As Virgin Australia charts a 'mid-market' flight path – one that contentiously includes axing free snacks in economy, closing half its airport lounge network and jettisoning its flagship Airbus A330 and Boeing 777s with their flatbed business class – frequent flyers have been wondering what else might disappear from the experience.
While some details remain up in the air, including how the airline’s Boeing 737 business class proposition will shape up, Virgin Australia's new CEO is looking more to America’s JetBlue than her days at Jetstar for inspiration.
“I think one of the great examples (of a mid-market airline) is JetBlue,” says Virgin boss Jayne Hrdlicka, who spent five years as CEO of Qantas' low-cost arm Jetstar arm from 2012 to 2017.
“We’ve looked a lot at airlines around the world, and who we want to look like … and while there’s nobody specifically that we’d say 'that’s exactly it', it’s more like a JetBlue than not," Hrdlicka revealed at this week’s CAPA Live event.
JetBlue, for example, includes checked baggage for some passengers, while others have to pay.
At the other end of the spectrum, it offers a flagship business class experience known as Mint, for its cross-country flights.
However, Hrdlicka is eager to downplay concerns that she'll steer Virgin Australia onto a Jetstar trajectory.
“Virgin Australia is very different” to Jetstar, she's quick to assure, reinforcing that “the culture, the people, the customer experience, and the business strategy (at Virgin Australia) are entirely different.”
Virgin Australia vs Qantas into 2021
Part of Virgin Australia’s transition to the middle of the market sees Qantas being less of a direct competitor, and more of an alternative for those who desire a higher level of service and inclusions.
“We’ll compete very differently than we have in the past,” Hrdlicka continues.
“We’re not trying to compete head-to-head; we’re not trying to beat Qantas. We’re Virgin Australia.”
Marching to the beat of its own drum, rather than slavishly aping its competitor, is key to Hrdlicka's approach.
She is under no illusion that Qantas appeals to a different type of passenger, but remains confident that travellers’ needs are changing, and that Virgin's product will still suit many.
“Qantas will have a much bigger lounge network that reaches into small regional airports,” Hrdlicka acknowledges, with this continuing to be a deciding factor for many frequent flyers.
“But I also think elitist behaviour – that we all kind of gravitated towards after a decade of a really strong economy behind us – I think that’s going to be a bit on the nose too.”
“I think executives will be much more conscious of their leadership shadows, wanting to be more grounded and connected with the employee workforce.”
“Everybody is also going to be a bit more price-conscious than they’ve been before, where value proposition is key.”
Value will be Virgin Australia's touchstone, she says, although the challenge will be balancing fare price and inclusions in a way that appeals to travellers while also returning the airline to profitability.
Rex makes for a three-horse race
One challenge to that profitability will be Regional Express, which will launch its own Boeing 737 flights – ironically using former Virgin aircraft – on the Brisbane-Sydney-Melbourne triangle from 2021.
Rex will offer airport lounges at each end of the journey, a full-service business class, free snacks and drinks in economy, and an equivalent to Virgin Australia’s Economy X, at very affordable pricing.
In economy, Rex’s sale fares start at $79 one-way including checked baggage, with business class from just $300.
However, Virgin Australia has no plans to cede its market share to Rex, with the competition bringing low fare prices across the board.
“I think (Rex) should expect it is going to be super-competitive, because we are all rebuilding the market,” Hrdlicka says.
“It will never have been cheaper to travel in this country … (and) prices will be very sharp for a long time.”
With Rex pricing its fares closer to Jetstar levels, but offering inclusions better resembling the norm at Virgin Australia, it remains to be seen whether travellers will continue paying more to fly with Virgin, when they can pay less for a comparable experience with rival Rex.
“We’re playing to our strengths, we’re not trying to be anybody else, but we think naturally there will be quite a lot of interest in competition for business travel,” Hrdlicka says.