Will Virgin Australia launch its long-promised flights to Tokyo?

Virgin faces a ‘use it or lose it’ deadline for its promised daily flights to Japan.

By David Flynn, September 27 2022
Will Virgin Australia launch its long-promised flights to Tokyo?

Japan is back on the international travel stage, and airlines are ramping up their flights between Australia and Tokyo to take advantage of the country’s October 11 reopening without testing, quarantine or visas.

Qantas, its Oneworld partner Japan Airlines and Star Alliance rival ANA are eager to rebuild their Tokyo schedule: over 620,000 Australians visited Japan in 2019, a solid rise of 12.6% on 2018 figures.

But what about Virgin Australia, whose planned Brisbane-Tokyo flights in early 2020 were scuppered first by the global pandemic and then by the airline’s collapse the following month?

That flight was one of four approved between Australia and Tokyo's Haneda Airport – the other three were assigned to Qantas, JAL and ANA – in the lead-up to Tokyo 2020 Olympic Games, with the proviso that daily flights began by March 31, 2020.

All of those flights were of course cancelled mere weeks before their launch, in the face of the Covid-19 pandemic.

The International Air Services Commission (IASC) – which oversees Australia's international airline activity, including routes and airport takeoff and landing slots – has several times pushed back the ‘must-fly’ start date, citing the “extraordinary circumstances” of the impact of Covid-19 and “travel restrictions put in place by the Australian Government since March 2020.”

Use it or lose it...

However, the IASC has now set 26 March 2023 as the ‘use it or lose it’ deadline for Virgin’s flights to Tokyo Haneda.

“On 29 June 2022, Virgin Australia wrote to the Commission seeking a further extension of the date for utilisation of the capacity from 30 October 2022 until 30 June 2023,” notes the IASC’s official determination.

“In its letter, Virgin Australia provided the Commission, on a confidential basis, with its firm commercial plans to commence operating these services at the beginning of the Northern Summer 2023 season” which starts on 26 March 2023.

This is now the latest date for “the capacity… to be utilised”, the IASC states.

Approached for comment by Executive Traveller, a Virgin Australia spokesperson said “Virgin Australia has retained its capacity allocation in Tokyo Haneda with the intention of commencing Australia-Japan services in the future.”

“We welcome the lifting of travel restrictions in Japan and are working closely on our plans as demand for leisure travel to and from Japan returns.”

But to begin flying between Brisbane and Tokyo, Virgin will need to lease or buy aircraft with longer range than its Boeing 737s.

Bain Capital ditched Virgin’s long-range Boeing 777 and Airbus A330 jets under a sweeping ‘rescue, rightsize and reboot’ plan which saw the airline focus almost exclusively – and, arguably, so far very successfully – on the domestic market.

The IASC declined to offer comment if a ‘wet lease’ arrangement with partner ANA, which would see Virgin Australia lease both ANA jets and cabin crew, would satisfy its requirements.

Long-range flights a long way away?

Earlier his month, Virgin Australia CEO Jayne Hrdlicka said the carrier was reluctant to resume long-range flights even as demand for international travel soars, as the airline prepares for an initial public offering as soon as next year.

“Anything that we did from a long-haul standpoint would have a very high hurdle on it,” Hrdlicka said in an interview at a CAPA Centre for Aviation conference in Adelaide.

“There is a lot of demand right now for long-haul flying and not enough capacity, but you have to plan for the long term. You don’t invest significant amounts of capital in aircraft to solve for a moment in time.”

Hrdlicka anticipates that Virgin Australia will return to profit in the year ending June 2023, laying the ground for a share sale – possibly next year – and at least a partial exit by the airline’s owner, US buyout firm Bain Capital.

After collapsing under a mountain of debt at the start of the pandemic, Virgin Australia is now focused on keeping hold of one-third of the domestic passenger market and short-haul flights to destinations such as New Zealand.

“We’re very focused on running the business and making sure that we’re in great form for eventual listing,” Hrdlicka added.

