BY MARK FINLAY
Today trading under the name Virgin Australia Airlines Pty Ltd, Virgin Australia is the largest airline by fleet size to fly under the Virgin banner. However, did you know that when Virgin Australia was first created on August 29, 2000, it flew under the name Virgin Blue, with two aircraft on a single route?
Launched as a low-cost airline with two Boeing 737-400s Virgin Blue offered seven return flights a day between Brisbane Airport (BNE) and Sydney Kingsford Smith Airport (SYD). The decision to call the new airline Virgin Blue resulted from a competition and was a play on Virgin’s predominately red livery. In Australia, there is a tradition of calling red-headed males “Blue” or “Bluey.”
Virgin grew rapidly helped by the failure of Ansett
Virgin Atlantic could not have planned its time to launch any better following the collapse of Ansett Australia in September 2001. At the time of the failure brought about by overextending itself, Ansett was an extensive domestic and international carrier. Virgin Australia grew rapidly to fill Ansett’s void and soon became Australia’s second-largest airline after Qantas.
Ansett’s collapse also gave Virgin access to landing slots that it would not have gotten otherwise. As Virgin Blue grew, it soon swapped out its Boeing 737-400s for newer 737-700s and 737-800s. In 2005 Australian logistics conglomerate Patrick Corporation launched a hostile takeover bid for Virgin Blue after being unhappy about the direction the airline was heading.
By the time everything was done and dusted, Patrick owned a 62% share of the airline, which gave it overall control. The Virgin Group meanwhile retained a 25% ownership. In 2006 Toll Holdings, the Australian-based subsidiary of Japan Post Holdings, bought Patrick to become the majority owner of Virgin Blue.
Virgin Blue copied Southwest’s low-cost model
Virgin Blue was successful because it followed Southwest Airlines and Ryanair’s model of doing away with free inflight meals, printed tickets and embracing telephone and Internet booking systems. It also cut costs by limiting what airports it flew to and operating a single type of aircraft, which in Virgin Blue’s case was the Boeing 737, just like Southwest and Ryanair.
Wanting to re-enter the Sydney to Canberra marketplace and to fly to less populated areas, Virgin Blue abandoned the single aircraft strategy and placed an order with Brazil’s Embraer for six E-170s and 14 E-190s.
Virgin Blue began codesharing with United
When it was founded, Virgin Blue had no cooperation with other airlines, but following the collapse of Ansett, it quickly started codesharing on flights with America’s United Airlines. The deal allowed United customers to fly to Australian destinations United did not serve.
While wanting to compete further with the Australian national flag carrier, Qantas, Virgin Blue started exploring the possibility of codeshares with Emirates, Hawaiian Airlines, and Malaysia Airlines.
Aimed at business and corporate customers in 2008, Virgin Blue introduced what it called “Premium Economy.” The first three rows got larger seats in a 2-2 configuration, unlike the 3-3 throughout the rest of the plane. Besides the larger seats and additional legroom, premium economy customers enjoyed a more significant baggage allowance, priority check-in and boarding, and inflight meals and drinks.
The rebranding as Virgin Australia
In 2010 Virgin Blue allied with Abu Dhabi’s Etihad Airlines and Air New Zealand. The same year CEO Brett Godfrey stepped down after ten years in charge, with former Qantas executive John Borghetti taking control.
After he arrived at Virgin Blue, many Qantas employees followed suit. This brought about talk of a possible rebranding of the airline. In February 2011, this was confirmed when Virgin Blue announced that the word “Blue” would be dropped from the name as a strategy to help attract more business customers. New crew uniforms were unveiled, and the airline’s fleet received a new livery under the new name Virgin Australia.
