10 things to watch for in Bain's Virgin Australia 2.0 reboot

Virgin's new owners are about to pull back the curtains on the relaunched 'value-orientated' airline.

By Chris Chamberlin, November 17 2020
10 things to watch for in Bain's Virgin Australia 2.0 reboot

Virgin Australia 2.0 is, by all accounts, ready for take-off.

Having bought the collapsed airline for $3.5 billion, US private equity firm Bain Capital today assumes full ownership of the challenger, with newly-minted CEO Jayne Hrdlicka behind the stick from tomorrow.

Executive Traveller understands that Hrdlicka – who is both a former Jetstar CEO and a Bain & Company partner – will outline the airline's future direction on Wednesday November 18.

Bain has previously promised that "Virgin Australia will be a 'hybrid' airline offering great value to customers by delivering a distinctive Virgin Australia experience at competitive prices."

A carefully calibrated 'mid-market' position is likely to meld some of the old Virgin Australia, some of the even older Virgin Blue and more than a dash of X-factor as Virgin seeks to carve out its own space in Australia's crowded and highly competitive skies.

Does the use of INXS' "What You Need" in the airline's latest advertising blitz hint at a push towards passengers paying only for what they want (or what Bain's number crunchers believe they want) in order to keep base fares low?

Here are 10 things that we, and Australia's business travellers and frequent flyers, will be watching for when Bain and Hrdlicka pull back the curtains.

Update: Virgin Australia has now shared its plans to relaunch as a mid-market airline, and we've got all the details.

Virgin's new business class proposition

For many Executive Traveller readers, how Bain packages and sells those eight business class seats at the front of every Boeing 737 will be crucial to the airline's appeal.

Virgin Australia's Boeing 737 business class experience remains up in the air.
Virgin Australia's Boeing 737 business class experience remains up in the air.

While nobody expects to see a return of a fancy menu curated by Luke Mangan, that still leaves room for a decent meal for busy travellers who skip the airport lounge.

But on the most popular 'triangle' routes of Sydney-Melbourne and Sydney-Brisbane, with an average flight time of barely 90 minutes, Bain appears to have relatively few levers to pull beyond pricing.

Longer trips – the 2+ hours of Brisbane-Melbourne, and the 4-5 hours between the east and west coast – will change that equation in favour of both inflight meals and lounges.

So the question of Virgin's new business class, perhaps more than anything else, will revolve around the airline's new touchstone of 'value': how much you'll pay, and what you'll get for it.

Complimentary snacks versus ‘buy on board’

Might the drive to 'value' also see complimentary snacks and drinks in economy class sidelined, at least for some entry-level fares?

While Virgin Australia has long sold food and drinks via its ‘buy on board’ cart, the airline had been providing free hot meals on longer flights – such as the east-west trek – and free snacks on shorter hops.

Tea, coffee, juice and water have been complimentary on all flights, with soft drinks, beer and wine joining the roster in the evenings on weekdays, and in the afternoons on east-west flights.

Whether these freebies remain, or ‘buy on board’ becomes the new default, has been one decision on the table at Bain.

Read: Virgin to ditch free meals, snacks, drinks in economy?

A return of the no-bag fare?

Another place where Bain can play the value card is entry-level economy fares.

Virgin Australia has offered one free checked bag to every passenger on every flight for a number of years now, but that wasn't always the case.

Several years back, the airline's Saver Lite fares offered the lowest price but without any checked baggage, unless the passenger enjoyed elite Velocity Frequent Flyer status.

Bringing back an 'economy basic' no-bag fare would certainly sharpen Virgin's appeal to corporates with a 'best fare of the day' travel policy, with little need for checked luggage on a day trip.

It could also be a drawcard to business travellers who book into economy class and pack lightly – typically just one carry-on bag for an overnight trip – while relying on their Velocity status for perks such as lounge access and better advance seat selection choices.

Airport lounges

On the topic of airport lounges, Virgin's business class passengers plus Gold and Platinum frequent flyers will be keeping a close eye on the new lounge experience.

Virgin's airport lounges have typically been considered as better than the Qantas Club, while of course being below the Qantas Business Lounge.

