Virgin Blue In Search of Joint Ventures to Boost Market Share

John Borghetti, the newly appointed chief executive of Virgin Blue (VBA) has hinted in his inaugural public address that he is planning to establish joint ventures with the international airlines by following the same format that his company is planning to follow for Delta Air Lines and Air New Zealand. In his statement, Mr. Borghetti stated that Virgin was planning to go for one-to-one alliances with the airlines instead of joining the global marketing groups like Star Alliance and oneworld. However, he didn’t come up with any conclusive statement regarding the issue. According to the chief executive, there are several markets out there where Virgin cannot go all by itself and run operations economically which is why it may need to forge alliance with other airlines.

Analysts are considering Singapore Airlines as one of the potential partners of Virgin Blue which offers its service to every major city of Australia and may benefit from Virgin Blue funnelling customers from its local network. Currently Virgin Blue is waiting to get the regulatory approval for its joint venture with Delta Air Lines and Air New Zealand on routes across Tasman and between the United States and Australia. The new Virgin boss is currently working on overhauling some of the Virgin operations which may include closing its flights in some routes. Under the renovation, flights to Fiji and Thailand are likely to be dropped. Mr. Borghetti has made it clear that he is looking forward to target the corporate travelers aggressively but sought to dismiss the fear that the company is leaving the leisure market.

It is believed that an unexpected drop of demand among the leisure travelers since early May was one of the key reasons that led towards the profit downgrading for Virgin Blue couple of weeks ago with the shares closing at a 22 month low of 30¢ on Tuesday which is less than half its value in comparison with the numbers recorded three months ago.