How Virgin aims to win back business travellers, corporate flyers

Virgin Australia will use new premium lounges to help woo "value-conscious" business travellers.

By David Flynn, December 8 2021
How Virgin aims to win back business travellers, corporate flyers

Virgin Australia will sharpen its focus on the corporate market in 2022, and expects its new "premium lounge product" formerly known as The Club will play a large part in winning over what airline CEO Jayne Hrdlicka described as "value-conscious" business travellers.

That segment will be a neat fit into Virgin's mid-market position, Hrdlicka said at the CAPA Australia-Pacific 2021 Aviation Summit.

"We do believe there's a big part of the corporate market that is value-conscious. At the end of the day we're a value carrier (and) we are significantly better value than alternatives in the market place... it's not going to be appealing to everyone, but we're not trying to serve everyone."

Citing "a deep loyalty with corporate travellers," Hrdlicka said the forthcoming premium lounge program – to be launched in early 2022 – would be "an important part of the corporate market’s requirement."

"It won't be called The Club any more, it’ll be rebranded and be more consistent with who we are as a company and more aligned with our brand."

"We've spent quite a lot of time figuring out how we design (the premium program) that so it is purposeful and it's not trying to be something that we're not."

Winning back the business traveller

The SME (small to medium enterprise) segment will also be crucial to Virgin's 'back to business' strategy, with Hrdlicka saying that Virgin Australia has historically "been disproportionally successful in the small-to-medium sector relative to other (airlines)."

"We've probably lost a little bit of focus on that part of the marketplace in the last 5-7 years or so," she admitted, "(but) that focus is back. We've earned the right to recover some of the customers who may have decided (in the past) that we didn't care about them any more."

Hrdlicka has set her sights on claiming a 33% share of Australia's domestic air travel market, which she said is slightly above the 31% share previously held by Virgin but also makes allowances for new challengers Regional Express and from early 2022 Bonza, which plans to fly up to either Boeing 737 MAX jets on mainly leisure routes in its first year.

"The market will rebalance," Hrdlicka maintains. "We're very clear about who we appeal to, the importance of the experience and what elements of the experience really matter."

Return to USA, Japan “an open question”

In addition to a solid domestic footprint, Hrdlicka said the airline "intends to be a strong player in international short-haul" flying, primarily to New Zealand.

However, she cast doubt over Virgin's plans to resume long-range international flying to the likes of the USA and Japan – routes which both Hrdlicka and airline owners Bain Capital have previously and repeatedly said they were committed to.

"Whether we go back in with long-haul flying ourselves is an open question," Hrdlicka said, "but if not, we will work with partners" such as ANA and Delta to serve those markets.

Virgin axed its long-range Boeing 777 and Airbus A330 jets as part of Bain Capital's sweeping 'rescue, rightsize and reboot' plan, leaving the carrier with a primarily short-range Boeing 737 fleet.

Qantas - Qantas Frequent Flyer

09 Feb 2015

Total posts 335

Their business class fares are very competitive, it’s hard to see how they won’t win market share.

Absolutely, as long as these fares remain so competitive Virgin has a solid case to make for being the best value for business travellers on a budget, and these days that's just about all of us!

Virgin Australia - Velocity Rewards

24 Jan 2018

Total posts 539

If they maintain the current fare structure and deliver the traditionally SUPERIOR inflight cabin service, they're gonna need more than just eight (8) business class seats on their planes.  Add in the likely recovery of SME segment with the 'special lounge', they might find even 3 rows isn't enough.  A nice problem to have.  

05 Mar 2015

Total posts 387

Good on JH and Bain for continuing to "let Virgin be Virgin". Have done a few VA flights and pretty impressed with their business class offering especially at the low price compared to Qantas. Inflight meals are great, the latest lounge menu is pretty good too although I still think the new 'premium lounges' should be Virgin Business Lounges.

03 May 2021

Total posts 37

The economy class menu is terrible

Generally very happy with what Virgin is bringing to the market these days, it's actually a proper competitor or alternative to Qantas instead of being a 'me too'.  Virgin still needs to work out what it's going to do with WiFi, I don't mind if most people have to pay for it although maybe it should be free in business class, but right now there's no option because Virgin doesn't have any WiFi at all.