Virgin’s former long-range fleet plan

In September 2021 a Virgin Australia spokesman told Executive Traveller “we remain in discussions with aircraft manufacturers on a fleet strategy to support the reintroduction of widebody services when long-haul international travel demand returns.”

Former Virgin Australia CEO Paul Scurrah, who helped steer the airline out of administration in 2020 before Hrdlicka took the stick, had previously launched a “widebody fleet review” with the aim of replacing the A330 and B777 with a single aircraft type – either the Airbus A350 or the Boeing 787 – citing “significant cost savings available from next-generation aircraft.”

“We did a lot of work pre-administration on replacing both those aircraft types with a more efficient, newer version of a wide-body,” Scurrah elaborated at a media briefing in August 2020.

“We are having discussions with aircraft manufacturers but there's also going to be leasing opportunities for us, and it might be that we go straight to the end solution or we might have a temporary lease solution,” he allowed at the time.

QF

11 Jul 2014

Total posts 870

I’d ditch it, it’s a prestige thing not a money making thing.

Virgin Australia - Velocity Rewards

25 Jul 2013

Total posts 65

Not holding my breath on this one

Qantas - Qantas Frequent Flyer

08 Dec 2014

Total posts 50

At this stage in the game Virgin are just being selfish in holding on to these slots that they clearly have no intention of using.  Just hand them back and let one of the other 3 airlines take up the capacity.

During the original tender process Qantas said that they would never use the slots.  Turns out they were right.

Qantas - Qantas Frequent Flyer

09 Feb 2015

Total posts 356

Virgin did have every intention of using the HND capacity until covid come along.

Qantas - Qantas Frequent Flyer

08 Dec 2014

Total posts 50

Virgin were on the verge of collapse long before Covid came along.  It was just the final nail in the coffin.

12 Dec 2012

Total posts 1034

Back when the HND applications were going in, and prior to Covid, the only way VA could have operated any flight to Japan was to reduce flights to another international market. They were also losing money. Covid only made them lose money faster.

Qantas - Qantas Frequent Flyer

11 Oct 2014

Total posts 684

The routes cannot be offered to JAL and ANA. If handed back, QF is the only option. 

JAL and ANA have been separately awarded identical route authourities directly by the Japanese Government . The Japanese Government offered equal routes for the IASC to decided where they are allocated, but they must specifically be allocated to an Australian carrier(s). There are also restrictions on codesharing and wet-leases in the contract. Virgin either keeps it (see my other response on this) or it is handed back and put 'to tender' (where QF is the only other notional Australian operator that is capable of using it.

Qantas - Qantas Frequent Flyer

11 Oct 2014

Total posts 684

One of two things happening here:

1. Virgin is just 'route-sitting' on the route authority with no intention of operating it - simply to deny access to QF. This is clearly borne out by a) the IASC giving Virgin a no-so-gentle push to force the hand-back of authority, b) Jane's very recent Adelaide statement which you've quoted above c) Bain's probable aversion to leasing expensive equipment just for one route and d) the route being a total unproven and international distraction to their domestic operations plan - which Virgin needs to get right / profitable quick smart in preparation for relisting and / or a capital infusion.

2. Everyone forgets that Virgin is (hopefully) meant to take delivery of some Boeing B737 MAX frames in February 2023. Absolutely no reason why these larger frames can't be used as an interim solution to do a say SYD-CNS-HND and return service. A bit of a less-competitive option compared to QF / JAL / NH (and JQ, who is not mentioned), but hey, it secures the Route until the next review of the route (2024). Jane could simply be playing PR 'cat and mouse' with her Adelaide statement (gee, that's never been done before) to keep the opposition off her tail.

Elsewhere, some people are throwing around the idea of leasing a couple of larger frames (B787 and A330 have been mentioned) for this route but there are a number of limitations to this: Leasing is expensive and short-term, low notice is prohibitively expensive. I also understand that the IASC's route authourity contains certain restrictions on the registration of the operating aircraft frame, relative to their ownership. And, really, who is going to source wide-bodied (relatively foreign) frames and try to recruit and train intn'l crew within a short few months to offer a competitive product against the other highly experienced vendors?

