Worried about Virgin's new Melbourne-Hong Kong route

VA would have been much wiser to eschew the solid competition at HKG and fly MEL-PVG instead. The PVG market is growing much more than HKG, their premium product is years ahead of the competition on the route (MU/FM and CA), plus a solid feeder network with VS and DL giving a new one-stop option to UK and US East Coast. Given the option between VA and QF (factoring in the current transfer at SYD) I would choose VA every time.

I’m a big fan of VA but share others concerns that this route will not last long. It’s certainly not unusual to constantly discount a new route for the first 6-12 months in order to fill seats and most airlines expect to lose money on new routes initially. However this route has various issues for VA:

- Its an extremely competitive route already served by QF daily and CX 3 x daily, its not some underserved route crying out for a new player (like MEL-JNB was);

- CX and QF offer some of the rest premium products in the world on this route as well as some of the best lounges in HKG (even the QF HKG lounge is far superior to the HKG Airlines Lounge VA will use);

- Its not a daily service vs their competitors who do have a daily service;

- The schedule is all over the place. I realise they couldn’t get ideal slots but if their customers can’t remember the schedule they’re more likely to book a competitor with a reliable schedule (I know QF flies MEL-HKG at the same time every morning, every day);

- Onward connections are presumably via HNA Group who are virtually unknown in Australia vs the household name of CX.

I think VA would have better success if they’d launched MEL-PVG instead with a daily schedule. The competition is not nearly as intense.

It’s high time JB moved on from VA – he’s done as much as he can with them. Other than squeezing every cent of revenue they can from their customers I haven’t heard any strategy from VA in a long time.

I'm a big fan of Virgin, and i'm not anti qantas ;-) VA needs to stop placing random services into new cities and may even just stick with LAX from BNE, SYD and MEL and increase their frequencies rather than starting AUH, HKG etc. Costs of starting a new route are high, plus the LAX route is a premium route and they should be able to justify more flights in and out of the U.S than any other port. Do you guys agree?

I think the only way to keep this route sustainable is to launch a JV between HX and VA. Remember HX cannot launch MEL or SYD in its own right due to rights restrictions on HK side. Therefore, if HX wants to expand into Australia, it must co-operate with VA and let VA to operate Australia - HK routes, this can allow HX to subsidize VA on running MEL-HKG also to feed customers to it to make it sustainable.