One of Australia’s top aviation experts said Virgin Australia made a critical error in failing to go the budget route when it came back from the brink of collapse.
Yesterday the public got their first glimpse of what a resurgent Virgin Australia would look like under new owner Bain Capital.
In its long-awaited announcement yesterday, the airline said it would keep its three-cabin system – Economy, Economy X, and Business – and bring back all but some of its lounges, but ditch free food in economy class and offer free entertainment. in-flight and Wi-Fi on board upon prior notice.
There was little clarity around its national network, and even less hope of returning overseas.
But new CEO Jayne Hrdlicka has made it clear that Virgin Australia’s new look will be a “mid-range” carrier – not a low-cost airline like Jetstar, or a full-service carrier like Qantas.
Strategic Aviation Solutions president Neil Hansford said it was a mistake.
“I think this model won’t work, I don’t think this midsize airline is what business people want and that’s where you make your money,” Mr Hansford told news. com.au.
“The smart thing to do would be to drive out Jetstar and come up with an even cheaper alternative. You could have called it Virgin Lite, it could have been a no-frills carrier where passengers pay for everything (they want). “
Mr Hansford said yesterday’s announcement did not specify anything about the business class experience – Virgin Australia said it was still under review and would be relaunched in 2021 – and that the shutdown of some business lounges made it a half-baked proposition for business travelers.
Families traveling on a budget would also be difficult to woo, especially with the replacement of free economy class food with a buy-only menu.
“If it’s a family with three kids going to Cairns, they’re going to have to bring them something to eat and drink for the duration of this flight, everything has to be bought, so it’s a tough proposition to sell,” said Mr Hansford, former executive director of Ansett Air Freight, said.
“The fundamental question is: is there a market between Jetstar as a low-cost carrier and Qantas as a traditional, full-service airline?
“No one has proven anywhere in the world that there is anywhere in the middle. The airlines that are booming are the very low cost airlines like Wizz in Europe and Frontier in the United States. “
He said Qantas had also been careful to push regional routes that had no commercial demand “into the Jetstar camp.”
“There is no established market between Jetstar and Qantas – there is nothing in the middle,” he said.
“Qantas can cut back on its premium product and fill that middle ground with a quality product at a good price. And you leave yourself very vulnerable if you don’t provide proper restoration.
Mr Hansford said he expected other shareholders to be introduced eventually and believed Singapore Airlines could be one of them if it looked for an Australian rival to Qantas.
“Then it will change direction once again, where there will be a super low cost activity and another premium activity, as Singapore Airlines business and first class passengers will not be attracted to domestic flights on Virgin, ”he said.
Virgin’s home network was another area where yesterday’s announcement was unclear.
New boss Jayne Hrdlicka told news.com.au that the new airline will serve “all the places that are really important to our hearts,” including capital cities, major regional destinations and vacation destinations.
The company hopes to retain the 30% market share it held before the pandemic.
But Mr Hansford believed Virgin Australia would operate with a significantly smaller 737 fleet when the national grid was restored.
Today, the Australian Competition and Consumer Commission gave the green light to Virgin Australia to have its partner airline Alliance operate up to 41 regional routes on its behalf, a deal it said would create more competition in regional areas.
It arose when Rex announced that he would launch domestic operations with a fleet of Boeing 737s formerly flown by Virgin Australia.
The only mention of regional and charter flights in Virgin Australia’s announcement yesterday was its plan to retain Virgin Australia Regional Airlines, which flies from its base in Western Australia.
“What about Intra-Queensland, which is important, and Canberra, which is not even mentioned?” Said Mr Hansford.
He said he felt the ad was an “unfinished plan” for a “partially built business”.
“I would have thought that in the time that it took, and they’ve been in the driver’s seat for a long time, they could have come out with a defined product and a defined network,” he said.
“It’s neither one thing nor another. It’s an airline medley that’s basically a work in progress. “
Virgin Australia’s update to the public yesterday coincided with the first day in charge of Ms Hrdlicka, who was previously the CEO of Jetstar.
She said the post-COVID travel environment continued to change, with travelers and businesses looking for better value.
“They crave flexibility and choice, a brand of trust that resonates with their values, and great prices, as well as the premium features they value most,” she said yesterday.
“Today we announced a plan that will give our customers what they value without the high price tag: upscale lounges, a new onboard retail offering, choice of cabins, better digital technology and more simplified control. -in experience. We will also continue to provide our award-winning service, our strong destination network, an award-winning loyalty program and safe and reliable operation.
Virgin Australia’s Brisbane lounge has reopened and will soon be joined by those in Sydney, Melbourne, Adelaide, Perth T1 and the Gold Coast.
The Cairns, Darwin and Mackay Lounges will be permanently closed, joining Alice Springs, Perth T2 and Wellington, whose closures have already been announced.
Ms Hrdlicka said the company was particularly excited about its new Adelaide salon, which was delayed in April due to COVID-19, and will now open in early 2021 with an “experience and aesthetic more aligned with the Virgin brand. “.
“This is a new show for us and a prototype that will serve as a framework for other shows as we go through the salon modernization cycle,” Ms. Hrdlicka told news.com.au.
“We are really looking forward to starting to innovate now on what the future salon catering service will be, because now it’s a COVID experience and it’s quite limited, but there is a lot of positive energy to keep going. innovate and continue to deliver great customer experiences. . “