8 September, 2014

Virgin wants corporates on board

Virgin Australia is targeting a greater share of the multi-billion dollar corporate travel market and will step up efforts to win accounts held by arch-rival Qantas.

With the battle over seat capacity seemingly over, Virgin has opened up a new front as it looks to increase its share of the contracted corporate domestic and international market, estimated to be worth between $6 billion and $7 billion a year.

It's a market that had been dominated by Qantas since the demise of Ansett more than a decade ago. But Virgin has successfully been chipping away at that dominance, including stealing some of its rival's high-profile accounts such as the Seven Network, AFL and ABC.

Having set a target in 2010 of snaring 20 per cent of the corporate market, Virgin has already netted 25 per cent. In the last financial year alone, the carrier signed up 171 new corporate accounts, each worth a million dollars or more.

The airline, which entered the Australian market as a low-cost venture, is now setting its sights on increasing its corporate market share to 30 per cent by 2017.

"This focus on the corporate and government sector will continue to be a major part of our new strategy Virgin Vision 2017, as it is central to driving yield growth and continuing to diversify our revenue," a Virgin Australia spokesperson said.

The airline's success in growing its corporate and government business follows a major image makeover, which included developing its frequent flyer program and improving its "global footprint" through partnerships with other airlines.

By early 2015, the last of its red planes will also have gone, perhaps a further indication of the airline's drive to attract travellers with a more sophisticated palate. Membership of the Velocity loyalty program has hit 4.1 million, with Virgin aiming for seven million over the next few years.

Partnership deals with carriers such as Etihad, Singapore Airlines, Air New Zealand and Delta in the US, have also enabled Virgin to improve its lounge access without having to outlay any capital.

Virgin made an underlying pre-tax loss of $211.7 million in the 2013/14 year, while Qantas sunk to an underlying pre-tax loss of $646 million. The results prompted Virgin chief John Borghetti to describe the 2014 financial year as "one of the most difficult operating environments in the history of Australian aviation".

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