Macau opens up China for Virgin Blue

PUBLISHED : Thursday, 18 November, 2004, 12:00am
UPDATED : Thursday, 18 November, 2004, 12:00am

New aviation pact with Beijing gives operation to be set up by the no-frills carrier extensive access to mainland centres

Macau yesterday signed a liberal-ised air-services pact with the mainland, opening the door for Australian no-frills carrier Virgin Blue to go ahead with plans for a new China-focused airline in the former enclave.

The new deal gives Macau airlines 539 passenger flights between Macau and mainland cities per week - a near 90 per cent increase of 244 flights.

More importantly for Virgin Blue, the new deal allows a second airline to operate from Macau to mainland cities for the first time.

An announcement on the new airline is expected in weeks. The only cities that are exempt from the dual-carrier designation are Shanghai, Beijing and Guangzhou, which will be opened up to a second carrier at the start of the 2006 summer airline schedule.

The number of mainland cities accessible by air from Macau has also been increased from 31 to 37. These cities include Tianjin, Jiangjiajie, Lijiang, Jinan, Nanning, and Wenzhou.

The biggest difference between the new Sino-Macau deal and the agreement Hong Kong officials negotiated with Beijing in September is that mainland carriers have not been given through rights from Macau, meaning they cannot compete on international routes with Macau-based airlines. But mainland carriers now have reciprocal rights to Macau, so they can also fly to there 539 times a week from anywhere in China.

Macanese officials said they were surprised at the pace of the negotiations, which went much more smoothly than they had anticipated. The talks started shortly after the Hong Kong deal was finalised in early September.

'Our philosophy was for more frequent connections from Macau to the mainland. Now all the mainland [routes] we have can be served with at least a daily frequency,' one official said.

Virgin Blue's plans to launch a new carrier in Macau were not directly discussed between Macanese aviation officials and the General Administration of Civil Aviation of China (CAAC).

But its plans were implicit in the talks, given the discussion of a second carrier joining Air Macau.

While Virgin Blue's Macau start-up will not have access to the lucrative Shanghai route until 2006, it will be able to code-share on Air Macau's services, or those of mainland carriers, to the city in the meantime.

According to industry sources, Air Macau has already agreed to open up its monopoly on air services from Macau for Virgin Blue.

This agreement was ratified by Air Macau shareholders - which include China National Aviation Corp (CNAC), TAP Air Portugal, Sociedade de Turismo e Diversoes de Macau, Macau's tourist office, the Macanese government and Taiwan's EVA Airways - at a shareholders meeting this month.

Sources said an announcement on the new airline would be made over the next few weeks. It is expected that CNAC and other local interests will take at least a 51 per cent stake in the new carrier so that it can qualify as a Macau-owned entity to enjoy the new air rights.

It is also understood that the branding of the new carrier will not include the Virgin name, because of licensing concerns with Richard Branson's Virgin Group.

Instead, Virgin Blue is expected to use another variation of the 'Blue' name, similar to the Pacific Blue name with which it operates to New Zealand.

At present Air Macau operates scheduled services to just nine mainland cities, and to three of the 42 countries and territories (the Philippines, Taiwan and Thailand) with which Macau has agreements.