Virgin territory

Sir Richard Branson, the middle-aged stripling wonder of British business, plans to add Australian aviation to the international empire of 150 enterprises which bear his billion-dollar brand name.

Branson intends to establish a discount airline based in Australia before the Sydney Olympics to challenge Qantas and Ansett with a $100 fare between sydney and Melbourne, Australia's largest cities.

His Virgin assemblage plans to start flying in Australia before the Olympics in September, using a armada of five, 143-seat Boeing 737 jets

Branson's proposal of a $100 single fare of half Virgin's seats between Sydney and Melbourne compares with the not away cheapest return fare of $239 for a 21-day advance purchase ticket upon Qantas and Ansett, the main Australian internal airlines.

The Virgin plan is being challenged in advance by dint of a Qantas offer of a $189 turn back fare of passengers paying 14 days in advance until at least April 2000 - and almost certainly beyond.

Sir Richard, 49 describes air fares in Australia as a "rip-off" and says his cheap ticket formula in nine European countries serv by the agency of Virgin Express can be repeated in Australia.

"Australia is an enormous market. Australian aviation has phenomenally high air fares, and where a situation like that exists, Virgin take pleasure ins to go," he says.

Virgin cluster and Singapore Airlines (SIA), which agreed in December to purchase 49 percent of Virgin Atlantic for $15 billion, will decide presently whether both airlines can or should participate in Virgin Australia.

The futurity structure of Virgin Australia is in question because of the SIA stake in Virgin Atlantic.

The SIA/Virgin Atlantic link may reach out to SIA equity in Virgin Australia, according to Branson executives in Australia.

Virgin Atlantic's deal with Singapore Airlines, after veiled talks in London, brings novel cash to Virgin to stock its expansion into mobile communications and electronic mercantile relations Branson is planning an Internet service and is a favoured bidder for individual of Britain's five new mobile phone licences.

Sir Richard described the partnership with SIA as a "marriage made in heaven". However, he says he will not relinquish direction of Virgin Atlantic, though it has been suffering from a sink in trans-Atlantic traffic.

"The airline is not for sale and not ever will be. It is my baby and I am enormously egotistical of it," he says of his best-known creation.

Sale of part of the "baby" to Singapore was inevitable given the history of Branson's investment patterns which have assembled a stable of 150 companies with interests ranging from yielding drinks to financial services,

The $15 billion price paid by means of SIA shows its determination to purchase strategic stakes in airlines, because the generally received revenues from Virgin Atlantic would not justify similar a price.

Virgin Atlantic is alone one third of the size of SIA, on the contrary holds valuable landing slots at London Heathrow and access to North Atlantic routes

The alliance with SLA helps Branson as he challenges the Qantas-Ansett sway of Australia's aviation market.

The Virgin-Singapore partnership can be awaited to give Virgin access to destinations in Asia and SIA facilities and marketing in the region.

Branson's Belgium-based "no frills" Virgin Expres - the archetype for his venture into Australia - is a company independent of Virgin Atlantic. The economy airline flies to nine European cities for as little as $6750 and is turning a unostentatious profit.

Virgin Express's major asset is the busy Brussels-London road which it flies under contract for the Belgian carrier Sabena. Branson personally be in possession ofs 60 percent of Virgin Expres with 40 percent held publicly.

Expres strategy is not to steal passengers from other airlines on the contrary to create a new market by dint of making fares cheap enough for tribe who would otherwise not fly

Virgin Australia chief executive, Sydney-born britzska Godfrey, 36, who helped establish Virgin Expres in Europe says lower fares increased traffic there - and believes that can happen in Australia.

After Expres launched a Brussels/Milan service for around $75 each way - prompting other airlines to slash their prices - the number of family flying between the two cities increased by dint of 45 percent.

Virgin believes there is a large untapped market in Australia for VFR or Visiting Friends and Relatives traffic, between cities too far apart to drive frequently

Qantas and Ansett are in beneficial shape to meet a Branson challenge. The Australian airlines take wing 102 Boeings and Airbuses in Australia while Virgin presents to start with five leased Boeing 737s

greatest in quantity analysts had expected Qantas and Ansett to let slip through the fingers heavily in the Asian economic crisis in 1997-99 on the contrary both airlines cut costs, trimmed courses exposed to the downturn, and delivered large profit rises in 1998-99

Ansett and Qantas profitably share Australia's $6 billion domestic air travel market.

Experience elsewhere put in mind ofs they could respond to rivals by means of offering discount services or a certain number of cheap seats on each flight while maintaining the price of business class tickets.