TRAVELCONSUMERDAILY.COM
SATURDAY, JULY 10, 2010

AUSTRALIA’S Virgin Blue group is about to take the biggest leap of its existence, leaving behind its roots as a low-cost airline that was invented 10 years ago to "make the air fair" and break the strangehold of the Ansett-Qantas duopoly.

Now with about a third of the Australian domestic market, Virgin Blue has found a sweet spot with travellers with its bright red 737s and a jokey style of in-flight service modelled on the world’s biggest low-cost airline, America’s Southwest, which has grown to rival the biggest airline groups in the US.

Unlike Southwest, however, Virgin Blue has developed lots of frills – business lounges, valet parking, live in-flight TV.

The Virgin Blue group now has the first new chief executive since the retirement of founder Brett Godfrey – who benefited handsomely from the exquisite timing of his backer, Virgin Group founder Sir Richard Branson. With an investment of just $A10 million, Godfrey and Branson were able to turn Virgin Blue into a billion-dollar airline by resisting early overtures to buy the Ansett basket case.

Instead they let Ansett die and took over the vacant market space with Australia's first orthodox "low-cost airline" with a single fleet type – the 737 – and just one economy class product.

But new CEO John Borghetti, formerly the No.3 executive at Qantas, has signalled a renewed assault on the Australian business travel market by changing Virgin Blue into an airline like Qantas, with "discreet" business class cabins at the front, but with much lower costs.

READ: Virgin blue’s class struggle