Virgin Blue Goes Upmarket With Name Change

Matthew Taylor|Reporter, CNBC Asia Pacific
Wednesday, 4 May 2011 | 4:10 AM ET

Low-cost carrier Virgin Blue, which has grown into Australia’s second-largest airline since its launch 10 years ago, is now looking to go upmarket in an attempt to grab an even greater slice of the market.

Sir Richard Branson at a rebranding launch, which saw Virgin Australia replace Virgin Blue and V Australia, at Sydney Airport on May 4, 2011.
Getty Images
Sir Richard Branson at a rebranding launch, which saw Virgin Australia replace Virgin Blue and V Australia, at Sydney Airport on May 4, 2011.

The airline, which operates flights to most Australian cities and to some international destinations as well, is going in for an image makeover, starting with a name change.

Founder Sir Richard Branson was in Sydney to announce that Virgin Australia will be the new name for Virgin Blue, V Australia and Pacific Blue, airline brands under the Branson umbrella.

“We operate a number of brands, so this is all about streamlining the look of the airline and it’s of course part of our attempt to increase our share of the business and corporate travel market by 10 to 15 percent,” Branson told CNBC in Sydney.

The airline has acquired new wide-bodied Airbus A330 aircraft that it plans to use for transcontinental flights across Australia, with a luxurious new business class and increased comfort for passengers.

Australia’s national carrier Qantas is the first-choice airline for business travelers and has already deployed more capacity on certain sectors to compete head on with the revitalized Virgin Australia.

Virgin Australia’s Chief Executive John Borghetti says the revamp will “provide a new standard of air travel to Australians” but some analysts say it will take a while to gain traction.

Virgin Targets Business Travel Market
CNBC's Matt Taylor speaks with Virgin founder Sir Richard Branson about the company's plans to double its share of the domestic business travel market.

Peter Harbison, from the Centre for Asia Pacific Aviation, believes it’s a good move but thinks that challenging the dominance of Qantas will be hard.

“They will struggle to find their feet as Qantas already has a big head start, with a number of travel contracts in the corporate travel market,” he told CNBC.

On growing the business in Australia, Branson told CNBC that Virgin is in discussion with two more carriers to form alliances. It recently inked a deal with Air New Zealand and Middle Eastern carrier Etihad and is waiting on final approval from the US Department of Transport on a tie up with Delta.

Rising fuel prices remain one of the biggest challenges facing the global aviation industry and while airlines have increased fuel levies in recent months, Branson said developing cleaner fuels and more fuel efficient aircraft is the only way to reduce spiraling fuel costs.