Dubai: Virgin Australia, the majority foreign-owned carrier competing with Qantas for the country’s domestic travel market, will not join shareholder Etihad Airway’s “Partners” group, according to its chief executive.
“Etihad Airways Partners”, announced last month, is so far a grouping of the airlines Etihad holds stakes in, as well as Etihad Regional (formerly Darwin Airline), except Virgin Australia and Aer Lingus.
“We’re comfortable where we are,” John Borghetti, Virgin Australia’s chief executive, told Gulf News in a phone interview on Friday.
“Partners” members can work together on codeshare agreements, frequent flyer members and joint procurement. Etihad has dismissed that the grouping is similar to the traditional airline alliances, which President and Chief Executive James Hogan has lamented as fractured.
Borghetti said Virgin Australia will work with Etihad Airways Partners “where it makes sense” but that its interest in Australia is very different to that of a carrier in Europe.
Etihad holds stakes in European carriers Aer Lingus, Air Serbia and Air Berlin. It recently received approval to take a 49 per cent holding in Italy’s Alitalia and is waiting on approval for a 33.3 per cent stake in Swiss carrier Etihad Regional.
“You don’t have to join a grouping … in order to exploit bilateral relations,” Borghetti said.
Etihad increased its holding in Virgin Australia to 22.9 per cent, the maximum limit approved by Australia’s Foreign Investment Review Board (FIRB), last week. Days earlier Hogan, alongside the chief executives of Singapore Airlines and Air New Zealand, which also hold stakes in Virgin Australia, took a seat on the board.
“It’s a huge advantage,” Borghetti said. “I’m not sure there is any other airline in the world that’s got the benefit of four airline chief executives sitting on a board … I view that as a massive positive.”
Virgin Australia’s relationship with its foreign airline investors, in addition to a partnership with non-investor Delta, has given it access to a global market that may have otherwise been unattainable.
“We don’t have a desire of doubling our international reach that’s why we did the strategic partnerships,” Borghetti said.
Virgin Australia, predominantly a domestic airline, flies its own aircraft to international destinations in the Pacific Islands, Fiji, New Zealand, Indonesia and Thailand along with long-haul services to Los Angeles and Abu Dhabi.
“In the world of aviation nowadays you can’t do things on your own anymore,” Borghetti said.
Virgin Australia flies just three times a week to Abu Dhabi but the route is essentially operated double-daily when combined with Etihad flights. The Etihad partnership gives the carrier reach into Europe and the Middle East, while with Singapore Airlines it has access into Asia and onto Europe.
“Since Qantas pulled out of Asia it gives us a strategic advantage,” Borghetti said of the relationship with Singapore Airlines.
Qantas cut a 17-year partnership with British Airways in 2013 to move its London-bound hub from Singapore to Dubai when it tied up with Emirates.
Borghetti said Virgin Australia may launch “one or two other [international] destinations” but will keep its focus on the Australian market.
Until recently, Virgin Australia was locked in market share war with Qantas that saw both carriers flood domestic routes with capacity and drive down fares below profitability.
Borghetti said Virgin Australia wants revenue from corporate and government travel segment, which it’s battling with Qantas over, to increase from today’s “north” of 25 per cent to 30 per cent in the next three years.
