Virgin Australia is set to once again take the fight to Qantas: this time with the benefit of a wipe-out of debt, a lower cost base and a mission that's more squarely focussed on being its own value-oriented airline rather than 'Qantas lite'.
The primary battleground will of course be routes between the three east coast capital cities – Brisbane, Sydney and Melbourne – which form Australia's popular and profitable 'golden triangle'.
It's arguably here where Virgin can make the most headway, although from March 2021 it'll face a fresh challenger in regional airline Rex.
The prospects on Australia's other key corridor – the transcontinental crossings between those east coast capitals and Perth – seem quite different, however.
A new east-west battle
The east-west routes – especially Sydney-Perth and Melbourne-Perth – have long been popular and profitable for airlines, and at times hyper-competitive.
This was underscored in May 2011 when Virgin Australia, newly rebranded from Virgin Blue, launched its Airbus A330 'Coast to Coast' service.
While the former Emirates A330 was fitted out with 'regional business class' recliners in a 2-3-2 layout, this was still far enough ahead of Qantas' A330 offering that – combined with upmarket inflight dining and a chauffeur drive service at both ends of the trip – it delivered on Virgin's CEO John Borghetti promise of "a new standard of airline travel in Australia."
In response, Qantas briefly rolled out the mighty Boeing 747 jumbo jet between Sydney and Perth: a marker for the brutal capacity war which drive down prices but also profits, hammering both airlines' bottom line in the process.
Almost a decade on from those dizzying days, Virgin Australia – now cleared for take-off under the new ownership of Bain Capital – finds itself at a clear disadvantage to Qantas when it comes to chasing transcontinental business travellers.
The decision to ditch its Airbus A330s means that Virgin's east-west routes will be handed over to its Boeing 737s, which sport a simpler business class cabin than the A330's flagship The Business seats.
Even on a like-for-like basis against Qantas' Boeing 737s, Virgin's seats lack a swing-up legrest to cradle your calves for the 4-6 hour transcon journey.
Likewise, only some of Virgin's Boeing 737s offer an at-seat AC socket to keep laptops, tablets and phones charged up during the flight.
And on any given service where Qantas rosters the A330 with its Business Suite business class – a spacious, comfortable crib with direct aisle access, plenty of room to work and a seat which reclines all the way down to a flat bed – there's simply no contest.
So how can Virgin compete for business travellers shuttling between the east and west coasts?
A better business class? Not likely
For starters, let's put aside notions of Virgin creating a 'sub-fleet' of Boeing 737s dedicated to transcontinental flights, with their conventional business class seats replaced by something more suited to the longer trips.
Ex-CEO Borghetti started down that path in mid-2017 with plans for a “quantum leap in domestic business class" on the Boeing 737s – potentially using the airline's Boeing 737 MAX jets as the launchpad – while the A330s spearheaded a push into Hong Kong and China.
“When we brought today’s A330 business class onto east-west routes we brought something new, and it’s still the best transcontinental business class," Borghetti told Executive Traveller at the time. "I'm confident we will continue to have the best transcon product (with our new business class)."
But Bain's Virgin is very different to Borghetti's, and it's difficult to imagine such a significant investment would pass muster unless there was an overwhelming business case behind it.
Lowering the price of Perth
Under the ownership of Bain and the stewardship of CEO Paul Scurrah, Virgin's new lodestone will be value – and ticket prices will weigh heavily in the value equation, especially when Qantas has a superior business class product.
At the time of writing, Sydney-Perth fares for late July 2021 already show Virgin undercutting Qantas by up to 50%. Virgin's Business Saver fares listed at $1,249, with the more flexible standard Business fare at $1,800, compared to $2,571 for Qantas Business.
While many business travellers prefer the flexibility to change their booking without penalty, Virgin's full Sydney-Perth business class return fare lands at $3,600 – some $1,540 cheaper than the Qantas equivalent.
Such a difference in price should already give Virgin the edge for budget-conscious business travellers, and it's questionable how much further the premium fares could drop, considering that Virgin's most expensive economy fare – sitting just shy of $700 – is less than half that of the cheapest business class ticket.
However, the new Virgin Australia will by all accounts have more room to lower its fares across the board if need be: a useful tool in any competitive scenario, especially if Virgin needs to win back travellers based more on price than any other factor.
The lounge experience
Virgin's business class passengers already have access to the Virgin Australia lounges, which we rate as being generally better than their equivalent Qantas Clubs but falling well short of the Qantas Business lounges.
However, especially during the peak hours when most business travellers take to the skies, Virgin's lounges can be crowded, noisy and offer second-rate meals.
If Virgin decides to retain its The Club lounges – even without fancy à la carte dining – the airline could do worse than to usher east-west business class flyers into those quieter havens.
As a rule, the longer the domestic flight the more important the ground experience becomes, and including Club access with a transcontinental business class ticket would certainly tick that box and could even one-up Qantas.
Bundle hotels with airfares
It's a safe bet that just about every business traveller flying from Sydney, Melbourne or Brisbane to Perth, or vice versa, would be staying for at least one night and quite possibly two night before their trip home.
By stitching up deals with a selection of suitable hotels Virgin could offer a flight+hotel package at a lower combined price than most travellers could obtain, while also removing one more item from the traveller's to-do list and adding convenience to Virgin's value proposition.
The selection of properties would of course need to cover the most popular hotel loyalty programs – frequent flyers tend to be especially picky on that front, in order to maximise their points and status perks – but could conceivably include cost-extra items such as breakfast and executive lounge access.
Again, it all comes back to ensuring that Virgin Australia offers better value for the business traveller – because it can't seriously enter the new transcontinental turf war relying on its Boeing 737 alone.