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Virgin Australia CEO declares "Game on" in battle with Qantas

By David Flynn     Filed under: John Borghetti, Virgin Australia

Virgin Australia is launching the second phase of its three-year 'Game Change' transformation from the low-cost Virgin Blue to a full-service Qantas competitor – and the new war cry is 'Game on'.

“We are now almost a year ahead of schedule on the (Game Change) strategy, having achieved the majority of our goals" said Virgin Australia CEO John Borghetti on today's release of the airline's 2011-2012 financial results, which reveal a post-tax profit of $22.8 million, compared to last year's loss of $67.8 million, and based on $3.9 billion revenue.

"Today’s result gives us the confidence to reach for the next phase of the Game Change Program – it is now ‘Game On’."

Borghetti won't be drawn on specifics but says “In this phase, we will introduce further innovative product and service enhancements to establish a superior position in customer experience."

The business travel 'tipping point'

Virgin reports that the profitable corporate and government travel market now makes up 20 per cent of its domestic revenue, a milestone which Borghetti described as "a tipping point which we believe effectively creates a new competitive norm."

The airline also says that since the debut of its domestic business class in late 2011-early 2012 "we carried double the number of Business Class customers compared to Premium Economy customers in the prior corresponding period."

Likewise, the take-up of Business Class and Flexi Fares "has seen high-yield fare revenue increase by 113 per cent."

Borghetti also wants to dramatically boost the number of members of its Velocity Frequent Flyer scheme in the next three years, transforming it “from a frequent flyer program to a broad-based loyalty program in its own right” (see our full report).

New lounges

The first stage of Virgin's new 'flagship' lounge at Sydney Airport will open by year’s end, in the form of the all-new upstairs level, however the complete two-level lounge won’t be open "until March 2013", Borghetti told Australian Business Traveller.

Also on the slate for 2013 is a new lounge for Virgin's shiny new terminal at Canberra, along with Hobart and Cairns – see our report for more details.

New planes for 2013-2017 and beyond

By mid-2013 Virgin expects to have taken on 10 new Boeing 737-800s and its sixth Airbus A330, with the later feeding into the plan to run transcontinental flights from Sydney and Melbourne to Perth as A330-only services.

By June 2015 the airline plans another eight 737-800s plus two more A330s, and Borghetti again hinted that the A330s could appear on international routes, saying they "could be deployed in any market as the market demands."

Borghetti recapped the airline's plans to order 23 fuel-efficient Boeing 737 MAX 8 aircraft, which will enter the fleet from 2019, and will place an order for either the Boeing 787 or Airbus A350 within the next 12 months.

Get the latest updates for business traveller and frequent flyers: follow @AusBT on Twitter.

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About David Flynn

David Flynn is the editor of Australian Business Traveller and a bit of a travel tragic with a weakness for good coffee, shopping and lychee martinis.

 

Have something to say? Post a comment now!

1 on 28/8/12 by TheRiddler

Post-tax profit of $22.8 million from $3.9 billion revenue. Thats a profit margin of just a tad over 0.5%. Ouch, tough business.

1 on 28/8/12 by CaptainCrackers

Very tough business! Yet people still demand more product at less cost in an extremely volatile market. Trying to meet customers high expectations whilst also satisfying shareholders in the airline industry can't be easy. 

2 on 29/8/12 by tronixstuff

No wonder they got rid of ATA lounge access. Think about it - 1000 members a day having 3 beers each would cost them just over $1m a year :)

1 on 29/8/12 by David

Well I hope there weren't that many freeloaders swigging down the suds on a daily basis! But you're bang on the money, tronix, in this environment all sorts of cuts and trims have to be made.

3 on 29/8/12 by David

Riddler, that's the very first thing that struck me about the results – I looked at total revenue, then profit and had the same thought, that this is perhaps the clearest example yet of how airlines are such an unforgiving businesses!

2 on 29/8/12 by Southland

First ahlf of the year proft after tax was 50 mill. Bad 2nd half of the year. Both INTL and DOM made money. What happend to QF. Too many planes and routes flying INTL

3 on 31/8/12 by Miss Traveller

Virgin is half the size of Qantas yet its profit was just one sixth the size- I know where i'd rather put my money if I had to choose!

1 on 31/8/12 by TheRiddler

Didnt QF make a loss? Albeit an accounting loss but a loss nonetheless?

4 on 31/8/12 by snoopy7787

This is great news.However ditch those Pies and the Mangan Menu at once.I haven't touched it but some of these offerings are so bad It made the TAA Sandwich and whatever Australian and Ansett served outside of Standard Meal Times look good by comparison.

 

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