Bain Capital sets new flight path for Virgin Australia
With a third decade in business comes a third roadmap to profitability: but there'll be impacts for business travellers...
By Chris C., November 16 2020
Virgin Australia will officially pass into the hands of new owners Bain Capital tomorrow, some seven months after the struggling airline – long weighed down by a multi-billion dollar mountain of debt – collapsed into administration.
As it happens, Bain's buyout will not only take Virgin into its third decade of flying but its third business model.
The airline debuted in 2000 as Virgin Blue, firmly locked into low-cost carrier mode.
Premium frills like lounges and a frequent flyer program eventually followed, along with the sibling international full-service airline V Australia in 2009.
2011 saw a dramatic pivot when the rebranded Virgin Australia went toe-to-toe with Qantas in the full-service space with domestic business class (later including fully-flat beds on east-west routes), Platinum frequent flyer status, an invitation-only Chairman's Lounge challenger in The Club, and, over time, a broader lounge network.
Now, as 2020 draws to a close, Virgin Australia 2.0 – or Virgin 3.0, depending on how you count – is shape-shifting yet again.
Under Bain Capital, Virgin will ditch its often-criticised ‘Qantas lite’ approach to become more of a “value-orientated” airline with a broadly mid-market position.
It's already known that the rebooted Virgin Australia will have fewer airport lounges, a smaller domestic and international network and pared-back frequent flyer benefits, for starters.
The complete 'new Virgin experience' is yet to be revealed, although Executive Traveller understands we won't have to wait too long once incoming CEO Jayne Hrdlicka pulls up her chair.
Frequent flyers: what do you expect to see, and what do you hope to see, from the new Virgin Australia? Share your thoughts in the comments area below.
Also read: 10 things to watch for in Bain's Virgin Australia 2.0 reboot
Chris is a a former contributor to Executive Traveller.
24 Aug 2011
Total posts 1209
I would expect a much more modular experience in Economy where you pay for the features you want. This would mean items such as luggage, in-flight dining and WiFi all become an optional extra. The Air NZ short-haul product is probably already an example of this type of product.
Presumably, the headline airfares will be noticably less than Qantas' full-service offering though I wouldn't be surprised to see them unbundle some of their offerings but probably less dramatically.
Business Class will remain but won't be as plush as previously with no Mangan menu etc. In some respects, I think it will be similar to the original Virgin Blue Premium Economy experience except that the existing Business Class recliners will remain.
I am unsure of how they will change the Lounge experience. Obviously Covid is driving significant changes in the experience but I'm not sure they will go down a pay for food and drink channel as some have proposed. It is likely that The Club will remain in some form and will remain fairly exclusive. There is zero likelihood of a Business Class Lounge.
Changes in Velocity are a complete guess. With international travel in hiatus, I guess there is no rush when it comes to partners. I suspect most of the previous partners will remain though the earn rates will probably change as everyone tries to recover some of the losses they have suffered through 2020.
09 May 2020
Total posts 571
Bain hasn’t offered much in terms of actual attributable announcement; even tomorrow’s takeover date was announced by Deloitte not Bain itself and certainly Bain themselves had never actually stated VA will not go into LCC.
It will be interesting to see if tomorrow comes and goes without any corporate announcement from Bain or VA. But if there is any media release, it may not be the news people want to heard
18 Jan 2017
Total posts 51
During the administration process is the time to exit contracts etc. Therefore, if they were planning to close lounges they would have done so whilst in administration, not after.
It would also be Paul's last day as CEO, and would be paid out today so not to have that money come out of the "new" VA's balance sheet.
I tend to think the direct of Virgin was decided during the Administration process with Jayne Hrdlicka and the management team to impliment.
The keys going forward IMHO to the customer will be: Value, Service and Loyalty. Underlying will be profit within the business plan.
09 May 2020
Total posts 571
During administration is a good time to exit contract.... only if the administrators is interested in the operational aspect of the business, rather than the overall aim of cutting costs and getting the best value offer. Their treatment of Cyrus late second offer doesn’t uphold the latter goal, granted the Cyrus offer did not necessarily abide by the rules set by the administrators.
And Bain Capital has not actually made clear what the new VA product will be like, as so far all the announcement are spins from VA administrators and Scurrah’s vision. Only when Bain formally and legally take control of the company will anyone be certain whatever is announced by VA from then reflects directly on Bain.
I will suggest that making expectations and setting standards of a new VA, will only disappoint, as ultimately it’s going to be Bains’s VA not the customers’, many of whom still believe a limited return to VA of 2019, rather than Virgin Blue of 2010.
Qantas - Qantas Frequent Flyer
07 Aug 2013
Total posts 250
Right now I just want them to re start Perth to Hobart - QF flights are near full/rip off throughout December.
17 Jun 2020
Total posts 238
Why would any airline start flights from Perth to anywhere given the tin-pot dictator approach to borders?
12 Apr 2020
Total posts 6
Any news on what the plans are for VARA? Being sold?? In any event a single fleet of B737 not the right fleet for hot weather mining operations, and the F100’s to old and uneconomical.
17 Nov 2020
Total posts 2
think after some initally cheap fares, fares in general will be going up due to reduced supply.
No airline is going to operate a loss making route for very long these days.
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