An alliance between Richard Branson's Virgin Blue and Singapore Airlines is seen as a likely counter to Qantas
CNN's Geoff Hiscock
Asia business editor
SYDNEY, Australia (CNN) -- An alliance between Singapore Airlines and Richard Branson's discount carrier Virgin Blue is the most likely new competitor for Australia's Qantas Airways following the demise of Ansett, according to a leading industry analyst.
Center for Asia Pacific Aviation analyst Peter Harbison notes that Ansett's collapse in September and its final exit from Australian service on Monday has left the international Star Alliance without representation in Australia.
Harbison, in a report released late Tuesday in Sydney, said Star airlines were paying dearly for this. United Airlines, for example, derived a significant part of its U.S. traffic from passengers fed onto its services by Ansett.
Tesna From , joined Dec 1969, posts, RR: Reply 3, posted (11 years 9 months 3 weeks 12 hours ago) and read 1699 times:
The Virgin-SIA deal is from an analyst point of view and does not indicate a done deal so relax Singapore_Air.
The obstacles that SIA will encounter from a deal with Virgin Blue is the issue of product differences. As I stressed before, a corporate business traveller would not receive the same level of service from a full service airline (i.e SIA) and low-cost no frills airline (i.e Virgin Blue). I am not too sure if seamless travel exprience can be achieved from such a deal.
Firstly, Virgin Blue does not have airport lounges, frequent flyer program, business class cabin service and most importantly, membership to a global alliance. All of these have been examined closely by the Virgin Blue management and they have made it clear that all these initiatives would cost them money and hence does not fit into their low cost airline model. Fair enough if they want to maintain their low cost structure but I am sure there are tense moments between SIA and Richard Branson.
One thing we have to remember is that Richard Branson holds the white knight in this game and SIA is only a "49 per cent" shareholding...not a majority shareholder so they have to follow the way Branson and his team wants to play the game. But given the stubborn and conservative traits of SIA management, they do not see the way Branson sees the game and this is where tension has developed between the two parties.
With Branson receiving some 300 million pounds from the British Govt over compensation of the Virgin Trains deal, he is laughing once again to the bank and does not require to beg SIA for money. It is the reverse now that SIA has to beg for money given its financial status. They do not enjoy the once labelled cash-rich status as they have poured all their hard earned money into Branson treasure hunt. Branson is not complaining but amazed by the greed of SIA and its management to expand outside the home base. When greed gets you, you know what it does....DESTROYS YOU! Classic example is the SIA and Virgin Atlantic deal...SIA overpaid by some 66 per cent and with a deal like that Branson would not reject it...WOULD YOU!
I remember the same game when Alan Bond bought Channel Nine TV Network from Kerry Packer for the significant amount and Packer could only sell it to a greedy person knowning that he would buy it back in several years at a lower price....he was also laughing to the bank....very similar story to that of SIA and VS.
Also, with the disasterios loss at Air NZ once again, SIA would have to book this into their balance sheet and with the recent downturn in travel coupled with losses at Virgin Atlantic, SIA is definitely going for a LOSS and it is not a surprise given huge losses at SIA investments will make things worse rather than better.
Best of luck SIA...We look forward to May 2002 when your results will show how bad Dr Cheong and his team are in playing the investment game. Dr Cheong will be known as the Master Goose in the Virgin and Air NZ deals. Long live Dr CK! Happy retirement!
Danialanwar From Switzerland, joined Mar 2001, 421 posts, RR: 1 Reply 5, posted (11 years 9 months 3 weeks 11 hours ago) and read 1678 times:
Star Alliance is right now out of business in Australia, a bit like One-World missing out in Canada. With Australia being a big O/D market, but one that needs to be fed through hubs (I cant really imagine UA flying LAX-Adelaide!), they will surely look for solutions.
Best Business Class: Royal Brunei. Best Economy: Singapore Airlines. First: please send money first!