Virgin vs Qantas in a new battle for east-west business travellers
Transcontinental flights will become a tough new battleground for Virgin Australia.
By David Flynn, September 1 2020
Virgin Australia is set to once again take the fight to Qantas: this time with the benefit of a wipe-out of debt, a lower cost base and a mission that's more squarely focussed on being its own value-oriented airline rather than 'Qantas lite'.
The primary battleground will of course be routes between the three east coast capital cities – Brisbane, Sydney and Melbourne – which form Australia's popular and profitable 'golden triangle'.
It's arguably here where Virgin can make the most headway, although from March 2021 it'll face a fresh challenger in regional airline Rex.
The prospects on Australia's other key corridor – the transcontinental crossings between those east coast capitals and Perth – seem quite different, however.
Also read: How Virgin Australia 2.0 plans to win back business travellers
A new east-west battle
The east-west routes – especially Sydney-Perth and Melbourne-Perth – have long been popular and profitable for airlines, and at times hyper-competitive.
This was underscored in May 2011 when Virgin Australia, newly rebranded from Virgin Blue, launched its Airbus A330 'Coast to Coast' service.
While the former Emirates A330 was fitted out with 'regional business class' recliners in a 2-3-2 layout, this was still far enough ahead of Qantas' A330 offering that – combined with upmarket inflight dining and a chauffeur drive service at both ends of the trip – it delivered on Virgin's CEO John Borghetti promise of "a new standard of airline travel in Australia."
Virgin Australia fired the first shot in the original east-west battle with its Airbus A330 Coast to Coast service.
In response, Qantas briefly rolled out the mighty Boeing 747 jumbo jet between Sydney and Perth: a marker for the brutal capacity war which drive down prices but also profits, hammering both airlines' bottom line in the process.
Read more: How hard-fought competition made Australia's business class travellers the winners
Almost a decade on from those dizzying days, Virgin Australia – now cleared for take-off under the new ownership of Bain Capital – finds itself at a clear disadvantage to Qantas when it comes to chasing transcontinental business travellers.
The decision to ditch its Airbus A330s means that Virgin's east-west routes will be handed over to its Boeing 737s, which sport a simpler business class cabin than the A330's flagship The Business seats.
Virgin Australia's decision to ditch the Airbus A330 also means an end to its flagship business class.
Even on a like-for-like basis against Qantas' Boeing 737s, Virgin's seats lack a swing-up legrest to cradle your calves for the 4-6 hour transcon journey.
Likewise, only some of Virgin's Boeing 737s offer an at-seat AC socket to keep laptops, tablets and phones charged up during the flight.
Virgin Australia's east-west business travellers will now have to make do with the Boeing 737.
And on any given service where Qantas rosters the A330 with its Business Suite business class – a spacious, comfortable crib with direct aisle access, plenty of room to work and a seat which reclines all the way down to a flat bed – there's simply no contest.
Qantas' Airbus A330 business class.
So how can Virgin compete for business travellers shuttling between the east and west coasts?
A better business class? Not likely
For starters, let's put aside notions of Virgin creating a 'sub-fleet' of Boeing 737s dedicated to transcontinental flights, with their conventional business class seats replaced by something more suited to the longer trips.
Ex-CEO Borghetti started down that path in mid-2017 with plans for a “quantum leap in domestic business class" on the Boeing 737s – potentially using the airline's Boeing 737 MAX jets as the launchpad – while the A330s spearheaded a push into Hong Kong and China.
Thompson Aero's Vantage platform was rumoured to be Borghetti's pick for a new Boeing 737 business class seat.
“When we brought today’s A330 business class onto east-west routes we brought something new, and it’s still the best transcontinental business class," Borghetti told Executive Traveller at the time. "I'm confident we will continue to have the best transcon product (with our new business class)."
But Bain's Virgin is very different to Borghetti's, and it's difficult to imagine such a significant investment would pass muster unless there was an overwhelming business case behind it.
Lowering the price of Perth
Under the ownership of Bain and the stewardship of CEO Paul Scurrah, Virgin's new lodestone will be value – and ticket prices will weigh heavily in the value equation, especially when Qantas has a superior business class product.
At the time of writing, Sydney-Perth fares for late July 2021 already show Virgin undercutting Qantas by up to 50%. Virgin's Business Saver fares listed at $1,249, with the more flexible standard Business fare at $1,800, compared to $2,571 for Qantas Business.