That's a position that should perfectly suit the airline's overall mid-market orientation – so is there scope for any change to be made to the long-standing lounge formula?

Will Bain "leave well enough alone", or might it even find a way to improve its lounges in some unexpected way which embraces that "distinctive" Virgin character?

But first things first, of course: having been shut for almost eight months, those lounges need to swing their doors open again.

That process began today in Brisbane, and we expect the reopening roadmap for most other Virgin lounges is imminent.

The future of The Club

The secret Velocity Frequent Flyer ‘VIP’ tier – sitting above Platinum in the status ranks, and bestowing access to Virgin Australia’s The Club lounges – could certainly remain, even as Virgin moves more towards a mid-market airline, rather than a ‘Qantas lite’.

However, whether those VIP-level frequent flyers would still have a private lounge to enjoy at five major Australian airports remains up in the air, as the airline looks to cut costs. These lounges could indeed remain as-is, potentially be opened to other passengers as well, or removed: anything is possible.

Membership to Virgin Australia's The Club is on a strictly invitation-only basis.. Source: Supplied
Membership to Virgin Australia's The Club is on a strictly invitation-only basis.
Source: Supplied

"We are not looking to take Qantas head on, especially in their corporate part of the market," Bain Capital's local managing director Mike Murphy has said.

"In our research, access to The Club is important to a small elite segment of our customers and not the mainstream. Whether or not we retain that is under evaluation."

The new shape of Virgin's domestic network

Virgin Australia’s network of flights has recently been under the microscope, with the airline withdrawing from a host of loss-making regional routes to bring its books back into the black.

However, Virgin is also reintroducing flights on routes that were previously paused – such as between Brisbane and Launceston – as domestic travel becomes more popular.

On the regional front, the airline is hoping to work more closely with Alliance Airlines: particularly to resume and continue regional flying under the Virgin Australia banner.

How this shapes up – as well as the extent of Virgin Australia's plans for international flying – remain to be seen.

Read: Virgin seeks Alliance tie-up to keep regional routes flying

The fate of VARA

Virgin Australia Regional Airlines – also known as VARA – operates flights on selected regional routes, including many within Western Australia.

How these services will shape up under the rebooted Virgin Australia is also still to be outlined.

That's particularly true if Virgin’s closer partnership with Alliance Airlines is approved by the ACCC, which could make it more economical to cede some routes from VARA to Alliance.

Under the deal, Virgin Australia would sell tickets, while Alliance Airlines does much of the regional flying.
Under the deal, Virgin Australia would sell tickets, while Alliance Airlines does much of the regional flying.

When Alliance Airlines operates a flight on behalf of Virgin Australia, the flight is still booked under a VA code through the Virgin Australia website.

At the airport, passengers also check-in via Virgin Australia counters and kiosks (or use Virgin Australia's online check-in), with frequent flyer benefits such as additional checked baggage and lounge access applying, as though the flight were operated by Virgin itself.

Inflight WiFi

With the airline’s focus shifting to value and cost, another aspect up for review has been Virgin Australia’s inflight Internet service.

Prior to the airline entering administration, the link provided a complimentary connection on domestic flights at standard speeds, with passengers able to purchase a faster service where required.

Keeping each aircraft WiFi-enabled comes at a significant cost to airlines, with data charges levied on top.

This could see Virgin mirror the approach of its partner Delta, where text-based messaging is free for all passengers, but where broader Internet access attracts a fee.

Read: Virgin Australia looks to reboot inflight WiFi

Velocity Frequent Flyer

As Virgin Australia prepares to reboot the airline, travellers will be watching its Velocity Frequent Flyer program like a hawk, eagerly waiting to see how the scheme changes over time.

Already, members have seen a mixed bag of changes.

In October, Velocity removed perks like lounge access across three of the program's partner airlines. Points conversions between Velocity and the KrisFlyer program of Singapore Airlines also remain suspended.

Changes to Velocity Frequent Flyer this year have impacted all members, from Red through to Platinum.
Changes to Velocity Frequent Flyer this year have impacted all members, from Red through to Platinum.

Credit card points conversions from ANZ Rewards and HSBC Rewards Plus into Velocity also sit on hold, but in more pleasing news, the yearly cap on points conversions to Velocity from Coles’ Flybuys rewards program appears to have been removed in recent weeks.