20 Oct 2015

Total posts 230

So it looks like Virgin might give up on LAX? Tokyo never took off and I think Qantas, JAL and ANA can cover the Australia-Japan market pretty well, but it'd be a shame not to see Virgin back on LAX. I know a lot of people who flew Virgin exclusively to the USA. Maybe it just doesn't make sense when you boil the numbers down. Not sure that Delta can ever really replace Virgin out of Sydney, despite how good its A350s and LAX lounges and connectivity is.

Virgin Australia - Velocity Rewards

04 Aug 2017

Total posts 11

It'll be disappointing if they do give up on LAX, especially considering that DL only serve SYD, leaving BNE to QF and MEL to QF & UA for the direct flights.

I think we would see Delta take on BNE-LAX, maybe not daily but certainly 4-5x per week.

03 May 2021

Total posts 37

I think adelaide-lax could be a profitable route

05 Mar 2015

Total posts 387

You're right, I have NO idea why Qantas and Virgin didn't launch Adelaide-LAX years ago, and of course Delta and United must also be chomping at the bit to begin ADL-LAX flights /S

Qantas - Qantas Frequent Flyer

04 Nov 2017

Total posts 315

While we're at it, lets start DRW-LAX, or TSV-LAX, or OOL-LAX...

Virgin Australia - Velocity Rewards

24 Jan 2018

Total posts 539

ADL-MEL-LAX  or  ADL-BNE-LAX maybe . . . . 

I suspect Bain has done the numbers and figured out that LAX is simply too hard, too risky, and any financial reward it would get would not be worth carrying on top of the substantial investment and overhead. I can't see AU-US travel being back to pre-COVID days for a few years to come, Virgin may as well just work closer with Delta in a QF-AA style 'joint business venture'.  Delta's A350s are great aircraft, it has a great Delta One business class suite and a decent premium economy. The new DL lounges at LAX are apparently very good and if you are going elsewhere in the US beyond LAX then DL also has very good connections and transfer facilities.

Virgin Australia - Velocity Rewards

24 Jan 2018

Total posts 539

Given the choice of flying MEL-PER-LHR on Qantas, of MEL-LAX-LHR with Virgin Australia and Virgin Atlantic - it was a no brainer to me - LAX every time.  I'm not altogether sure than Delta offer an even comparable business class service between LAX and Australia (compared to Virgin), but they may have lifted their game.  Flew United once (LAX and SFO, never again).  

If VA did get back into servicing LAX, would the A350-1000 be the right metal for the AUS sectors (BNE, SYD and MEL)?  

QF

11 Jul 2014

Total posts 728

Lounge- Better be good for us P1s, I can't remember if Borghetti just took over the space where The Club was and didn't refresh it from Ansett days? Old Age setting in..

Partner Airlines are good- Flying Singapore , Etihad is so much better but if I ever have to fly to Bali I won't be using a standard VA 737 again, I'll sit back in the Qantas First Class lounge before the flight and have a business seat for the trip. 

The Club lounges were completely 'new build' projects. Very refined and with fantastic f&b under Luke Mangan. I'll be very interested to see how Virgin relaunches these lounges and the rumoured 'Velocity VIP' program too. It had a very good chance to create its own spin on a Qantas Platinum One tier and the Qantas Chairmans lounge as well as being a business class lounge.

23 Oct 2014

Total posts 208

Agree with all above the price point of the Virgin J fares place it number 1 frequently.

The product is basically identical to Qantas- lounge, soft and hard product and the price offer 1/3 per f the Qantas J asking price makes Virgin for Business a no brainer.

Qantas - Qantas Frequent Flyer

01 Aug 2013

Total posts 24

I haven't flown the re born Virgin yet, am flying next week in J and hoping I get offered something other than the pie or sausage roll I got on my last few Qantas J flights.   Not liking my chances though.

The fares are very tempting with VA.

Virgin's business class menu has featured a pie in the past but it's a bloody good one, and anyway there's a lot more on the menu as well, so you should get something quite decent. Virgin's fares and overall experience definitely makes you think about paying Qantas' fares!