While many business travellers prefer the flexibility to change their booking without penalty, Virgin's full Sydney-Perth business class return fare lands at $3,600 – some $1,540 cheaper than the Qantas equivalent.
On Virgin's east-west Boeing 737 flights, price will be paramount.
Such a difference in price should already give Virgin the edge for budget-conscious business travellers, and it's questionable how much further the premium fares could drop, considering that Virgin's most expensive economy fare – sitting just shy of $700 – is less than half that of the cheapest business class ticket.
However, the new Virgin Australia will by all accounts have more room to lower its fares across the board if need be: a useful tool in any competitive scenario, especially if Virgin needs to win back travellers based more on price than any other factor.
The lounge experience
Virgin's business class passengers already have access to the Virgin Australia lounges, which we rate as being generally better than their equivalent Qantas Clubs but falling well short of the Qantas Business lounges.
However, especially during the peak hours when most business travellers take to the skies, Virgin's lounges can be crowded, noisy and offer second-rate meals.
Should east-west business travellers have access to The Club lounges?
If Virgin decides to retain its The Club lounges – even without fancy à la carte dining – the airline could do worse than to usher east-west business class flyers into those quieter havens.
As a rule, the longer the domestic flight the more important the ground experience becomes, and including Club access with a transcontinental business class ticket would certainly tick that box and could even one-up Qantas.
Bundle hotels with airfares
It's a safe bet that just about every business traveller flying from Sydney, Melbourne or Brisbane to Perth, or vice versa, would be staying for at least one night and quite possibly two night before their trip home.
By stitching up deals with a selection of suitable hotels Virgin could offer a flight+hotel package at a lower combined price than most travellers could obtain, while also removing one more item from the traveller's to-do list and adding convenience to Virgin's value proposition.
Would business travel bundles combining airfare and hotel sharpen Virgin's appeal?
The selection of properties would of course need to cover the most popular hotel loyalty programs – frequent flyers tend to be especially picky on that front, in order to maximise their points and status perks – but could conceivably include cost-extra items such as breakfast and executive lounge access.
Again, it all comes back to ensuring that Virgin Australia offers better value for the business traveller – because it can't seriously enter the new transcontinental turf war relying on its Boeing 737 alone.
Also read: How Virgin Australia 2.0 plans to win back business travellers
David Flynn is the Editor-in-Chief of Executive Traveller and a bit of a travel tragic with a weakness for good coffee, shopping and lychee martinis.
11 Sep 2015
Total posts 216
Virgin is going to find this is an uphill battle when it only has the Boeing 737 in its fleet. It's really going to have to rely on a low selling price, I wonder if it could get down to $1,000 for business class if it also cut its top-rate economy fare? The airline can't compete with the business class seat, and even the best inflight meal won't change things because nobody flies for the food. Access to The Club would be interesting, I think some US airlines offer access to business class lounges for transcon flights but not other domestic flights?
17 Jun 2020
Total posts 236
It is only a no contest on hard product if QF keep the flat beds on. Out of Brisbane it is very rare to get anything other than a 737. QF did have 2-3-2 recliners in Business similar to the 737 on the 330 and only reacted because of Virgin.
Wish there was more competition in Australia. Never thought I would say Transcon flying in the US in premium cabins is a much more compelling offering (USD439 lead-in on United for LA-NY as an example).
Qantas - Qantas Frequent Flyer
09 Nov 2018
Total posts 105
Agree on the A$600 sale fares Us trans con! Cheapest I have seen is $1299 or there abouts.
Qantas win hands down on product & have the large corporate accounts to pay the premium, especially with people that are flying on someone else’s dime!
Virgin will be for the very small business owner that want some degree of comfort for a value price, and there are heaps of people in that boat.
09 Aug 2015
Total posts 93
Also worth pointing out that the galley in the 737s limits what you can do in terms of preparing meals. Not that Bain is going to go down the gourmet path here anyway. What would make me choose Virgin over Qantas for an east-west flight? Price is number 1, 2 and 3, and that includes the price advantage of a flight+hotel bundle as suggested above.
13 May 2020
Total posts 803
Virgin could sign some incredibly good deals with hotels right now.
Talking to a hotel in Brisbane on edge of city & told average occupancy under 20%, even at giveaway rates.
So Virgin offers choice of 1/2 dozen hotels for 1 night, combined with airfare, with no price breakdown, for less than the Qantas airfare alone. Also Virgin offers triple ff pts to be used domestically only, in a shorter time frame , so no real cost, as just more people looking for same ff availability.
