Virgin Australia has announced a series of deals which will see it sell a 10% stake to Singapore Airlines, gain a 60% share in low-cost carrier Tiger Airways Australia and challenge the dominance of Qantas in the lucrative fly-in, fly-out market with a $99 million proposed takeover of Western Australian-based airline Skywest.
Our senior lecturer here at UNSW Aviation, Dr. Ian Douglas says the move will help cement Virgin Australia's move to a premium airline.
Virgin is well on it's way to becoming a full-cost carrier rather than the low-cost carrier it started out as. A dual brand strategy gives you protection when there is a downturn in the economic cycle. What happens to network carriers in a downturn - and Virgin has international exposure as well as domestically - is the front end premium traffic goes soft and the cargo business falls apart, usually very quickly, leading to significant falls in yields, particularly in international freight yield which can sometimes fall by 50%.
The full article can be viewed at The Conversation website.