Virgin Australia - Velocity Rewards

24 Jan 2018

Total posts 539

Yeah, I recall is was a truly genuine gourmet pie, not your corner store variety.  

QF

11 Jul 2014

Total posts 728

One of the worst meals I ever had flying out of Townsville on QF was a Pie…. I remember thinking a Pie? I’m going to be starving by the time I hit Sydney.

Qantas - Qantas Frequent Flyer

07 Aug 2013

Total posts 246

Katsu chicken curry not too long ago!

Qantas - Qantas Frequent Flyer

04 Nov 2017

Total posts 315

QF J had also featured Pies and Sausage Rolls in recent times.  Saying that the Pies & Sausage Rolls on both QF and VA aren't of the service-station variety.   As per other other reports, closer to the gourmet types.

Virgin Australia - Velocity Rewards

24 Jan 2018

Total posts 539

If Virgin were to think about it, they should offer a gourmet Kangaroo pie.   Too soon ?

QF

11 Jul 2014

Total posts 728

@Boeing-Tragic - With red sauce in the shape of a kangaroo on top. Don't give Branson any ideas their crazy the Virgin UK Marketing Department like wanting to have "Mary Cola" in Australia with the slogan "Be The First". Mary got knocked back quick smart by us Aussies.

21 Apr 2019

Total posts 16

Great pity they are not flying to LAX for those that held credits for J/C prior to administration.

Qantas - Qantas Frequent Flyer

21 Jan 2014

Total posts 327

Not sure if focusing on lounges is a good idea when your offering is fairly pathetic, 5 of the capital cities and that’s it. Considering it’s focus now is the domestic market only, anyone traveling outside of those cities lounge access is worthless, anyone who travels to regional centres on business, worthless, people who live in regional cities, worthless, not sure why they would promote something when your competitor is so clearly dominant. 

05 Mar 2015

Total posts 387

I wouldn't say Virgin is focusing on lounges but as you mentioned it, those five capital cities cover most of the market and certainly most of the business and corporate travel market which is what Virgin is talking about here. You've got the triangle of Brisbane Sydney and Melbourne, plus Canberra and Adelaide, and then Perth for east-west flights. Surely that's maybe 80% of business and corporate flying. Does Virgin need to have lounges in lots of regional centres, and could it see enough business and corporate flying to justfiy those? Anyway in regional centres you can turn up at the airport maybe 30 minutes before your flight. Is a lounge that big a deal? If it is then the people who want a lounge there can justify paying more for Qantas. I think Virgin is focusing on being profitable and can afford to lose some passengers who want regional lounges for the sake of not having the overhead of a lounge so they can keep fares low and competitive.

Qantas - Qantas Frequent Flyer

21 Jan 2014

Total posts 327

None of that makes any sense, why would anyone turn up to an airport in a regional city any different from a capital city. VA seem as confused as ever, going for a selective part of a market, budget business travelers,  in only selective locations, capital cities, looks like a losing strategy to me.

So they are give up that Haneda spot, that they keep saying they will not give up?

05 Mar 2015

Total posts 387

I think the time will come, and hopefully soon, when Virgin is given a 'use it or lose it' ultimatum. The only way they can use this Haneda slot is to fly it themselves, which might include a leasing arrangement with ANA but not ANA flying it themselves under a straight VA codeshare.

Qantas - Qantas Frequent Flyer

28 Oct 2011

Total posts 468

That will be handy for Qantas, as it wanted both the HND slots that were allocated to Australia.

Qantas - Qantas Frequent Flyer

02 Jan 2015

Total posts 78

Be great to Delta in either Brisbane or Melbourne. Can't argue with the very competitive prices in VA Business 

21 Jul 2020

Total posts 17

If they want business flyers back how about letting us use our Covid credits on any flight? How about ET asking that on our behalf. also the missing Darwin lounge is shocking, only one flight a day, it’s fine if you can park up and work in the lounge.

23 Oct 2014

Total posts 208

The chicken Katsu curry in VA J is great !

