Virgin Australia

Early years as Virgin Blue (2000–2006)

Virgin Australia was launched as Virgin Blue, a low-cost airline, in August 2000, with two Boeing 737-400 aircraft, one of which was leased from then-sister airline Virgin Express. Initially offering seven return flights a day between Brisbane and Sydney, this was expanded to cover all major Australian cities and many holiday destinations. The Virgin Blue name was the result of an open competition; it was a play on the predominantly red livery and the Australian slang tradition of calling a red-headed male 'Blue' or 'Bluey'. This term has been used by the older generation, also known as the boomer generation.

The timing of Virgin Blue's entry into the Australian market was fortunate as it was able to fill the vacuum created by the failure of Ansett Australia in September 2001. Ansett's failure allowed Virgin to grow rapidly to become Australia's second domestic carrier rather than staying just a cut-price alternative to the established players. It also gave Virgin access to terminal space, without which growth would have been significantly limited. Delays in negotiating access to the former Ansett terminal at Sydney Airport however, forced Virgin to use its original terminal there—a collection of prefabricated buildings without aerobridges—longer than was needed. The airline's corporate and operations functions were located in its headquarters building at 112 Barry Parade in Fortitude Valley, Brisbane.

In May 2006, Toll Holdings acquired Patrick and became the majority owner of Virgin Blue. In July 2008, Toll sold its majority holding via a special dividend to hold 1.7% of the company. In June 2013, Air New Zealand owned 23% of the company.

Virgin Blue previously used a familiar formula pioneered by airlines such as Southwest Airlines and Ryanair of eliminating costs such as included in-flight meals and printed tickets in favour of selling food on-board and using telephone and internet booking systems. It also cut costs in the past by limiting the number of airports serviced and by operating one type of aircraft, the Boeing 737. This strategy changed with the introduction of a second type into the fleet. The airline ordered 20 Embraer E-jets, in a mix of six E170s and 14 E190s. These were ordered specifically so that the airline could re-enter the Sydney–Canberra market that it abandoned in 2004, and to fly to less populous areas. The first E170 arrived in Australia in September 2007, and by the end of the year, the three on initial order had been delivered. These were placed on limited-frequency services before full-scale operations were launched on 4 February 2008 with services from Sydney to Canberra (branded as 'Capital Jet' services), Mackay in Queensland, and the New South Wales regional centres of Port Macquarie and Albury, which were promoted with a one-cent fare. The flights to Canberra and the regional centres signified an effort to compete more directly with Qantas and its subsidiary QantasLink operation, which flies to all three cities, and with independent Regional Express Airlines.

Codesharing and network consolidation (2006–2010)

When Virgin Blue launched in 2000, it did not have interline or marketing alliances with other airlines. This changed after the collapse of domestic competitor Ansett Australia, when Virgin Blue began a codeshare agreement with United Airlines, enabling United passengers to connect from the United States to Virgin Blue’s Australian destinations not served by United.

In 2006, Virgin Blue began forming partnerships to compete with Qantas. It established frequent flyer agreements with Emirates, Hawaiian Airlines, and Malaysia Airlines. The airline also had an interline agreement with Regional Express Airlines for access to smaller regional centres in eastern Australia, and operated two routes in Western Australia through Virgin Australia Regional Airlines.

In November 2007, Virgin Blue announced an agreement with Garuda Indonesia, allowing domestic passengers to transfer to international Garuda flights from Perth, Melbourne, Sydney, or Darwin. A similar agreement was later made with Vietnam Airlines, providing connections from Melbourne and Sydney to destinations in Vietnam via its network.

In 2008, business class was introduced throughout its entire fleet. New seating was installed in the first three rows of the cabin. These could be converted from three seats in economy configuration to two seats for premium economy. The premium product offered priority check-in, larger baggage allowance, lounge access, priority boarding, increased legroom and all-inclusive in flight entertainment, meals and beverages on board. The product was aimed at business and corporate customers. The airline began charging economy-class passengers for checked baggage in September 2008. The airline further announced its intention to operate Airbus A330 aircraft between Perth and the East Coast, starting in May 2011.

In December 2010, Virgin Blue entered into alliances with Etihad Airways and Air New Zealand for code-sharing, reciprocal lounge and frequent flyer access and other co-operational projects.