Sir Richard Branson lashed out at Qantas while in town for Virgin Australia’s Melbourne to Hong Kong flight launch this week.
Branson claimed at the launch that the Hong Kong route “desperately needed Virgin’s competition”, and now fresh reports claim he went as far as to slam Qantas’ monopoly of the domestic market.
Per the Australian Financial Review, Branson took aim at Qantas for “pouring hundreds of millions of dollars” into a domestic capacity war, as well as asking the Government for financial support.
“We’ve had Qantas throw everything they can at us and it has cost them more than it cost us,” Branson said at the launch of the new Melbourne-Hong Kong route yesterday, per AFR.
Branson claimed Qantas went to the Federal Government in 2014 with a “begging bowl to push us over a cliff”, despite not needing the money.
“We had to lobby hard,” he said, per AFR.
“[Qantas] are big boys, they can make good money without having to drive us out of business.”
According to the Fairfax paper, Qantas sought financial assistance from the government in 2014, claiming they needed the funding to get back on a level playing field with Virgin, who had nabbed over $1 billion in capital from major foreign airline shareholders.
Qantas wanted the option for foreign ownership to be scrapped by the government, but foreign ownership was set at a 49 per cent limit. Per AFR, individual foreign investors can’t own more than 25 per cent of an airline, while combined ownership from foreign airlines is capped at 35 per cent.
Back in 2014 when all this was unfolding, Qantas said, per AFR, that it needed “immediate action to address the imbalance that has been allowed to persist for almost two years, namely Virgin’s unlimited ability to access foreign capital from government-owned airlines to fund a loss-making strategy against Qantas”.
Qantas now sits as one of the biggest moneymaking airlines in the world, while Virgin claws back from the financial impacts of the Aussie turf war.
According to Virgin Australia’s Chief Executive John Borghetti, Virgin’s new Hong Kong route is just the beginning of its expansion plans into Asia.
“Virgin Australia is renowned for bringing choice and competition and since our flights went on sale we have seen our competitors discount their Melbourne-Hong Kong fares by as much as 34 per cent compared to before our fares were launched,” he said.
“Hong Kong and mainland China are two of the largest and most valuable inbound travel markets for Australia and we are excited to introduce Virgin Australia to these regions. We believe there is tremendous opportunity for growth in these markets.”
Meanwhile, per AFR, Branson said the airline had plans in the works to launch new routes to Hong Kong from Sydney and Melbourne, having already applied for 21 new take-off and landing slots in Hong Kong to cover those new routes.
Approvals are yet to be approved, per AFR.
“We have to get slots in Hong Kong and that is tough,” Branson said, per AFR.
In addition, Branson promised he had no plans to sell off his 10 per cent stake in Virgin’s Aussie arm.
“I love Virgin Australia. It would be one of the last things I ever sell,” he said.
The Hong Kong Tourism Board said the new route would bring 71,500 additional seats to Hong Kong each year, contributing to further growth in total air capacity out of Australia.
The city has already seen an increase in seats out of Australia of 5.3 per cent year-on-year, as of January 2017, due to extra volume across Cathay Pacific, Qantas and Hong Kong Airlines in 2016.
“Hong Kong’s status as a key hub for international visitors has been made stronger today by the launch of Virgin Australia’s new flight from Melbourne,” said Hong Kong Tourism Board Regional Director, Andrew Clark.
“It’s been a long time since we’ve had solid competition on this route and we anticipate strong lead-in fares across all airlines off the back of it.”
“A third major airline for Hong Kong opens up a great deal of opportunity to boost Australian arrivals into Hong Kong and onwards to wider parts of Asia through Virgin Australia’s alliance with the HNA Group, including Hong Kong Airlines.”
