Big Breakthrough For Virgin

Virgin Australia has scored a major coûp after announcing plans to form a “long-term alliance” with Singapore Airlines. Under the agreement, the two airlines will code share on international and domestic networks and engage in joint sales, marketing and distribution activities, as well as coordinate flight schedules between Australia and Singapore and beyond.

The joint venture is a major gain for Virgin Australia, which saw Asia as the last region in which it needed to find an alliance partner.

In a bid to boost its appeal to business customers, Virgin has already formed joint venture arrangements with Etihad, US carrier Delta and Air New Zealand. The Australian airline wants to boost its share of the corporate travel market from about 10% to 20%.

The proposed agreement with Singapore Airlines will need the approval of the Australian Competition and Consumer Commission. The carriers plan to begin their alliance from August 1.

Virgin Australia’s chief executive, John Borghetti, said, “Asia is clearly a critical market for us as we build our international alliance network. Singapore Airlines’ extensive network throughout Asia will be particularly attractive to our international business and leisure travellers and this partnership, along with our other alliances, will mean Virgin Australia can now offer truly global flight coverage.”

Singapore Airlines’s chief executive, Goh Choon Phong, said in a statement that the deal would “enable us to offer even more choice for domestic and international air travel”.

The tie-up will give Virgin access to more than 70 global destinations. For SIA’s part, the deal provides access to about 30 destinations on Virgin’s network.

The deal has the potential to put even more pressure on Qantas’s international operations, which chief executive Alan Joyce said this week was losing money and unlikely to grow until its financial performance improved.

‘‘This partnership represents a significant opportunity for Singapore Airlines to drive growth in a manner consistent with our focus on service excellence, product innovation and network connectivity,’’ Mr Goh said. ‘‘It will enhance the attractiveness of Australia as a travel destination while also opening up new horizons for travellers from Australia.’’

SIA and Virgin’s top tier frequent flyers would also have reciprocal access to each airline’s airport lounges.

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