Virgin Australia Reemerges as a ‘Hybrid’ Airline

Australia’s second largest airline is set to reemerge as a mid-market ‘hybrid,’ somewhere between a full-service airline and low cost carrier. With the close of its sale to US private equity group Bain Capital, the airline exited voluntary administration this week, Australia’s nearest equivalent to US Chapter 11 bankruptcy procedings.

Virgin Australia recently named Jayne Hrdlicka, a former Qantas executive, as its new chief executive. Hrdlicka said the reborn Virgin Australia will be more competitive and resilient. “Australia already has a low-cost carrier and a traditional full-service airline, and we won’t be either,” she said. “Virgin Australia will be a mid-market carrier appealing to customers who are after a great value airfare and better service.”

Virgin Australia started out as a low-cost domestic carrier in 2000, but by 2011 was positioning itself as a full-service airline. With a fleet of Boeing 777s, a network of posh lounges and long-haul routes to Asia and the US, Virgin found itself deeply in the red as it competed with flag carrier Qantas for the business travel market.

With the collapse of global air travel due to the coronavirus pandemic, Virgin’s creditors agreed in September to sell the airline to Boston-based private equity group Bain Capital in a A$3.5 billion deal.

Virgin Australia’s new strategy will instead target price-conscious corporate travelers, small and medium businesses, premium leisure travelers and vacation travel. Some regional airport lounges, while a revamped lounge concept will be unveiled in Adelaide early next year, which will then be rolled out across other locations such as Sydney and Melbourne.

The inflight product will see some changes as well. While Virgin will keep its business class cabin, it will conduct an end-to-end review and relaunch the product in 2021. In economy class, a buy-on-board menu will replace complimentary meals and snacks.

The new Virgin Australia “will ultimately give our customers what they value without the big price tag,” according to Hrdlicka. “Premium lounges, a new and fresh retail offering onboard, a choice of cabins, better digital technology, and a more streamlined check-in experience.”

Some things however will stay the same under her leadership, she adds. “We will also continue to deliver our award-winning service, strong network of destinations, an award-winning frequent flyer program, and a safe and reliable operation.”

virginaustralia.com