Virgin Australia's future is more JetBlue than Jetstar
The former Jetstar boss turned Virgin Australia CEO is taking inspiration from America’s JetBlue as the airline moves forward.
By Chris C., December 10 2020
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.
JetBlue Mint is flatbed business class at more of a premium economy price.
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.
Virgin Australia's cosy Cairns lounge is among six lounges axed by the airline this year.
“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.
Rex's Boeing 737s will take wing from March 2021.
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.
Also read: Twin-aisle jets off Virgin's agenda until late 2022
Chris is a a former contributor to Executive Traveller.
11 Sep 2015
Total posts 220
This is what I want to hear from Virgin and Jayne. JetBlue would be a great model for VA2. This doesn't mean that Virgin has to rush out and put Mint-style business class on its Boeing 737s or even the MAX 10s, but Mint is a solid example of a mid-market 'challenger' which is very good at appealing to travellers across the spectrum, from budget flyers to business travellers. I just hope the new business class package can find its place between Rex and Qantas.
American Airlines - AAdvantage
13 Jul 2015
Total posts 273
The difference is Jetblue differentiates itself from the larger competition by providing better Business Class seating, better food options, and arguably better service both on the ground and in the air. I'm not entirely sure if there is much differentiation in Economy class, but I don't see Virgin Aus being able to differentiate itself as drastically as Jet Blue quite as quickly.
05 Mar 2015
Total posts 413
Yes, JetBlue has more of a mixed fleet and mixed product approach than Virgin, but I don't think JH is trying to remake VA in JetBlue's image as much as citing JetBlue as a good example of a hybrid airline which works. The trick will be that the US market is absolutely massive and so there's more room for a spread of carriers, from full-service (American, Delta, United, Alaska) to low-cost (Southwest) and ultra-low cost (Frontier, Spirit), and also more space for a mid-market airline like JetBlue. Australia is a tighter market and Virgin will really need to work hard to define and differentiate this mid-market position.
20 Oct 2015
Total posts 241
I'm sure Bain didn't count on Rex when it bought Virgin, this will add a real complication. Virgin wants to be in the middle between Qantas and Jetstar and that sounds like a smart business case but it also means Virgin can be squeezed at either end by Qantas and Jetstar. Qantas can and will cut its fares to reach down into that space, I would not even rule out an 'economy basic' fare without checked baggage. Qantas also has muscle to do things with Jetstar such as making it easier to earn Qantas points and status credits on Jetstar fares to try and ensure people who care about that but are also price-sensitive can see more reasons to fly with Jetstar than Virgin or Rex.
09 May 2020
Total posts 571
Not sure why you think Rex was not considered?
Rex announced their intention on 12 May
Deloitte announced Cyrus and Bain as 2 contenders on 2 June 2020 for the final binding bid due on 30 June and both ended up submitting their bids 1 week before the dateline
14 Oct 2016
Total posts 105
It's interesting that you mention that as some of their fleet plans are becoming clearer. They cancelled all their 737-8s and are now only get 737-10s. When they also talked about some of their routes (ie Canberra) they mentioned that the current 737s are a bit too large.
Now I don't believe in the next year they'll order anything additional, but I think after things stabilise, I could easily see an order for the a220 as it's a plane that can cover all routes around Australia, it's operating costs per passenger are at least on par with the 737 and since it has a smaller capacity than the 737, it will provide a platform for the thin routes (ie Canberra, Hobart to Perth).
24 Aug 2011
Total posts 1209
Highly unlikely to happen. Like Southwest in the US, VA2 sees huge savings in keeping a very simple fleet built solely around the 737. Were the situation arise where VA felt a smaller plane was required for thin routes like PER-HBA, I'm sure they would adopt the same process as they have with their regional Qld services and contract Alliance to provide the service.
14 Oct 2016
Total posts 105
Except even Southwest who operate exclusively the 737, are looking to diversify their fleet with numerous stories and quotes from the management wanting a smaller plane to replace the 737-700s.
The airline that Jayne mentioned; Jetblue, is moving to a a320/1 and a220 fleet, so i'm not sure why I was down voted so much for highlighting a possible roadmap for Virgin in the future.
13 May 2020
Total posts 801
& the loser is Qantas. Qantas can have regional routes which don't make much money like in & out of Cairnsfrom capitals.
08 Feb 2018
Total posts 162
Dont mind having to pay for snacks or drinks if in economy if the overall fare is lower. I do hope they let you pay by card though, QF only allowing cash payments for drinks has left me parched a few times with them.
Virgin Australia - Velocity Rewards
09 Aug 2016
Total posts 38
Glad to see the back of the economy 'snack' to be honest. It was just tokenism and a waste of time and money. I had a number of encounters as well where FA's huffed and puffed like it was a major inconvenience when I wanted to buy something else from the cart on top of the free snack.
QF
11 Jul 2014
Total posts 974
What interests myself is how did VA know who to send emails out to offering VA Gold to QF P1 and QF P. One QF P1 said "What's the point of VA Gold when the lounges are closed anyway", I had to explain they were reopening on the 15th of December so that made him happier. And how does VA think they will make QF P1 and QF P happy and not just go back to Qantas and then do the VA Double P get the same deal?
