Home' Australian Aviation Magazine : January February 2010 Contents 29
JANUARY/FEBRUARY 2010 AUSTRALIAN AVIATION
type, ie a turboprop, or perhaps more
Embraer E-Jets are candidates for the
fleet profile Godfrey plans to have in place
before stepping down.
"We made it clear that we wanted to
look at any market that Qantas was flying
lonely on, so there are still a few of those
out there," Godfrey explained of where
Virgin Blue regional expansion might go,
pointing to his airline's recent intra-state
WA foray as an example. "Now we had
looked at ATRs, we had looked at Q400s,
(whereas) the Embraers are not really a
regional aircraft at all.
" e 190 can almost fly transcon, the 190
we'll have ETOPS for shortly and where
can you fly with that? Oooh, possibly into
New Zealand. So you can't fly a turboprop
that far and nor would you want to sit in
one if you could.
"We haven't fully deployed them prop-
erly," Godfrey said of the E-Jets' potential.
"If we go back about four years, we actually
got into a capacity shortfall where we
couldn't get 737s, the Boeing order book
was locked up and we couldn't get any. So
we took more Embraers than we actually
"So the Embraers have been doing
'stocking stuffer' stuff -- they've been going
into markets where they're probably not the
ideal aircraft but in the absence of having
none, we'll put them in there. We've got
them earmarked for better things to do,
which when we've got more Boeings we'll
swap them out."
at should see the E-Jets operating on
longer thin routes.
"Particularly the 190 shouldn't be doing
anything under an hour and a half to two
One of the shorter sector flights the E-
Jets are currently deployed on is Sydney-
Canberra, with it's 30-35 minute flying
time and critical role in the VB network
in meeting the requirements of lucrative
government corporate travel accounts. VB
currently flies eight E-Jet Sydney-Can-
berra flights each weekday, but Godfrey in
effect concedes that level of frequency is
"We look at Sydney-Canberra, we think
that's a market we have to look seriously
at. Having jets on there, it was nice at
first to call it ' e Capital Shuttle' and say
you were the only airline to fly (only) jets.
(But) e reality is we're looking at more
frequency there but I don't really want to
put too many more jets on it. at will
probably not be resolved in my timeframe
but we are looking at, the development
guys are looking at, what if we ended up
with a turboprop aeroplane? What's out
there now that works really well on those
sorts of markets?"
Another market VB is watching closely
is domestic New Zealand, where subsidi-
ary Pacific Blue is fighting for marketshare
against Air New Zealand and Jetstar.
"It doesn't make us any money today,"
Godfrey confirmed. Pacific Blue started
domestic NZ services in November 2007,
and by May 2008 was profitable, before it
"started to go south," with the deteriorating
NZ economy, Godfrey noted. "However,
having said that, there are some strategic
advantages of it being where it is, it feeds
traffic on to the Tasman, (and) it represents
about two per cent of our total capacity so,
with all due respect to it, it is a very minor
part of our business."
Looking forward in New Zealand, "So
the next 12 to 18 months, can it sustain
three carriers?" Godfrey asked. "Probably
not, but that's a shame for Air New Zea-
land or Jetstar. We don't see ourselves doing
much more in that market at the moment,
but we don't see ourselves doing any less."
Of much greater concern are the losses
being generated by V Australia.
"Awful," was Godfrey's summation of
V Australia's current performance. United
Airlines boss "Glen Tilton said about
10 days ago, and I'll quote him almost
verbatim, (that US-Australia) was 'One
of the world's most profitable routes and
we're losing money on it now'. Well, I can't
sit here and tell you any differently. I think
(Qantas CEO) Alan Joyce said about a
month ago, the same thing, 'we're losing
money on it', and he reckons everyone's
losing money. Well, it's probably the first
time we've agreed on something."
e key issue, Godfrey said, is that " e
demand is not emanating out of the US.
It is at a price but we're giving the seats
away. e leading fares out of the US are
still about $1000 Australian and we can
get $1000 taking people to Phuket or Bali,
even, places that from here in a 737 are
about six hours away, versus 14 hours with
food and drink and IFE and all that. e
market is seriously depressed."
Godfrey said V was seeing month-
on-month improvements in profitability,
"but we're not seeing significant enough
improvement to call it the end of that
Unquestionably V Australia has been a
victim of economic circumstance. When
plans for V were announced in March 2007
the world economy was buoyant and the
US-Australia market one of the airline
industry's most profitable. But strikes at
Boeing which delayed V's first 777s, the
full force of the Global Financial Cri-
sis, and the arrival of Delta Air Lines as
the fourth airline on the previously cosy
duopoly market, have all taken their toll.
Indeed, V Australia's $124 million start-up
and continuing losses were a considerable
contributor to Virgin Blue's $160 million
net loss last financial year.
To stem the damage delivery of some
of V Australia's 777s have been deferred,
a joint marketing alliance with Delta Air
Lines has been proposed, and new ser vices
to outbound tourist destinations of Phuket
and Fiji launched.
Godfrey called the Phuket and Fiji serv-
ices as "gap fillers", as they take advantage
PACIFIC BLUES While Brett Godfrey describes the current performance of V Australia on the Pacific route as
"awful", he is confident in the longer term success of the airline. VB has also left unchanged its forecast that
V will be profitable within its first 18 months of operation.
V FOR VICTORS? Brett Godfrey with VB cornerstone
shareholder Sir Richard Branson ("some bloke who
wore a sweater and a goatee"), and V Australia EGM
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