As Velocity Frequent Flyer's parent company exits the administration process, it's hoped there'll be more positive changes for frequent flyers on the horizon.

Virgin's overseas airline partners

With a collection of airline partners that had been largely shaped around Virgin Australia’s international network over the years, the role these partners will play under Virgin Australia 2.0 isn’t yet clear.

Alitalia, for example, came on board when it, and Virgin Australia, were both operating their own-brand flights to Abu Dhabi, offering one-stop connections between Australia and Italy.

Now, neither airline serves the UAE capital, nor did the two intersect at any other global airport, even prior to COVID-19.

As well, Hong Kong Airlines – plus the broader HNA group that also includes Beijing Capital, Hainan Airlines and others – also came online as Virgin Australia began operating flights to Hong Kong, and when Hong Kong Airlines was flying to the Gold Coast.

With Virgin's own Hong Kong flights axed, and Hong Kong Airlines withdrawing from Australia some years back, the benefit of this partnership has shifted, primarily to cater for passengers travelling from China to Australia, when borders make this possible.

Beyond the current airline partners of Virgin Australia, it's also not yet known whether the long-awaited tie-ups between Virgin Australia and airlines such as Air Canada and Japan’s ANA will progress as previously planned, or whether Virgin’s revised focus on domestic and shorter-distance international flying will move these to the backburner.

Also read: Bain Capital sets new flight path for Virgin Australia

Additional reporting by David Flynn

Chris Chamberlin

Chris Chamberlin is the Associate Editor of Executive Traveller, and lives by the motto that a journey of a thousand miles begins not just with a single step, but also a strong latte, a theatre ticket, and later in the day, a good gin and tonic.

QF

11 Jul 2014

Total posts 532

I'm due to fly Sydney to Gold Coast tomorrow and had to cancel the tickets due to Sydney being a HotSpot, I couldn't get through on the phone. I emailed my normal contacts at VA, auto reply saying they left the business, contact such and such, I contacted such and such, they passed it onto someone else who stiffed me $140.00 bucks for cancelling the flights? Way to go on day one, all about the dollars they can stiff me, not the dollars I spend on airline tickets every year. 

QF

11 Jul 2014

Total posts 532

I must apologise to VA they fixed there error up after rechecking the details.

17 Nov 2020

Total posts 2

no reason why Alliance couldn't operate some of Virgins thinner flights to NZ wtih e190s. Even if per seat cost is the same, it means a lot less seats need to be sold to cover costs.

gwd
gwd

08 Nov 2020

Total posts 1

They need to provide at least something to eat for a $600 business class seat between Townsville and Brisbane! It was basically zero on this evening's flight as most items had run out!!!

XWu
XWu

09 May 2020

Total posts 279

Interesting that they can’t be bothered to prepare for 8 people who paid premium price for a flight under 2 hours, even on the last day of VAH on the ASX. 

Maybe they thought if the hordes are unhappy with fantastic noodles in a cup, it’s better not to offer anything at all no matter how many boxes of cuppa noodles they have in the cupboard 

19 Apr 2013

Total posts 3

"Virgin's airport lounges ... while of course being below the Qantas Business Lounge" on what basis? Just because it's Qantas, and because it's designated a Business Lounge? I'd argue that Melbourne QF business lounge yes because of the addition the Spice Bar and new layout, but Sydney "well below" not at all, and Brisbane is debatable.

Thai Airways International - Royal Orchid Plus

15 Jan 2013

Total posts 319

what about subway catering for economy subs,cookies and 600ml drinks.or even vilis doing rolls and sandwiches lol.

XWu
XWu

09 May 2020

Total posts 279

According to Hrdlicka’s press release on VA website

Business class offering still under review, relaunching in 2021, no fir there details until then

Economy will be fresh buy onboard menu from 2021, complimentary tea coffee water 

Wifi under review 

Lounges DRW, CNS, MKY to close, CBR under review (which says a lot about what they are chasing)

Wonder what is constitutes LCCs in the eyes of the new VA CEO? Maybe because they are keeping lounges so they can call themselves mid market?


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