04 June 2008

Virgin Blue gets punished for straying from the fold

Virgin Blue was one of the original Low Cost Carriers. However it has strayed from the model and today - it is probably beginning to regret that.

In the last 3 years it has bloated up with the usual accouterments of the Full Service model to wit:

1. Lounges
2. Assigned Seating
3. GDS Participation
4. Multiple aircraft types
5. Interlining

There are more

And to cap it all - it has an MOU with Air Asia to develop a new LCC (conveniently called an ULTRA Low Cost Carrier.)

Well today it seems that this is now coming home to bite badly. JP Morgan has issued a pretty nasty coverage analysis that has been widely picked up down under. There is talk of the airline not surviving.

With Qantas cutting back significantly on both major brands (Jetstar and QF Mainline) Virgin Blue will have no choice but to follow suit.

It may just be me - but it seems that if you have the word Blue in your name, you start as a LCC and then order Embraer E-Jets you end up in trouble. But then this could just be coincidence.



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