Virgin Australia launches China push with Hong Kong flights

Virgin Australia will seek regulatory approval for a proposed alliance with part-owner HNA Aviation, Hong Kong Airlines and HK Express that will see it fly to Hong Kong from the middle of the year.

The airline plans to introduce flights between Hong Kong and Australia in mid-2017 using Airbus A330 aircraft featuring its award-winning business class.

It will offer an onward connection to mainland China on services operated by Hong Kong Airlines.

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However, the Australian carrier also flagged today that it ultimately wants to operate direct flights in the highly competitive market between Australia and Mainland China.

The initial stages of the alliance will see the airlines codeshare on each other’s flights between Australia and Hong Kong as well as between Australia and mainland China and on each other’s domestic networks.

Virgin’s Velocity frequent flyer members and HNA’s Fortune Wings Club members will get reciprocal access to frequent flyer benefits and lounges. The airlines are also proposing to co-operate on route planning, sales, distribution and marketing.

The airline has yet to reveal where it will fly from in Australia, although the speculation is Melbourne, and would not confirm if the flights would be daily.  It said pricing would be competitive without specifying fares. 

Virgin Australia group executive chief executive John Borghetti described the services, which are still subject to regulatory approval, as a “game changer’’ for travel between Australia and China and said they were a key plank in the carrier’s international strategy.

“The alliance will accelerate and support our access to the Chinese market, which is Australia’s fastest growing and most valuable inbound travel market,’’ he said.

“HNA Aviation fly nearly 100 million passengers each year and we look forward to working collaboratively with them to drive inbound visitation to Australia, resulting in significant benefits for the Australian tourism industry and the broader economy.’’

The airlines have submitted an application for authorisation of the alliance to the Australian Competition and Consumer Commission.

Mr Borghetti said he hoped Interim approval would be granted quickly, possibly within a month.

“The reason for that is, as you know, Hong Kong is really a route that’s covered by two carriers,’’ he told a telephone conference. “Cathay and Qantas have got it by the throat and we intend to break that duopoly and bring real competition on the route.’’

The news came as Virgin reported a net loss of $A21.5m for the first half of fiscal 2017 compared to a $A62.5m profit in the same quarter last year. This translated to an underlying profit before tax of $A42.3 million, a fall of  $A39.2m on the same period a year ago.