Virgin Blue walks away from Macau

NO-FRILLS airline Virgin Blue, recently wrested from Sir Richard Branson's control by Australian transport group Patrick Corporation, has pulled out of talks with Air Macau to become one of three new airlines based there.

Instead the carrier, led by chief executive Brett Godfrey, will concentrate on its push for rights to fly from Sydney to Los Angeles - one of rival Qantas's most profitable routes - in a move that potentially puts it head to head with Virgin Atlantic's partner Singapore Airlines.

'We examined the feasibility of a joint-venture operation [in Macau] for several months,' Virgin Blue spokeswoman Amanda Bolger said.

'In the end, we couldn't reach an agreement, so we formally and amicably ended the negotiations.'

Virgin Blue was shortlisted to operate from the former Portuguese colony with start-ups WOW!Macau and Golden Dragon.

When talks began last November Virgin Blue, then controlled by Branson, was enthusiastic about the potential as it sought to expand offshore while growth prospects in its Australian home base became hard to find.

'We see Macau as having lots of potential,' Virgin Blue's head of strategy, David Huttner, said then.

Virgin Blue is not the only airline to fail. A similar bid by Ryanair to take control of Air Macau fell apart in 2003.

Instead, it seems Virgin Blue is intent on pursuing plans to fly across the Pacific. It has submitted documents to the Australian Department of Transport outlining proposals. The problem with that from Branson's perspective is that his Virgin Atlantic partner Singapore Airlines has sought similar rights for some time.