Virgin Blue goes business class

By: steve rowell - 7th March 2005 at 08:39

The Australian

Virgin Blue, famed for its one-class discount fare model, will launch its first business class service today as it seeks to wrest more corporate travellers from arch-rival Qantas.

Virgin Blue's new Blue Plus service will not be called business class, but will offer travellers a range of additional services on full-fare trips.

These include seats at the front of the cabin, where there is already up to 5cm more legroom than at the rear, extra luggage allowances and priority check-in.

Virgin Blue customers flying on the new top-rate "fully flexible" fares will also be offered full refunds on cancellations, less a $30 administration charge. Until now, customers who cancelled have been offered a replacement flight within 12 months.

However, Virgin Blue is still holding out on the introduction of a frequent-flyer program to rival Qantas and its low-cost offshoot Jetstar, which said last week that customers on its fully flexible fares could earn Qantas points.

Blue Plus travellers will have to pay for their own food and drink, like Virgin's other passengers.

The new class of ticket breaks with the one-class discount model Virgin has championed since its launch in 2000.

Chief executive Brett Godfrey said the changes were in response to feedback from business travellers, with Virgin now claiming more than 1000 corporate travel accounts.

"We expect Blue Plus to attract new Virgin Blue flyers and we will continue to lobby for an increasing share of business from Australian corporations and government organisations," Mr Godfrey said.

The changes come as Virgin Blue faces increasing competition from Jetstar and a slowdown in its business that caused a heavy profit downgrade in January. The subsequent slump in share price prompted a $2 billion takeover bid from Chris Corrigan's Patrick Corp, which already owns 46 per cent.

The bid has been rejected by Virgin Blue and Richard Branson's Virgin Group, which holds 25 per cent.

The Virgin Blue business push also comes as Paul Stoddart, the Australian-born entrepreneur who runs the Minardi Formula One racing team, prepares to launch his OzJet service later this year. OzJet, which is aiming for a single-digit market share, will offer only business-class services.

Flights are likely to cost the same as fully flexible economy fares on other airlines – about $320 each way on the key Sydney-Melbourne route.

A Qantas spokesman said the airline could not comment on the Virgin Blue business offer without seeing details, but said Qantas offered "the most comprehensive range of flights and services for business travellers in Australia, including frequent two-class services between major destinations".