer than was needed.

As the airline grew, it acquired new equipment, enabling it to phase-out its older 737-400s in favour of a modern fleet of Being 737-700 and 737-800 series aircraft with modern glass cockpits, winglets and greater fuel efficiency.

Virgin Group's holding in Virgin Blue has since been reduced, initially via a sale of a half interest to Australian logistics conglomerate Patrick Corporation and later by a public float. In early 2005 Patrick Corp launched a hostile takeover for Virgin Blue. It had been unhappy for some time with the company's direction. By the closure of the offer, Patrick Corp held 62% of the company, giving it control. Virgin Group retains a 25% share.

In May 2006 Toll Holdings acquired Patrick  Corporation and became the majority owner of Virgin Blue. In July 2008 Toll sold its majority holding via a special dividend to hold 1.7% of the company. In June 2013 Air New Zealand owned 23% of the company.

Virgin Blue originally used a familiar formula pioneered by airlines such as Southwest Airlines in the United States and Ryanair of Ireland of eliminating costs such as included in-flight meals and printed tickets in favour of selling food on-board and using telephone and internet booking systems. It also cut costs in the past by limiting the number of airports serviced and by operating one type of aircraft, the Boeing 737. This strategy changed with the introduction of a second type into the fleet. The airline ordered 20 Embraer E-jets - a mix of six Embraer 170s and 14 Embraer 190 jets. These were ordered specifically so that the airline could re-enter the Sydney - Canberra market that it abandoned in 2004, and to fly to less populous areas around Australia.

The first Embraer 170 arrived in Australia in September 2007 and by the end of the year the three on initial order had been delivered. These were placed on limited-frequency services before full-scale operations were launched on February 04, 2008 with services from Sydney to Canberra (branded as 'Capital Jet' services), Mackay in Queensland and the New South Wales regional centres of Port Macquarie and Albury which were originally  promoted with a one-cent fare. The flights to Canberra and the regional centres signified an effort to compete more directly with Qantas and its subsidiary QantasLink, which flies to all three cities, and with independent carrier Regional Express Airlines.

At its inception in 2000 Virgin Blue did not have interline or marketing alliances with other airlines. However, after the collapse of its domestic competitor Ansett Australia, it began a codeshare agreement with United Airlines. This allowed United customers to fly from the United States to any of Virgin Blue's Australian destinations that United did not already serve.

In 2006, in an effort to compete with Qantas, Virgin Blue started exploring these relationships, forming frequent flyer agreements with Emirates, Hawaiian Airlines and Malaysia Airlines. Virgin Blue also established an Interline Agreement with Regional Express Airlines for travellers to and from smaller regional centres in the eastern states of Australia, and operates its own two routes with Virgin Australia Regional Airlines in Western Australia.

Also in early 2006 Virgin Blue announced its intention to operate up to seven flights a week to the United States through either Los Angeles or San Francisco. At the time, only Qantas and United Airlines competed on the Australia - US trans-Pacific market. The airline was given permission for ten flights a week to the United States by Australian regulators on July 24, 2007. The plans were approved by the US regulators on February 15, 2008 due to the signing of an open skies agreement between Australia and the United States. Instead of using its existing brand, Virgin Blue launched a fully owned subsidiary with a separate Air Operator's Certificate, named V-Australia as the result of a public naming competition, with a fleet of five specifically branded Boeing 777-300ER aircraft.

The airline launched flights between Sydney and Los Angeles in 2009, followed by flights from Melbourne and Brisbane since obtaining permission to operate an unlimited number of flights between Australia and the United States by the Australian International Air Services Commission. V-Australia also applied to the United States Department of Transportation to operate services to San Francisco, Seattle, Las Vegas, and New York, but these plans never materialised. V-Australia later launched flights to Nadi, Phuket and Johannesburg (all of which were discontinued prior to the brand being absorbed into Virgin Australia, although Virgin Australia continued to operate to Phuket until 2015, and still operates to Nadi), and Abu Dhabi to consolidate Virgin Blue's codeshare agreement with Etihad Airways.

In November 2007 the airline announced an agreement with Garuda Indonesia offering an easy transfer from a domestic Virgin Blue flight to an international Garuda Indonesia service departing from Perth, Melbourne, Sydney or Darwin. Since then Virgin Blue has also announced an agreement with Vietnam Airlines which allows passengers to fly from Melbourne and Sydney and connect with Vietnam Airlines's destinations through its flight network.

In 2008 ‘premium economy class’ was introduced throughout its entire fleet. New seating was installed in the first three rows of the cabin. These could be converted from three seats in economy configuration to two seats for premium economy. The premium product offered priority check-in, larger baggage allowance, lounge access, priority boarding, increased legroom and all-inclusive in flight entertainment, meals and beverages on board. The product was aimed at business and corporate customers. The airline began charging economy-class passengers for checked baggage in September 2008. The airline further announced its intention to operate Airbus A330 aircraft between Perth and the East Coast, starting in May 2011.

In December 2010 Virgin Blue entered into alliances with Etihad Airways and Air New Zealand for code-sharing, reciprocal lounge and frequent flyer access and other co-operational projects. Virgin Blue also entered into talks with Delta Air Lines about the possibility of joining SkyTeam, one of the top three alliances in the world, as V-Australia and Delta sought approval for an agreement between the two airlines to co-operate on trans-Pacific services. The agreement was rejected by the United States Department of Transportation under the United States Antitrust law. Upon review the agreement was approved by the United States Department of Transportation on June 10, 2011.

