Virgin Australia will acquire Perth-based Skywest for an estimated $47 million and transform the airline into its regional arm, following this morning’s approval of the buyout by the Australian Government’s competition watchdog.
The move will see Skywest rebranded as Virgin Australia and take on Qantas’ own regional operation, QantasLink, flying secondary routes including the resources sector and charter services.
In announcing the deal last October, Virgin Australia CEO John Borghetti said it would “enable us to fast-track our advancement in the high growth fly-in-fly out and regional markets, increasing competition in these important segments.”
“We launched a regional partnership with Skywest in October 2011 and now we will be able to realise the full potential of the operation through developing a more integrated network, service and frequent flyer program,” Borghetti explained.
Borghetti has also set his sights on a controlling 60% stake in Tiger Airways Australia, on which the ACCC will make its call next Thursday, February 7.
If approved, it will complete Borghetti’s triple-play which sees Virgin Australia squaring off against Qantas, The Airline Formerly Known As Skywest taking on QantasLink for regional services, and Tiger Australia sharpening its low-cost claws to attack Jetstar.
Borghetti wants to invest “up to $62.5 million” to allow Tiger Australia to boost its fleet from the current 11 aircraft to 35 by 2018, although he remains adamant that Tiger “will be run as a separate business with a separate board… it will not be polluted in any form of distraction and will remain true to the from the low-cost carrier concept.”
Borghetti also stressed that that Virgin and Tiger will not codeshare flights, saying “we have to make distinct separation in marketing, and manage consumer expectations on what they’re booking.”