Virgin Australia to Boost Perth Services
1st Nov 2012
In a bid to get a bigger share and establish its dominance in the domestic market, Virgin Australia has recently announced its takeover of the Perth-based Skywest regional airline on October 30. Virgin Australia has also a controlling 60% stake in another rival Tiger Airways Australia.
Skywest used to be a major regional airline providing travelers charter flights through the 'fly-in-fly-out' concept in much of Western Australia and to a lesser extent, Darwin, Melbourne and Bali.
The buyout of Skywest shares is reportedly valued at $47M which is to be completed within the first quarter of next year.
The deal was similar to Qantas and QantasLink wherein Skywest, though operating independently as a separate entity, will sport the livery of the Virgin Australia brand in all its aircraft.
The latest development of the country's airline industry gives Australian business travelers three-level options as to which brand they like to fly with: Qantas or Virgin, QantasLink or Skywest, and Jetstar or Tiger.
John Borghetti, Virgin Australia CEO, said that the acquisition of Skywest by Virgin is a strategic move to fast-track its expansion plan to go into the 'fly-in-fly-out' business concept which he finds a good way to penetrate the regional markets, thereby increasing its stake in these important segments.
Mr. Borghetti hopes to develop a more integrated and expansive network, service and frequent flyer program through the acquisition of Skywest. Virgin Australia entered an agreement with Skywest in October 2011 enabling Virgin to test the regional markets served by Skywest.
The deal, though, is awaiting approval from regulators of two countries, Australia and Singapore, where Virgin Australia has also a controlling stake of the Singapore-based Tiger Airways. The purchase also needs the consensus of the majority of the Skywest shareholders before Virgin can finally take its full control.