Right on Cue, Virgin Blue Upgrades
By Steve Creedy, Theaustralian | May 31, 2006
VIRGIN Blue is hoping to snare a third of the corporate and business travel market as it ramps up attempts to attract premium passengers with a $2 million-plus upgrade to its lounges.
The upgrade is the latest of several moves by the low-cost carrier to attract well-heeled customers. Virgin Blue chief executive Brett Godfrey yesterday said more initiatives were on the way.
He would not say whether this included the introduction of premium economy or business class seating on Virgin flights.
But he said the airline would introduce its next initiative - on-board live cable television - by the end of September, and expected to have the fleet converted by June next year, at a cost of $US1 million per plane.
"We'd like to get the same share of the business market as we have of the rest of the market, which is about a third," Mr Godfrey said.
The airline is already starting to see some payoff from its decision to target the business market, with a slight kick in yields.
The latest upgrade pits Virgin's renewed offering against the popular Qantas Club and comes after last year's introduction of its Velocity frequent flyer program, also aimed at corporates.
It will be accompanied by a strong lobbying campaign aimed at convincing government departments and more corporate clients that Virgin is an affordable, high-quality alternative to Qantas.
The all-inclusive facilities - which opened yesterday in Melbourne, Sydney and Brisbane - offer complimentary drinks, food and "enhanced" business facilities including free wireless internet.
Passengers will be able to pay a $349 annual fee, with a $199 joining fee, or buy a single visit pass for $30.
Mr Godfrey said the airline was also looking at opening a lounge in Adelaide and "a couple of other ports".
Virgin Blue hoped to break even on the project within three years.
"Whether it will take three years, I hope not," he said. "The original lounges were expected to take 2.5 years to break even and they broke even pretty much in the first year.
"We feel this is an appropriate upgrade for the market we're trying to attain.
"It demonstrates further the New World carrier strategy we've put into place, and I think it will be a winner with our corporate guests."
Mr Godfrey said plans to fly to the US were still in train, and Virgin had a team of 10 working on them.
He hoped to brief the airline's new board about the plan by September or October.
He said it was still considering aircraft capable of flying the route. Availability and the ability to fly the mission were issues.
The first Virgin plane to boast the live cable service, LiveTV, will be converted in the US in July. Subsequent conversions will be done in New Zealand.
Passengers will be able to pay to receive Foxtel channels, including news and business reports, broadcast via satellite.
Mr Godfrey said price had not been decided but it would be "considerably less" than the $12 charged for portable digital entertainment systems.