Tucked down in the corner of the world, Australia is usually not the first place to come to mind for, well, just about anything. But right now, it’s by far the most interesting aviation market in the world.

I’m not just talking about the Chilean ash cloud that has wreaked havoc on the Continent but rather airline shut downs, shifting strategies, and unlikely partnerships. It is incredibly exciting for airline industry dorks like me.

For years, the Australian market has survived as a duopoly. On one side, we had Trans Australia, which became Australian Airlines before being merged into Qantas in the 1990s to form the domestic and international powerhouse we know today. On the other side, Ansett was the counterbalance until its collapse in September 2001. Ansett’s collapse created an opening for upstart Virgin Blue, and the hole was quickly filled.

Plenty of airlines have tried to form a third challenger over the years. Most recently, it’s been a subsidiary of Singapore-based Tiger Airways that has tried to squeeze in with an ultra low cost service. That service is now in serious trouble.

Tiger was just shut down for a week by the Australian authorities because the regulatory agency “believes permitting the airline to continue to fly poses a serious and imminent risk to air safety.” This only impacts the Tiger subsidiary in Australia; the other Tiger operations in Asia continue to fly but the damage could be widespread.

Tiger is fighting this, but such terrible press is bound to put a serious dent in bookings regardless of whether it flies again or not. It’s going to be very hard to recover from something along these lines.

But that’s not the only blow to low cost flying in Australia. After years of acting like a low cost carrier, Virgin Blue has decided to go upscale. It’s combining its Virgin Blue, Pacific Blue, and V Australia brands into the new Virgin Australia.

Virgin Australia is focusing on competing with Qantas. It’s introducing new onboard products to compete with what Qantas offers and it’s trying to form partnerships in order to expand its reach for its customers.

One of those partners is Air New Zealand, which actually owns 15 percent. This may seem eerily similar to Air New Zealand’s last venture across the Tasman when Ansett collapsed under its ownership, but this is a very different Air New Zealand. Instead, the two airlines can come together to compete against Qantas instead of each other.

Internationally, it’s a different story. Virgin has hitched its wagon to Delta in the US with a joint venture between the two over the ocean. Since they both currently fly between the US and Australia, this will allow them to cut capacity and share traffic. But this is where it gets weird.

Over in Asia, Virgin Australia has joined up with Singapore Airlines in a broad alliance partnership that includes codesharing, frequent flier benefits, and more. Why is this weird? Because Singapore Airlines owns roughly a third of currently-grounded Virgin competitor Tiger Airways.

Will all these changes, Virgin Australia loyalists can get just about anywhere in the world on the airline and its partners. They can also get the same level of service on domestic flights as they’ve come to expect from Qantas. Qantas can’t be happy about this, but in a way, Qantas did this to itself.

Who’s running the show at Virgin these days? It’s John Borghetti, a 30+ year veteran of Qantas. Why did John leave Qantas? Well, he was in line to take the top job but he was passed over for Alan Joyce. Now he’s got Qantas in the crosshairs.

What is Qantas doing about all this? Well, as it has in the past, it’s complaining a lot about its business being under attack. Recently, its international business has been suffering the most with big losses while its domestic operation actually makes money. Makes sense that Virgin Australia would focus on taking Qantas’s profitable domestic business, huh?

While Virgin Australia chips away domestically, international is about to become a bloodbath. The airline is losing millions, and CEO Alan Joyce said in a speech last month that a major restructuring would be announced on August 24.

You can expect to see some cuts and some strengthened partnerships with other airlines. I imagine that as usual, much of the focus will go on to its low cost subsidiary Jetstar. Jetstar is one of the few “carrier within a carrier” experiments that has been called a success, though not everyone is convinced that the numbers are telling the whole story.

Jetstar has taken over more and more of the airline’s business, and now there is word that a joint low cost carrier will be started with Japan Air Lines in Japan. This is on top of the Jetstar Asia brand that already flies within Asia. There has also been interest in starting a full service airline division based in Singapore. This all seems strange since Asia is so hotly contested right now. You would think Qantas would prefer to focus on its home turf and doing that right, but the only thing on the menu for that region seems to be cuts.

