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V is for victory on coveted Sydney-LA route

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V is for victory on coveted Sydney-LA route


Mathew Murphy and Brian Robins

April 1, 2008



VIRGIN'S new international carrier, V Australia, has fired an opening salvo at imminent rival Qantas, announcing it will offer a daily Sydney-Los Angeles service and attempt to break the airline's stranglehold on the lucrative route.


Australia's newest international airline has also snubbed Melbourne in favour of Sydney as the base for V Australia, with founder Sir Richard Branson saying it would create 1000 jobs and generate $44 million worth of investment for the harbour city.


It comes as Prime Minister Kevin Rudd prepares to sign an open-skies agreement with the US Government in Washington today that will allow airlines of both countries to offer unlimited services across the Pacific.


At present, only Qantas and United Airlines service the route because other airlines have only been guaranteed a minimum of four services a week, making it almost impossible for them to compete.


V Australia's first flight, scheduled for December 15, is set to spark an international air fare price war. Yesterday's promotional $999 return offering on the Sydney-LA route sold out within hours. Sir Richard said standard fares on the route would start from $1899, undercutting Qantas by at least 16%.


"There is going to be very fierce competition, as there is with Virgin Blue and Qantas in Australia, and fares will definitely drop quite dramatically across this route," he said.


V Australia will launch 10 weekly flights between Australia and the US by the end of the year, compared with Qantas' 51 and United's 14 services a week. The carrier will target Qantas' business clientele, offering business class, premium economy and economy cabins.


It is expected that the airline will run a service similar to United's, which travels Melbourne-Sydney-Los Angeles and then back.


Melbourne Airport spokesman Geoffrey Conaghan said V Australia's choice of Sydney as its base was disappointing but that representations had been strong. "We gave it our best shot. It was handled personally by Chris Woodruff, the CEO," he said. "There are still announcements to come and we hope V Australia looks at the Melbourne market and the opportunities here."


The NSW Government beat other states by giving the airline payroll tax concessions and marketing and training incentives.


The aggressive pitch is a big departure for the Iemma Government, which has ben stung by losing business to other states. It is confident that Sydney will also become the hub of Virgin Blue's new regional services as the airline is introducing a smaller aircraft for flights to Canberra, Albury and Port Macquarie. The larger Boeing 737 aircraft it uses have not been profitable on the regional services.


The airline expects its trans- Pacific flights will boost US visitor numbers to Australia by 50,000 a year.


"We are in a good position to pursue Virgin Blue for the regional part of its business. We're not stopping with this," Premier Morris Iemma said.


The incentives to woo Virgin Blue come as state governments move away from competing aggressively with each other to win business. All states, except for Queensland, signed an agreement not to do so five years ago, although this has not stopped competition in areas such as formula one racing.


The NSW Government had to pitch hard to beat both Brisbane and Melbourne to win the Virgin Blue international base.


"Virgin Blue's local operations (are based) in a local city like Brisbane; its global operations in Australia's only global city," an upbeat Mr Iemma said yesterday.


"The NSW Government negotiated a package which included payroll incentives, marketing and training," State Development Minister Ian Macdonald said.


"Virgin has committed to spend an average of $1 million per annum for the five-year term on an international marketing campaign, focused on inbound travellers into NSW."



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News release from LAWA:




(Los Angeles, California – March 31, 2008) Mayor Antonio R. Villaraigosa announced today that Virgin Blue International Airlines will launch non-stop service between Australia and Los Angeles later this year under a new open-skies agreement, continuing a trend among international carriers that are choosing Los Angeles International Airport (LAX) as their West Coast gateway and adding to the billions of dollars in economic activity generated in Southern California by overseas flights. Virgin Blue Airlines, through its long-haul international carrier, V Australia, will use the first of its 10 weekly allotments to launch non-stop service from Australia to Los Angeles in December, operating between Sydney and LAX.


U.S. Secretary of Transportation Mary Peters and Australia’s Ambassador to the U.S. Dennis Richardson were to sign the historic open-skies agreement at a ceremony attended by Australian Prime Minister Kevin Mudd in Washington, D.C., following announcements of the new air service in Sydney and Los Angeles. The open-skies agreement was announced in February.