Both options above (1 and/or 2) are entirely possible. Gonna be fascinating (not to mention revealing) to see which emerges as the chosen option. There's a good, but not clear, chance for either. 

Qantas - Qantas Frequent Flyer

20 Aug 2014

Total posts 147

While it's possible to go SYD-CNS-HND, who would actually travel that route when other airlines on the route have direct flights with fully flat business class? Going that route with Virgin means a 1 stopper, longer overall travel time by quite a bit, and recliner seats. They could go after the economy market, but surely they need to fill business to make it viable? I don't think Virgin will choose to do this. I think they'll just let the rights lapse.

SCM
SCM

28 Sep 2022

Total posts 3

What do you mean? Jetstar does literally this, except they fly to NRT which is worse.

QF

11 Jul 2014

Total posts 870

Flying over 3 1/2 hours most hardcore flyers want good seats in economy and business, non-hardcore flyers will just go Jetstar, I'm keen to see the SQ business class in the new Virgin 737 Max otherwise I'll be flying atleast Qantas.

Qantas - Qantas Frequent Flyer

04 Nov 2017

Total posts 319

As VA have stated previously, there isn't going to a 'SQ business class' in their 737 Maxes, as maintaining a sub-fleet would be expensive, and taking into consideration that VA have stated that they are a 'Value Orientated' carrier going after the 'mid-market', not the premium market. 

Putting in flat-beds on a 737 sub fleet will go against VA's stated 'Value orientated' approach.

05 Oct 2022

Total posts 1

Option 2 is a green light 

02 Jun 2013

Total posts 52

CNS-HND is most likely feasible with 737MAX8, if they wanted to keep the slots until such time as they have a widebody available. 

Virgin Australia - Velocity Rewards

11 Dec 2016

Total posts 71

I don't think we had some definite answers as to whether the Max when they come will or will not have lie flat seats. Only seen conjecture IIRC.

So this is possible, although it might mean that VA need to reopen the Cairns lounge again.

Virgin Australia - Velocity Rewards

27 Nov 2020

Total posts 4

Yes! 

The MAX8 range is 6,500KM. 

CNS — HND is 5,900KM. 

Other carriers are flying the MAX8 on longer routes e.g., Brasilia to Orlando — 6,079KM. 

I would also love to see PER — AKL direct (5,350KM). 

I don’t know about the economics — but it’s got to be cheaper to fly a MAX8 than a 787 or an A330. 

No way will Virgin fly Brisbane-Cairns-Tokyo or anything similar in a 737 or 737 MAX, the route would be an immediate sinkhole because who would fly that long with a stopover in a crappy 737 with domestic business class seats to get to Tokyo? Nobody! And Bain is all about making money, especially as they want to be refloated onto the ASX next year. No way would they approve an idiotically long stopover 737 route to Tokyo. And I can't even see Virgin leasing the necessary two jets like a pair of A330s just for Tokyo. If a wet-lease from ANA is not permitted, and I think that's the case, then Virgin will just have to give up Tokyo and the slot will be handed back to Qantas.

Qantas - Qantas Frequent Flyer

20 Aug 2014

Total posts 147

Jetstar's CNS to NRT route is a point to point route as Japanese tourists love Cairns.  Virgin on the other hand are not a low cost carrier and would need to fill business, with the corporate market to make the route work I think.

AT
AT

Qantas - Qantas Frequent Flyer

14 Sep 2012

Total posts 383

When doing so well in their restructure focusing on domestic AU, NZ & short haul int and doing a great job by all accounts, why would they make such a dumb decision to launch long haul international in a few months? VA exec team would have to be nuts. 


Hi Guest, join in the discussion on Will Virgin Australia launch its long-promised flights to Tokyo?