OR
simply bring the other 1/2 with you, with other person paying less, as they would be sharing hotel room.
20 Nov 2015
Total posts 434
Very good idea, bring your partner to have a bit of a holiday while you work and still save against the equivalent Qantas fare.
25 Jan 2012
Total posts 29
I've only flown business in VA on 737's a few times, but have quite enjoyed it every time. The smaller cabin allows for much more attentive/quicker service. The seats were comfy enough, and the flights really aren't long enough to sleep anyway so i don't really see the need for full lay flat seating.
I would go as far as to say i had my best flight experience in a VA 737 business class, and it all came down to the flight attendant who was just so spot on with her mix of friendliness and professionalism. Little things like tweaking the breakfast menu when i ummed and arred over a selection, regular proactive offerings of drink refills etc and then when deboarding she proactively removed everyone's travel bags from the overhead bin, extended the handles and had everyone's jackets ready.
I had flown First Class and Business Class on Singapore Airways just a few months prior - and whilst SG First Class is another level again in terms of onboard food and seating, i felt the service by this flight attendant just blew the SG service out of the water. It was actually the first time i went out of my way to send positive feedback to VA.
09 Aug 2015
Total posts 93
That's a good endorsement of Virgin's approach to service, which at its best is brilliant, although I suppose you could say that about Qantas or any other airline, but Virgin does seem to deliver good service in business class on a consistent basis. Also agree that you don't need a flatbed in east-west business class, there's no way you can get enough 'sleeping time' on a flight even if its a redeye to make that a must-have. I think a good recliner is enough, like Virgin's original A330 2-2-2 seating, but for their own reasons both Virgin and Qantas went with fully flat beds.
25 Jan 2012
Total posts 29
*edit* forgot to mention i've flown Business Class on the A330 a number of times, so i know the hard product is far better. But i found the service, whilst great (like still very good, no complaint at all), felt like the flight attendants were spread thin over the cabin and service felt very assembly line in comparison to on the 737 where it was very personalized.
24 Aug 2011
Total posts 1202
With a depressed domestic market for the next year or two, it is likely that QF will be putting more 737s on its trans-continental services than before. There will still be a few A330s but the chance of getting a 737 is much increased.
05 Mar 2015
Total posts 411
Yes, a lot more Qantas east-west flights will be Boeing 737s, but at the same time I reckon as soon as QF can see an advantage in putting an A330 up against Virgin it'll do so. The other advantage is that Qantas can use the A330 to get more capacity than Virgin and help get its fares lower to match whatever Virgin can do.
Qantas - Qantas Frequent Flyer
07 Aug 2013
Total posts 249
So you may see a330s more frequent in periods of high demand probably sometime in 2021..but not right away. However QF also have to maintain fares that will help break even putting a widebody in the air, more fuel etc.. if they go back to a price war to match VA and vice versa both are back to square one which has a few lessons learnt.
13 May 2020
Total posts 803
however, B737s would offer more frequency & that's important. Who wants to sit at any airport for 4 hours or more, just waiting for next nonstop flight.
Virgin Australia - Velocity Rewards
24 Jan 2018
Total posts 716
For me, lay-flat seats on a 3 1/2 to 4 1/2 hour flight are will not get used. Whilst the existing Bus seats on 737 are 'tired' and, but right now I miss them and will enjoy for first 12 months when interstate flights from MEL resume. Perhaps not the right word, but there is a type of service intimacy on 737s that larger body craft can't replicate. If Virgin can retain and - somehow - even improve the inflight attention given by cabin crew (as per above comments), that will go far. Galley size needn't be a hurdle to improving the quality of wine and spirits served in Bus class. A noticeable improvement in wine quality will get 'tongues talking' and that's the best form of advertisement.
It will be a real challenge getting 'water shed' hotel deals, but it's a great idea, these are 'challenging times' (Oh how I'm tired of hearing that expression) and hotel operators will be keen to support. But a HUGE plus will be if The Club Lounges can be retained for Bus class travelers only. I'd much rather pay for alcoholic drinks at 'hard cost' price to Virgin in The Club, particularly when poured/prepared by a bar tender, than have free drinks from the 'Dispensary bar' in the 'Virgin Food Court'.
Doing the above whilst bettering the Qantas airfare prices (as mentioned elsewhere above) should be good enough. They're the 'touch points' that matter to me.
