No-frills Virgin eyes NZ skies

Discount airline Virgin Blue hopes to be operating here by the end of the year to fill the vacuum created by the collapse of Qantas New Zealand.

The airline of flamboyant Englishman Sir Richard Branson wants to accelerate its entry into the New Zealand market and has written to Prime Minister Helen Clark requesting Government permission to operate here.

Virgin Blue's move comes as accounts obtained by the Herald show Qantas NZ was losing money on 13 of its 18 routes, including all its provincial services, when it went into receivership.

The accounts for March - the airline's last full month of operation - show that the Auckland-Wellington-Christchurch routes being eyed by Qantas Airways, and possibly Virgin Blue, were profitable. But provincial routes lost $1.4 million.

The accounts show the airline made $900,000 on its Auckland-Wellington route, $900,000 between Auckland-Christchurch, $280,000 flying Christchurch-Rotorua, $80,000 flying Christchurch-Queenstown and $10,000 flying Auckland-Queenstown.

It lost money on every other route, notably Wellington-Christchurch ($400,000), Christchurch-Dunedin ($300,000) and Wellington-Nelson ($240,000).

Overall, the airline posted an operating loss of $140,000 in March.

An insider said management's refusal to take the tough decisions and close unprofitable regional routes was the key to the collapse.

Virgin Blue, which has broken the Australian market wide open with cheap fares since it started flying there last July, hoped to be here by the end of the year, said commercial operations head David Huttner.

"In light of the events of the past few days, while we have always been interested in the New Zealand market, that interest has obviously been accelerated."

Plans to enter the New Zealand market were on "the front foot."

Virgin's entry into Australia has been a boon for travellers. A price war has developed, allowing people to fly between state capitals for as little as $A33 ($41).

Virgin Blue's parent, Virgin Atlantic, has distinguished itself with quirky extras for its passengers, including massages and live entertainment on board. Virgin Blue markets itself as a no-frills airline that has dispensed with tickets, airport lounges and fancy offices.

Transport Minister Mark Gosche would say only that he had received a fax from Virgin and would look at setting up a meeting.

Despite an "open skies" agreement between New Zealand and Australia, Virgin will need Government approval to operate.

Civil Aviation Authority spokesman Martyn Gosling warned that Virgin Blue faced "a few hurdles" before it would be granted approval. He declined to speculate how long that could take.

Mr Huttner said Virgin chief executive Brett Godfrey was in Seattle buying 14 new Boeing 737s to add to its existing fleet of six.

"We would be open to putting those into a New Zealand service."

Virgin had created 600 jobs in Australia, and if allowed to fly here would also create a lot of jobs.

As Virgin declared its hand, Qantas Airways announced it would operate six Boeing 737 services today between Auckland and Christchurch and Auckland and Wellington, increasing to eight flights a day from tomorrow. It made no commitment beyond Sunday.

It promised to honour Qantas NZ tickets.

Receiver Michael Stiassny said he hoped to have a clearer picture of the airline's financial position within 48 hours. He had no comment on reports that the businessmen who bought it a year ago owed $12 million in unpaid capital.

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