Singapore sling a threat to Virgin

The Australian AVIATION, February 12, 2007

Steve Creedy, Aviation writer



VIRGIN Blue has lashed out at politicians and others backing a Singapore Airlines bid to fly between Australia and the US, warning they could undermine its $1 billion plan to launch a new international carrier.

The airline says comments by backbenchers and other commentators that Australia's aviation policy should be reviewed if a private equity takeover of Qantas is successful show little understanding of the international aviation system which was "a political quagmire full of self-interest".

Several coalition backbenchers have argued that Qantas should no longer be protected on the trans-Pacific route if the $11.1 billion deal goes ahead. A target's statement is due to be released today.

Virgin says the comments fail to acknowledge that its new carrier, to be launched next year, will create more Australian jobs, bring tourists and provide choice and vigorous competition on the trans-Pacific route.

"Virgin believes strongly in competition as long as it's fair," Virgin chief executive Brett Godfrey says in an opinion piece published in The Australian today. "What would not be fair, nor clever, would be to openly invite these privileged international airlines to cherry pick and compete with Australian startup carriers without considering the findings of the 2006 aviation review."

But Singapore Airlines' Stephen Forshaw dismissed Virgin's warning as the same arguments used by Qantas to keep competition out of "one of the world's most protected air routes". "Continued protection costs Australia and Australians. Australians want to see competitors challenge the protection club, not join it," he said.

Mr Forshaw said passengers flying the route knew the lack of competition had pushed up prices and kept them high, deterring tourists and depriving Australia of more than $110 million a year in direct tourism expenditure.

"Virgin Blue appeals to keep protection in place so it can benefit: an irony for the airline which started by campaigning to 'keep the air fair'," he said.

Mr Godfrey's warning came as Singapore-backed Tiger Airways said yesterday it would be prepared to add more planes if the launch of its domestic carrier this year proved successful.

Tiger announced on Friday that it had applied for regulatory approval to launch an Australian domestic carrier with five Airbus A320 aircraft in what Mr Godfrey argues is an example of the unfairness of the bilateral aviation system.

He says Australian airlines are unable to do the same in other countries without taking a local partner, although Mr Forshaw said that in Singapore's case this was only because the island was too small for a domestic market.

Tiger is promising to use its no-frills Ryanair-based model to significantly undercut fares and could prove an increasingly painful thorn in Virgin's side.

Tiger chief executive Tony Davis told ABC television yesterday that the airline would be spending up $10 million launching the airline, and that it would be prepared to add aircraft if the venture proved successful.