20 Jan 2017

Total posts 48

Havent had a chance to fly Virgin 2.0 yet but I'm sure it'll come up at some stage.

Genuine question though in regards to focusing on the SME market. What sort of volumes would be in this sector? I understand there would be consultants and the like travelling but I guess I always imagined most flyers to be from large corporates with the budget to cover regular travel. Interested to know. 

QF

11 Jul 2014

Total posts 728

Setting there sights on 33% marketshare, there velocity for breakeven must be around  30-31% at a guesstimate which I can see is possible and capable of being a lot higher.   Qantas being the market leader with a massive market share will be the loser here, people will move to REX and Bonza from Qantas some from Virgin and than on to Virgin later on. Qantas loyalists will be forced to fly Virgin on price point, I can't see any board letting employees fly business class on Qantas for $1,000.00 when Virgin is $499.00 and anyone who pays that higher fee will be considered stealing from their company. Qantas needs to consolidate Jetstar and Qantas into one brand now "Qantas Lite" before their stripped of domestic market.    

07 May 2015

Total posts 14

I agree with much of what you've said, except for the bit about Qantas needing to merge QF and JQ into one brand. Why on earth would they do that?? Both brands are proven winners, and they are very very different.

I think Virgin will continue to steal price-concsious passengers away from Qantas, which is how they have won my business, and also will pick up some Jetstar passengers if the price is right too. Rex will be squeezed between Jetstar and Virgin. Virgin is in a really strong position right now and it just needs to keep its focus on doing its own thing, as others have commented here.

QF

11 Jul 2014

Total posts 728

@Tony Boyd, Why they need to join Jetstar and Qantas is there are routes that only Jetstar fly and not Qantas, your P1, Platinum and Gold are worthless on a Jetstar flight. I've lost count of the stories I've heard from loyalist Qantas supporters being knocked down.

"I've lost my status because Qantas doesn't fly there and I have been flying Jetstar" 15 years ago

"I had patients booked in and Jetstar gave my seat away to a family going on holidays" 10 years ago

"I fly ever day UpUpandAway, one day I was late and tried to push in so I won't miss my flight and they purposely held me up. Qantas doesn't fly there at the time I need to leave" 5 years ago

07 May 2015

Total posts 14

Another armchair airline CEO who thinks he knows better than Alan Joyce and others who have decades of experience. Yes, merging Qantas and Jetstar would be a brilliant move. Don't know why something so obvious to you hasn't been done yet.

QF

11 Jul 2014

Total posts 728

No one has called me an armchair before!! I'd say real world experience and the nickname gold fingers gives me those thoughts. Reminds me of that saying don't believe all you read.....

07 Jan 2016

Total posts 36

All Virgin needs to do to win back Corporate customers is not keep them on hold for an hour unlike Qantas

05 Mar 2015

Total posts 387

Yes, because that's the ONLY thing an airline has to do to win corporate customers. PS Try actually making a sensible comment next time, not just taking a lazy swing at how Qantas has treated you.

10 Dec 2021

Total posts 1

I agree with nige00160. I missed an important client meeting last week as Qantas rearranged my flight bookings and my only option to get it fixed when "computer says no" was to wait on hold for 2 hours to speak with someone to fix it.  I know I'm just one person, but this type of experience now seems to increasingly be the 'norm' for Qantas.   You only need to look at the number of similar comments posted by numerous travelers posted on this website and others to see this is an issue with the airlines customer service.  

26 Jul 2015

Total posts 70

Frankly, I thought over the past 5-7 years (excluding the obvious last 2) VA were great for business class offering, a bit pricey perhaps but they were the times. I thought the valet parking was fantastic, the premium entry lounge in Sydney and Brisbane excellent and the lounge pretty decent too. On board my only complaint, and its not a biggie, was that they became a little bit formal. I liked the old days when the FA's greeted you by your first name and were a little bit light hearted. I have only flown once in the last 18 months but in the new year it'll be back to normal so looking forward to trying them out. I assume they will reopen the premium entry with valet parking, if they don't, that will be a big negative for customers I'd suggest.


Hi Guest, join in the discussion on How Virgin aims to win back business travellers, corporate flyers