On January 20, 2011 Air New Zealand announced it would take a shareholding stake of between 10% and 14.99% in Virgin Blue. Air New Zealand chief executive Rob Fyfe described the investment ‘as part of Air New Zealand's strategy to develop scale and reach in this region’ but said the airline had no intention of making a full takeover.

On May 07, 2010 Brett Godfrey officially stepped down as Virgin Blue CEO after steering the company through its first ten years. John Borghetti, the former Qantas executive general manager, took over as the new Chief Executive.  Following Borghetti's arrival as CEO, a number of key Qantas staff moved to Virgin Blue while key Virgin Blue staff departed the airline causing much speculation regarding a forthcoming rebrand or reorganisation of the airline.

In February 2011 the re-brand was confirmed when the airline announced that the word 'Blue' would be dropped from its name as part of a campaign to attract more business travellers away from rival Qantas. This came shortly after the unveiling of new crew uniforms and business-class seats. The airline stated that the re-brand would proceed in stages and would reportedly include a new fleet livery and the renaming of the other Virgin Blue Group airlines as well.

On May 04, 2011 the former Virgin Blue revealed its new name - Virgin Australia - as well as its new livery. In addition to the new name, branding and livery, the airline also showed off its new flagship the Airbus A320 with new domestic business class. Boeing 737 business class seating was also revealed, to be introduced on all of Virgin's jet aircraft by the end of 2011. Pacific Blue and V-Australia were both folded into the new Virgin Australia brand, following an agreement with former Virgin Atlantic shareholder Singapore Airlines which ever since the establishment of Virgin Blue in 2000 had previously prohibited use of the ‘Virgin’ brand outside Australia.

Early in 2011 it was also announced that Virgin Blue had signed a ten-year deal with Perth-based regional airline Skywest Airlines, for Skywest to operate up to 18 turboprop aircraft leased by Virgin, in order to better compete in east coast regional markets served by QantasLink and Regional Express Airlines. The turboprops would supplement the existing Embraer 190s and replace the Embraer 170s, which would be phased out due to their being uneconomical on the routes operated by Virgin.

In October 2011 the Australian Competition and Consumer Commission (ACCC) approved a proposed code-share alliance between Singapore Airlines (SIA) and Virgin Australia, subject to other regulatory approvals in both countries.

On May 31, 2016 Chinese aviation holding company HNA Group agreed to purchase 13% of Virgin Australia Holdings for A$159 million, subject to authorisation from the ACCC, a stake which they ultimately intend to increase to 19.99%. The deal also created a codeshare partnership between Virgin Australia and Chinese airlines in which HNA Group holds shares, on routes between Australia and China. Virgin intended to launch flights between Australian destinations and Beijing and Hong Kong by 2017 to consolidate this agreement.

By October 2016 Air New Zealand was no longer a Virgin Australia shareholder after selling its remaining 2.5 per cent stake for A$65.7 million to investors including the Nanshan Group. On April 04, 2018 Air New Zealand announced the end of the code- and revenue-sharing partnership with Virgin Australia, effective October 28, 2018.

On June 12, 2018 John Borghetti, the current CEO of Virgin Australia confirmed that he will be leaving the airline before the end of his contract in January 2020. John Borghetti, who has been CEO of Virgin Australia since May 2010 mentioned that his initial plans were to stay in Virgin Australia for three to four years, however the companies growth and success prompted his permanence in the business during the transition period from Virgin Blue to Virgin Australia.
On February 06, 2019 it was announced that Paul Scurrah would take over as CEO of Virgin Australia, starting on March 25, 2019.

Sister airlines

In September 2003 Pacific Blue was set up to offer a low-cost service between New Zealand and Australia. Pacific Blue aimed to position itself as a low-cost competitor to Air New Zealand and Qantas on trans-Tasman routes. Pacific Blue also operated services on behalf of the Polynesian Blue - a joint venture with the government of Samoa. Pacific Blue has since been rebranded under the Virgin Australia name and livery.

On January 10, 2011 Virgin Blue entered a 10-year strategic alliance with Perth-based Skywest Airlines (now Virgin Australia Regional Airlines) to operate up to 18 new Virgin-branded turboprop aircraft from mid-2011. On February 23, 2011 it was announced that the aircraft would be Aeospatiale ATR-72s, to enter service beginning in May 2011. This would allow Virgin Australia to both replace its fleet of Embraer 170s and introduce new regional routes. The turboprops would be operated by Skywest Airlines under a wet-lease agreement. The May in-service date was not met, and by late July the first announcement was made concerning the routes to be served. It was reported that the ATR-72s would be initially employed on services between Brisbane and Gladstone in Queensland and from Brisbane and Sydney to Port Macquarie in New South Wales and on additional services between Sydney and Canberra.

On January 25, 2012 Virgin Australia announced additional services between Brisbane, Proserpine, Rockhampton and Cairns. It wet leased two Fokker F28-0100s from Alliance Airlines to operate these services. On February 26, 2013 Virgin Australia announced it would start flights between Brisbane and Bundaberg on May 04, 2013.

On October 30, 2012 Virgin Australia Holdings announced it had purchased a 60% stake in Tiger Airways Australia for $AUD 35 million. Tiger would continue to operate as a low cost subsidiary for 20 years. In October 2014 Virgin took full control of Tigerair for one dollar.

On April 11, 2013 Virgin Australia Holdings completed its acquisition of the regional airline Skywest Airlines. Skywest was then renamed Virgin Australia Regional Airlines.