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Singapore Airlines (SIA) and Virgin Australia have announced plans to establish a long-term alliance that, if it meets regulatory and competition approvals, has the potential to transform competition in Australia-Asia markets and increase competition for Qantas in its core domestic and international premium travel markets. For Virgin, SIA completes the alliance puzzle that now stretches east to New Zealand and North America with Air New Zealand and Delta, respectively, west to the Middle East, North Africa and Europe with Etihad, and now North to Asia with SIA, as well as simultaneously feeding its domestic operation.
Should it be approved, the SIA deal would cap a very successful first 12 months for Virgin CEO, John Borghetti, who has cut back loss-making routes, rebranded the airline and established a high-potential network of bilateral partnerships. The benefits of Virgin’s coverage of the compass should flow within the next 12 months.
Mr Borghetti calls the partnership with SIA “a huge step for us” and “a game changer” because “it really completes our alliance strategy we started 12 months ago”. He says the partnership is in particular key to achieving Virgin Australia’s goal of securing a 20% share of the Australian corporate market.
Under the agreement, the two airlines propose to:
- Codeshare on each other’s international and domestic flights;
- Offer reciprocal frequent flyer programme benefits and lounge access;
- Coordinate schedules between Singapore and Australia and beyond to provide seamless connections; and
- Engage in joint sales, marketing and distribution activities.
SIA and Virgin Australia will start interlining in Aug-2011. Codesharing, frequent flier links, schedule coordination and joint pricing will follow once approval for the partnership is secured, expected by the end of 2011. Both carriers do not expect any major problems in securing the required approvals.
Vicky is the co-founder of TravelDailyNews Media Network where she is the Editor-in Chief. She is also responsible for the daily operation and the financial policy. She holds a Bachelor's degree in Tourism Business Administration from the Technical University of Athens and a Master in Business Administration (MBA) from the University of Wales. She has many years of both academic and industrial experience within the travel industry. She has written/edited numerous articles in various tourism magazines.