"I am thrilled that such an innovative airline offering value and high-quality service to passengers has chosen Los Angeles as its front door to the U.S.,” Mayor Villaraigosa said. “It is a privilege to benefit so quickly from the open-skies agreement lifting market restrictions and allowing more air travel choices between both countries.”


Speaking upon his arrival from Sydney, where the new air service was announced earlier in the day, Virgin Blue Airlines Group Chief Executive Officer and Co-Founder Brett Godfrey praised the open-skies agreement and said that with the initiation of the Australia-Los Angeles routes, air passengers will be able to travel around the world on Virgin brand airlines.


“The Australia-U.S. Open Skies agreement is a great achievement and a significant change after almost twenty years of restrictive bi-laterals,” said Godfrey. “The agreement and the approvals granted underline the commitment of both governments to extensively liberalize Australia-U.S. air services -- a decision we strongly endorse and one which will bring significant benefits to both countries.


“At Virgin Blue, we are particularly proud of the contributing role we have played as a catalyst for the establishment of the agreement. It will enable us to bring long awaited, genuine competition to the trans-Pacific market,” Godfrey said.


The Virgin Blue chief executive added, “Eight years ago we launched Virgin Blue, the first Virgin airline in Australian skies with just two planes and 200 staff. Today, we fly 15 million passengers a year to over 30 destinations in Australia, New Zealand and the South Pacific island countries. We believe we have proven our ability through Virgin Blue to stimulate change and innovation to the benefit of air travelers, tourism and the economy, and V Australia will again be a catalyst for change, this time in the arena of international aviation.


“V Australia is a brand new long-haul international airline for Australia, focused first on the U.S. through our chosen gateway of Los Angeles and bringing a brand new style of service to the trans-Pacific route. It’s tremendously exciting and opens a whole new range of possibilities for travelers and for tourism and trade development between our countries,” Godfrey said.


The V Australia service will increase seat capacity between the U.S. and Australia by 16 percent, which Mayor Villaraigosa said would continue to stimulate new service and provide further benefits to passengers.


The V Australia flights are expected to generate an annual economic impact of up to $872 million to Southern California, and sustain as many as 4,340 jobs with total wages of $218 million, based on the findings of a recent economic analysis of overseas flights at LAX by the Los Angeles County Economic Development Corporation (LAEDC).


V Australia will operate Boeing 777-300ER aircraft on the trans-Pacific route, which Mayor Villaraigosa said will be welcomed by LAX neighbors because it is “one of the most fuel efficient and green commercial aircraft available.” V Australia will take delivery of its first 777-300ER in September and it will be the first and only carrier to operate the aircraft between Australia and the U.S.


V Australia is the ninth air carrier to begin or announce new international service to LAX in the past year, continuing a trend toward increased international air travel at LAX, which had consistently lost market share since 2000, and solidifying LAX’s position as the leading Asia Pacific gateway in the U.S.


In total, the nine carriers are adding 126 arrivals and departures per week at LAX, with an estimated annual economic impact of more than $5.6 billion. Overall, the new service will sustain 28,000 jobs paying cumulative wages of $1.4 billion.


Other new or recently announced international service at LAX includes:


* Air France - seven round-trips per week to London, which began March 30 under the recent open-skies agreement between the U.S. and European Union;

* Alitalia - five round-trips per week to Rome beginning in June;

* British Airways - seven additional round-trips per week to London, which began in April 2007;

* Emirates Airline - seven round-trips per week to Dubai beginning Sept. 1;

* EVA Air - three additional round-trips per week to Taipei via Osaka which began March 30;

* Korean Air - three round-trips per week to São Paulo, Brazil, beginning June 2;

* United Airlines - seven round-trips per week to Frankfurt, which began last December;

* United Airlines - seven round-trips per week to Hong Kong, which began last October; and

* Air China - seven additional round-trips per week to Beijing beginning in Summer 2009.


According to the LAEDC study released last year, one average daily, round-trip, transoceanic flight of wide-body aircraft from LAX generated $623 million in annual economic output, and sustained 3,120 direct and indirect jobs in Southern California and $156 million in wages.


In 2006, international overseas flights at LAX, including airport operations, visitor spending, and cargo services, generated more than $82 billion in total annual economic output in Southern California. They sustained 362,700 direct and indirect jobs with more than $19 billion in wages.

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* Alitalia - five round-trips per week to Rome beginning in June;


If they're still around, that is........... :rofl:

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