20 Nov 2015
Total posts 434
Always found it amazing that Qantas and Virgin offered better business class on domestic A330 east-west flights than SQ or Cathay Pacific's regional flights around Asia! Anyway for whatever reason Virgin's now 737-only, and the only way it can really compete against the Qantas A330s will be a much lower price, although it seems the fares are already half of what Qantas charges. What else can Virgin do? Not much without going back into Borghetti territory, eg hire cars to and from the airport, and that is not Bain's way at all. I suspect Bain will just aim to keep prices low, knowing that it can get a lot of 'best fare of the day' corporate bookings plus the self-booking business travellers.
20 Oct 2015
Total posts 237
Virgin's market for east-west business travel will be the VA loyalists who will almost always choose Virgin over Qantas on any given route, and the 'swinging traveller' who is happy to fly with either airline but will be driven heavily by price or other factors such as reaching or retaining status. As long as Virgin keeps the prices low and offers a decent experience all round, it's going to easily claim those two markets. The question is, how tough a fit will Qantas put up to keep as many of the 'swinging travellers' as possible. I can see some Double Status Credits deals coming up for east-west flights in the future!
Qantas - Qantas Frequent Flyer
07 Aug 2013
Total posts 249
Well, not entirely VA loyalists...if Qantas have that hopeful strategy it'll be them that suffer. As AsiaBizTravel put it there's corporate travel who have beat fare of day policy - even government has best fare of day policy where you see politicians out of Canberra fly QF and VA...maybe even Rex soon.
Qantas may not afford to keep up...Qantas today got hold of $500m bonds. As much as they will and spin it that QF is in a healthy financial position with its investment grade rating...it's just incurring less profit and more debt.
18 Jan 2017
Total posts 51
I wouldn't be surprised if there is a subfleet (if these aircraft remain in the fleet)
https://newsroom.virginaustralia.com/release/virgin-australia-save-hundreds-thousands-kilograms-fuel-year-new-winglets
The first and second (at once) thing they need to do is install tablet holders so you can actually eat and not have table space taken by tablets and ensure all business class seats have power.
Qantas - Qantas Frequent Flyer
04 Nov 2017
Total posts 322
IIRC that subfleet was originally operating the NZ and Denpasar/Fiji routes. If those are from the 'owned' 737 fleet, my guess would be that they'll be likely be sticking around for the TransCons for the meantime until the 'NZ/Pacific Islands' bubble gets the all-clear.
11 Apr 2018
Total posts 12
Having flown both airlines many times at their pre-covid peaks, Qantas offered a more frequent roster and better in-flight experience based on meals, IFE and lounge access. Immediate decider on who I fly with in the future will be price - other perks like points and lounge access is fine until the novelty wears off. I like the idea of bundled flight and accommodation packages, Virgin could throw in accomm for every return trip booked.
Emirates Airlines - Skywards
15 Mar 2019
Total posts 20
Interesting discussion. Our priorities will firstly be cost and departure/arrival times. The excellent lounge and service facilities. Finally reclining seats with easy aisle access. Not really bothered by food and drink offerings in flight nor wifi. Entertainment system only beneficial for the trans con route. At the moment I suspect that Virgin will offer the better package but I'll remain flexible.
22 Sep 2017
Total posts 81
For the eastbound red-eye the first priority needs to be sleep. Virgin could try giving business class passengers a good meal before the flight, then take off, shut the blinds, turn off the lights and no service for anyone (except a glass of wine on request) for the rest of the flight.
Virgin Australia - Velocity Rewards
06 Mar 2015
Total posts 232
All of my flights with VA over the last 5 years have been Business Class from Brisbane to Perth and return and always via Sydney to fly on the A3330.
The A330 was one of the best Business Class in the air even when compared to International Business which I did on quite a few Airlines in Business Class.
Such a shame it has disappeared for now as it was superb in all respects.
One can only hope it will return one day when things settle down but that will be years away!!
The B737 will be quite a step backwards in J Class travel but if one want's to fly with VA there's no choice at all.
I'm not a very big fan of " Rat Air " ( QF ) but if the VA new Business is awful then I might have to move over to them.
I do hope VA make a really good effort at producing something better than the J Class they had before in the B737 but from what I read it will be very much downgraded.
That's the tough thing about first world travels, having to find the best Business Class so I guess things aren't quite that bad , just not as good as it was.
Good luck to VA with it all , time will tell how well they do it.
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