Qantas - Qantas Frequent Flyer
02 Apr 2017
Total posts 134
I think they just sent emails to everybody, though I have filled out a survey at some point that asked about my status on other airlines.
Qantas - Qantas Frequent Flyer
28 Oct 2011
Total posts 461
Is she saying the use of lounges is "elitist behaviour" ??????!!!!!!!
09 May 2020
Total posts 571
Sure, people can explain away the use of this controversial descriptive term in the way this is reported or context it was used in, but I am frankly surprised if a airline CEO did actually use this word (as apparently she did, since no one here so far thinks she was misquoted).
The entire airline industry (short of LCCs) relies on “elitist behaviour” to ensure pax loyalty and price gouging where the profitable end of an airplane is the front 7% of the real estate feeling pampered for just as little as 90 mins of a golden triangle flight for an extra 1-2k to the cattle class tickets and the rest of the pax (myself included) are just space fillers.
Using such provocative term with risk of mis-interpretation or taken out of context (as it was asserted here) is such an unnecessary act where other phrases like blind loyalty or preference on presumption (obviously I am not Scotty from marketing) or whatever naunced words that can be found
Qantas
19 Apr 2012
Total posts 1425
XWu since when is ‘elite’ either provocative or controversial.
09 May 2020
Total posts 571
Elite is not
Elitist is.
Qantas
19 Apr 2012
Total posts 1425
John it depends on your definition of elite(s). I have no problem with it and we shouldn’t get to precious when it is used. Other more dare I say ‘working class’ would see the lounges as for the ‘elites’., and there is no point pretending otherwise. Jane H would certainly see herself in the elite group. Her point is about being seen to be too ostentatious about it when appearances are everything. I suspect she is wrong though.
Virgin Australia - Velocity Rewards
24 Jan 2018
Total posts 711
Honestly John, I'm not all that certain Hrdlicka knew what she meant. Easy to want to be CEO when you're not, a lot harder when you're in the chair working with 'live ammunition' (so to speak).
I don't care what service is, or is not, offered beyond Row 6, but in Business (1-3) it needs to be as good as Qantas, if not better, which IMHO it was the latter until March this year. If she's smart, Hrdlicka can have her cake and eat it too, but if the business class service and experience drops below Qantas, there'll be a lot of empty seats. She should use Rows 4-6 to entice aspirant business travelers by offering a quality seat but without the F&B and other care/attention service (i.e. you can look, but don't touch until you step up and pay to move forward a few rows).
I pray for Virgin's success, just not sure Hrdlicka is the right person. There'll be no 3rd chance if she's not.
09 May 2020
Total posts 571
"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."
Not sure what kind of example is that. Jetstar AFAIK has the basic tier where check in luggage is not included and then go up in levels with increasing inclusion including meals and luggage etc.
And JQ has business class tier in international flights with dedicated seats
17 Jun 2020
Total posts 238
There is no comparison at all between Jetstar Business Class and Jetblue Mint. Jetblue has by far best catering of any US carrier, the option of suites with closing doors and a great soft product (much better than Qantas or Virgin pre-Covid). Jetstar Business is a mediocre Premium Economy at best.
Qantas - Qantas Frequent Flyer
11 Oct 2014
Total posts 692
Awful lot of spin coming out of Jane's mouth in the past two days.
If she needed inspiration for the definition of a 'hybrid' carrier, perhaps she could have looked at Norwegian - which would have been a little closer than JetBlue? But then, Norwegian ended up needing to be bailed out too.
Qantas - Qantas Frequent Flyer
04 Nov 2017
Total posts 325
Norwegian also ended up axing Long Haul and reverted to a domestic and short haul carrier themselves. Clearly overexpanded too quickly.
Qantas - Qantas Frequent Flyer
11 Oct 2014
Total posts 692
Thanks DanV - at least I now know that one person understood the subtleties of my comment. :-)
09 Sep 2020
Total posts 12
The airline NEEDS to be open and transparent to the public on ALL it's machinations, what they are really offering their clients. Also can the Head Shed advise of a future return to International Long Haul if at all,your public asks, or has this gone the way of the DODO. Sad if they don't as their clients would flock to enjoy the ennui of VA Long Haul.
28 Nov 2012
Total posts 93
Sounds like Virgin America's previous offering
20 Nov 2015
Total posts 436
I was just about to write the same thing, earlier on Bain talked about bringing back a bit of the Virgin vibe and I always thought that Virgin America was a decent fit for that. VX was a bit too 'hip' at times but I think something that's a bit JetBlue and a bit Virgin America both in style and business model would not be the worst thing for VA2.
11 Jul 2020
Total posts 75
I think everyone is aware Virgin Australia were never going to be another Jetstar.
20 Nov 2015
Total posts 436
I think a lot of better-informed people or people who came to this with an open mind didn't think VA2 would be VB2 or JQ2, but a lot of people were worried that Bain would take VA down the low-cost carrier path, especially once Paul Scurrah was pushed out and Jayne Hrdlicka was brought in. The battle now is against perception and preconception, that Virgin and Bain will have to keep not just saying they are not going down the LCC path but they have to keep making sure they show that. And everything they do which does seem LCC rather than 'value' is going to be seen as proof of the JQ effect, eg removing free meals and snacks and drinks from economy.
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