As you can see, this market is truly fascinating and it’s changing quickly. I imagine that what we see next summer will look very different than what it looked like last year.

[Original tiger photo via Wikimedia Commons user Monika Betley/CC 3.0]
[Original Virgin Australia photo via Wikimedia Commons user YSSYguy/CC 3.0]

Australian travelers know Virgin Blue as the number two competitor to Qantas, but within a couple of days, the name will be gone. Ok, so I’m just being dramatic. The airline is simply changing its name to Virgin Australia (or so it’s expected). That, of course, begs the question . . . why didn’t it get that name in the first place?

We don’t know for sure that Virgin Australia will be the name announced this Wednesday (Tuesday for us here in the US), but all signs point that way. Trademarks have been registered, the web domain has been secured, and there were even a couple of slip ups on the current website that showed the airline’s hand. This is all part of Virgin Blue’s new strategy under former Qantas exec John Borghetti to become a viable competitor against Qantas when it comes to the business traveler.

How did the airline get the name Virgin Blue in the first place? It all came as part of a contest the airline held to name the airline when it launched in 2000. In Australia, a “Bluey” is apparently slang for a red-headed person. With its red-bodied airplanes, the name seemed to fit, and it added a little fun. This may have sounded fun, but it seems out of place today among Virgin airlines.

Most Virgin airlines (except for the now-defunct Virgin Express) have geography in the title. Virgin Atlantic flies over the Atlantic (primarily). Virgin America? I think we know how that works. And Virgin Nigeria may be gone, but in its day, it was clear where it flew. So now Virgin Australia will join that family.

The bigger problem, however, is around the Virgin name itself. The name was originally licensed solely for flights within Australia. That meant that when Virgin Blue started expanding, it couldn’t take the Virgin name with it. That’s how we ended up with Pacific Blue in New Zealand and the South Pacific, Polynesian Blue in Samoa, and of course, V Australia for long-haul intercontinental flights. The brand confusion is just nuts.

My understanding is that this insanity was courtesy of Singapore Airlines. Singapore bought 49 percent of Virgin Atlantic back in 1999. Concerned about protecting its turf in its sphere of influence, it pushed for the restrictions on Virgin Blue’s use of the Virgin name outside of Australia. We’re in a different world today, however. There is plenty of low cost carrier competition around Southeast Asia and Singapore is pondering a sale of its Virgin Atlantic stake anyway. I assume that Virgin Australia had to pay up in order to be able to use the Virgin name in a greater geography, but it’s worth it to have a unified brand.

Now we’ll see all the Virgin Blue brands united under the name Virgin Australia. It’s now my understanding that only Virgin Blue will become Virgin Australia with Pacific Blue being folded in to V Australia. So, man, did I get this one wrong. With this new brand, the airline will be gunning for Qantas and a larger share of the business travel market. The name and paint job aren’t the only things changing. We’ve already seen the airline put widebodies on flights between Sydney and Perth with longer-haul configurations that appeal to business travelers. We’re also going to see new interiors and changes to the frequent flier program, undoubtedly in ways to make it more attractive to the frequent Qantas traveler.

Remember, Virgin Blue also has a fairly new partnership with Air New Zealand across the Tasman, so I would assume we’ll see further integration between the two so that the new Virgin Australia can provide better offerings to the business travelers on both sides of the Ditch.

If I’m Qantas, I’m certainly concerned about this. The Virgin effort is being spearheaded by someone who knows Qantas well from the inside. And while its Jetstar subsidiary did a good job of holding ground against low cost carriers, it does nothing against an airline targeting the business traveler. This should be fun to watch.

[Updated 5/2 @ 812a to reflect the fact that only Virgin Blue will be changing its name to Virgin Australia]

[Updated on 5/4 @ 918a - it appears that Pacific Blue and V Australia will become Virgin Australia, so the initial post was right.]