Virgin Australia Wins Business Sales After Qantas Grounding

Virgin Australia, the nation’s second-largest airline, expects to double its share of corporate passengers faster than planned after Qantas Airways Ltd. (QAN) suspended flights for about 48 hours because of labor disputes.

Virgin carried an extra 30,000 travelers during the shutdown and that may help it win 20 percent of domestic business passengers before a 2014 goal, Chief Executive Officer John Borghetti told Bloomberg TV yesterday in Sydney. Qantas halted services on Oct. 29, stranding 80,000 customers, in a showdown with unions following weeks of strikes and flight disruptions.

“It’s up to us now to ensure that we follow up and try to keep as many people that flew with us on the weekend as possible,” said Borghetti, who worked at Qantas for 36 years before joining Brisbane-based Virgin. He didn’t say when he now expects to reach the 20 percent target.

Qantas is trying to retain disgruntled passengers by apologizing and offering compensation to help defend its 90 percent share of the business market. Virgin has renamed itself and rolled out new cabins to lure corporate passengers, leading up to the start of sales of business-class seats on flights between Sydney, Melbourne and Brisbane this week.

“People forget that Melbourne-Sydney is the fourth-largest route in the world,” Borghetti said. “That’s an enormous opportunity for us.”

Shares of parent Virgin Blue Holdings Ltd. (VBA), part-owned by billionaire Richard Branson, rose 1.4 percent to 37.5 Australian cents at the close of trading in Sydney and have gained 4.2 percent this week on speculation the carrier may win over Qantas travelers. The benchmark S&P/ASX 200 Index declined 4.2 percent in the period, while Qantas has gained 1.9 percent.

Etihad, Air NZ

Borghetti ditched the Virgin Blue brand about six months ago as he shed a low-cost carrier strategy to instead target lucrative premium-class passengers. He has also bolstered Virgin’s international network through agreements with Delta Air Lines Inc. (DAL), Etihad Airways and part-owner Air New Zealand Ltd. (AIR)

Virgin has also reached an agreement to cooperate with Singapore Airlines Ltd. (SIA), which has been cleared by Singaporean regulators and gained provisional approval in Australia.

“We stand to benefit significantly from it just like we have with Etihad, Delta and Air New Zealand,” Borghetti said. “It actually opens up all of Asia for us.”

To contact the reporters on this story: Robert Fenner in Melbourne rfenner@bloomberg.net; Shraysi Tandon in Sydney at standon14@bloomberg.net

Photographer: Sergio Dionisio/Bloomberg

John Borghetti, chief executive officer of Virgin Blue Holdings Ltd. Close

John Borghetti, chief executive officer of Virgin Blue Holdings Ltd.

Close
Open
Photographer: Sergio Dionisio/Bloomberg

John Borghetti, chief executive officer of Virgin Blue Holdings Ltd.

To contact the editor responsible for this story: Neil Denslow at ndenslow@bloomberg.net

Bloomberg reserves the right to edit or remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.