Virgin Australia CEO John Borghetti: China is the future for us

Virgin Australia CEO John Borghetti told CNBC’s “Squawk Box” on Thursday that Hong Kong was the perfect gateway to China.

“You’re geographically situated in a position where, within a five-hour flight time, you can access half of the globe’s population. So, it’s very important for us. It’s the spearhead of our Asian expansion,” Borghetti said.

“China is the future for us, in terms of in-bound tourism to Australia, certainly, but as Virgin Australia, we see this as a huge potential,” he said.

The airline has begun with five flights a week to Hong Kong, but Borghetti said that, ideally, the carrier would like 21 flights a week, although he said getting slots at Hong Kong’s busy airport was challenging.

Travelers from China and Hong Kong already make up around a quarter of the tourist dollars spent in Australia, and China was expected to overtake New Zealand as the biggest source of inbound tourists this year.

The founder of the Virgin Group and 10 percent shareholder in Virgin Australia, Sir Richard Branson, highlighted the importance of the Chinese market to Australia.

“Take Australia, this year and every year, it’s growing by about 18 percent, the number of people coming from China to Australia. And if you compare that with say, the number of people coming from America to Australia, it’s about 7 or 8 percent,” he told CNBC on Wednesday. “To be the No.2 airline in Australia (and) not to be taking China seriously would be a big mistake,.”

“We’ve started today flying into Hong Kong from Melbourne. We hope to get slots into Hong Kong from Sydney and Brisbane. We also hope to be able to open up other Chinese cities as well,” Branson said.

Virgin Australia CEO Borghetti said he was planning on launching direct flights between Australia and mainland China, but was tight lipped on when those services might begin.

“I won’t give you the timeline. Suffice to say. though, that it’s really just the slot issues that’s driving most of that. It’s the art of what’s possible with what you can get,” Borghetti said. “It’s a question of the logistics of getting the appropriate slots” in Hong Kong and China.

By Yolande Chee


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