In one of Australia’s worst kept airline secrets and as a part of John Borghetti’s attempt to transform Virgin Blue into a market leading Australian Airline, Virgin Blue Holdings Ltd., the Australian carrier backed by Richard Branson, will begin flying under the name Virgin Australia, as it tries to break Qantas Airways Ltd.’s hold on Australia’s business-travel market.

The new announcement comes today that the carrier will operate under the new name domestically from today and on international routes by the end of the year, it said in a statement. The Brisbane-based company, renamed Virgin Australia Airlines Pty, is also replacing its red-and- white logo with a largely silver one. The chief executive, John Borghetti, has made the strengthening of the airline’s brand one of his key priorities since taking over last year from its co-founder, Brett Godfrey. Shedding the Virgin Blue name, a reference to Australians calling redheads “Bluey,” highlights the carrier’s push to challenge Qantas’s 90 percent share of domestic corporate air- travel amid rising competition in its traditional budget market. Virgin Australia will offer onboard leather seats, a revamped inflight menu, new lounges and an overhauled frequent flyer program to win more lucrative passengers. While the staff have all new uniforms as well.

One of the challenges for the company had been to emphasise to consumers that its four brands – Virgin Blue, Polynesian Blue, Pacific Blue and V Australia – were one and the same. But despite today’s renaming of the domestic business, the airline may have to wait some time before it can use the Virgin moniker on its aircraft which fly overseas routes. The airline will still need to enter negotiations with joint venture partner, the Samoan government, to rename its offshoot Polynesia Blue.

“The only reason they would want to move away from the playful, joyful image of Virgin Blue is if the business market doesn’t like it,” said Stephen Holden, associate professor of marketing at Bond University in Queensland. “They might change, go more upmarket and become a lot more like Virgin Atlantic.”

Jetstar, Tiger Air

The Virgin carrier’s push to win business travelers has already seen it abandon much of the low-cost model it used when it began flying in 2000. The airline has moved away from the budget market as the growth of Qantas’s Jetstar unit and Singapore Airlines Ltd.-backed Tiger Airways Holdings Ltd. has helped push down coach-class fares in Australia. Discounted domestic economy ticket prices fell to a record low in January, according to Department of Infrastructure data.

That competition, along with natural disasters and rising fuel prices, has left the Virgin airline expecting its second annual loss in three years. The carrier may post a loss of as much as A$80 million ($87 million) in the year ending June 30, it said in March.  The airline’s shares were unchanged at 28.5 Australian cents at 10:30 a.m. in Sydney trading. They’ve dropped 46 percent in the past year, more than double the rate of decline for Sydney-based Qantas. Branson owns 26 percent of the carrier, while Air New Zealand Ltd. holds 15 percent.

The new name may also help Chief Executive Officer John Borghetti win customers from overseas as Virgin Australia works on expanding its international sales network through tie-ups with Delta Air Lines Inc., Abu Dhabi-based Etihad Airways and Air New Zealand.

“The Virgin brand has been underplayed, particularly internationally,” said Peter Harbison, managing director at Sydney-based industry consultant Centre for Asia Pacific Aviation. “I don’t think it’s going to lose anything by dropping ‘Blue’.”

Virgin Limits

The company was only able to use the Virgin Blue name on domestic flights because of restrictions linked to Singapore Air’s 49 percent stake in Virgin Atlantic. Its long-haul unit is called V Australia, while flights to New Zealand are flown by Pacific Blue. The carrier also has a venture with the government of Samoa called Polynesian Blue.

Qantas last year began a revamp of its business-class services, including lounges, cabins and food to help fend off competition. It’s also adding Airbus SAS A380 planes and boosting an alliance with American Airlines to help win international flyers.

The ‘Virgin Blue’ name was chosen after a radio competition, with the winner getting two return trips each year for life. Other suggestions included Rooted Airlines and Virgin Down Under, according to a press release. The carrier began flying the same year with a fleet of two planes and A$10 million of seed capital.

It’s been a very rough ride lately for Virgin will all sorts of issues and problems coming up, so it’s now time to deliver on the promise.

Do you think that Virgin Australia can take on Qantas?

See more about Virgin’s battle to reinvent itself:

http://urbanglobetrotter.posterous.com/virgin-blue-hits-week-long-turbulence

http://urbanglobetrotter.posterous.com/virgin-blues-overhaul-grounded

See more AIR WARS stories:

http://urbanglobetrotter.posterous.com/virgin-blue-on-the-money

http://urbanglobetrotter.posterous.com/tiger-takes-on-air-asia

http://urbanglobetrotter.posterous.com/coming-soon-to-a-plane-near-you-text-tweet-mi

http://urbanglobetrotter.posterous.com/australian-airline-wars-hot-up

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