By Mathew Murphy and Seattle
VIRGIN founder Sir Richard Branson predicts that United Airlines or Delta Air Lines will be the first casualty in the "war on the Pacific" as V Australia prepares to launch services between Australia and the US at the end of the month.
Sir Richard, in Seattle to receive V Australia's first 777-300ER today from Boeing's manufacturing headquarters, told BusinessDay that consumers should expect to see low fares on the route "definitely this year and maybe next year as well".
The route, which has been a virtual monopoly for Qantas, with minor competition from United, has been subject to an air fare war, with Virgin offering fares as low as $1199 return between Sydney and Los Angeles. But V Australia's assault on the Pacific, which was due to start in November but was delayed because of a strike at Boeing, was further rocked by news that Delta, the world's largest airline, would also begin services on the route in July.
Sir Richard said something would have to give.
"Well, you have United, where the quality of service is dire," he said. "Qantas is a mixed bag of seats, some you can slide down … I think you are likely to see only two or three airlines on the route.
"United or Delta are likely to go, probably United … (these airlines) can attempt to drive us out of business but we don't get driven out of business."
Sir Richard agreed that the economic conditions were not ideal to be launching V Australia but he would press ahead.
"Yes, we are launching at one of those cyclical downturns but we will be out there offering consumers the best deals they have had in years across the Pacific on the best-quality planes," he said.
"We have been fighting to get permission to fly this route for a long time. Having got it, we are going to grab it. If you launch when the economy is booming, then you are going to get into profit sooner than if you launch when you are in the worst recession since 1929.
"But we have one of the strongest brands in the world. In America, we have one of the strongest reputations; in Australia we have a strong reputation."
Virgin Blue chief executive Brett Godfrey said V Australia had strong bookings, which were at about 40 per cent until June and he expected ticket sales to increase once the plane arrived in Australia on Monday. He said he expected V Australia to break even in the next 18 months.
V Australia will have four Boeing 777s by July and another three aircraft delivered next year.
Mr Godfrey said consumers had been "taken for a ride" on the Pacific route by Qantas for too long. "Even though London is 30 per cent further, it has been cheaper," he said.
V Australia's launch will mean it joins airlines Virgin Atlantic and Virgin America.
Sir Richard said consumers could also expect cheap deals on around-the-world tickets by the end of the month. "It will give you the ability to fly all around the world on Virgin," he said. "When you are flying 16 or 17 hours (across the Pacific) you don't want to go with an empty seat … There are going to be great bargains to be had."
V Australia is expected to wait a year before it announces plans to fly between Australia and South Africa.
The reporter travelled to Seattle courtesy of Virgin.