Matt O'Sullivan February 6, 2009 - 3:55PM British billionaire Richard Branson believes airlines will be locked in a price war between the Australia and US for the next year, and in a stinging attack on competitors has predicted United Airlines will stop flying the route within the next two to three years.
Sir Richard, the largest shareholder in Australia's second-largest airline Virgin Blue, took a broad swipe today at Qantas and United Airlines, on the eve of Virgin's long-haul carrier, V Australia, taking delivery of its first Boeing 777 aircraft in Seattle tomorrow.
Playing up the fledging carrier's chances of success, he described United's service as "dire" and Qantas as a "mixed bag".
V Australia will begin daily flights between Sydney and Los Angeles on February 28, three months later than originally planned because of aircraft delays. It will begin three flights a week between Brisbane and LA on April 8.
Sir Richard said a price war was between carriers on the Pacific was likely to continue for the next year as they vigorously competed for customers amid a global economic slowdown.
"We are not going away - we just don't get driven out of business," he told reporters in Seattle today. "I am sure [Qantas] will be competitive. [But] they are not going to want to lose tens of millions of dollars to drive us out of business."
He believes the US will be the epicentre of airline failures around the world over the next year because of the economic slowdown and the poor state of carriers. He said he did not believe Chapter 11 bankruptcy provisions would avert airline failures in the US.
"I am sure there will be more casualties. There are some very inefficient and very weak airlines in the world that don't deserve to survive, particularly American carriers," he said.
Qantas, United and V Australia face an added threat on the Pacific route in July when the world's largest carrier, Delta Air LInes, begins services.
Sir Richard said it would be "suicidal" for a fifth airline to fly between the US and Australia, adding that he would "put money on either Delta or United" not flying across the Pacific in two years because they could not compete against a lower Australian cost base.
Sir Richard said United was the most likely carrier to stop services to Australia.
V Australia is set to launch special fares on Monday when its first plane arrives in Sydney. It has already lowered its fares across the Pacific to as little as $1200 return.
Sir Richard said airlines needed to work to stimulate demand amid the global economic slowdown because he did not believe "there is going to be a natural pick up for a couple of years".
The carrier's planes will carry 361 passengers in a business, premium and economy-class configuration. Business class seats will recline to a flat bed. One of its main features is a bar in the business class cabins and a stand-up bar for premium economy passengers.
V Australia will take delivery of its second and third Boeing 777 aircraft by the end of this month, while a fourth is due in July. In total, the carrier will take seven aircraft - the first of which will be leased. It has an option to buy another six 777s from Boeing.
The planes have a list price of $US250 million ($380 million) to $US279 million.
* The reporter travelled to Seattle courtesy of Boeing and Virgin Blue.
VBA Price at posting:
21.5¢ Sentiment: Hold Disclosure: Held
