Virgin Australia halts plan for new Boeing 737 business class

By David Flynn, May 3 2019
Virgin Australia halts plan for new Boeing 737 business class

EXCLUSIVE | Virgin Australia has put on ice its plans for a new domestic business class for east-west Boeing 737 flights as it embarks on a review of the airline's domestic offering.

The move follows freshly-minted CEO Paul Scurrah's decision earlier this week to delay delivery of the troubled Boeing 737 MAX jets from November 2019 to July 2021.

The Boeing 737 MAX was once considered as the launchpad for an all-new business class seat which former Virgin Australia CEO John Borghetti promised would be a “quantum leap in domestic business class."

Read: Virgin Australia to launch all-new Boeing 737 business class

Borghetti referred to the top-secret seat as Virgin's "Perth product", in line with its aim of offering a superior business class experience on east-west routes flown by the Boeing 737 as the airline's larger Airbus A330 jets progressively shifted to Asia.

Two of Virgin's six-strong Airbus A330 fleet cover the Sydney-Hong Kong and Melbourne-Hong Kong routes, while Borghetti and Virgin brandmaster Richard Branson had previously talked up Brisbane and mainland China as follow-on routes.

Borghetti first revealed his plans for the dedicated east-west business class to Australian Business Traveller in July 2017, teasing "you’ll hear about it later this year."

However, by December 2017 the airline was tamping down expectations – which at one stage included an early 2018 launch – with Virgin Australia exec Rob Sharp saying there was "not an immediate need” for the new seat while Virgin continued to fly Airbus A330s on the transcontinental trek.

Australian Business Traveller understands that Scurrah, barely five weeks into the job, has launched a broader review of the airline's domestic offering and filed away plans for the new Boeing 737 business class.

"The majority of our transcontinental flights are currently operated by Airbus A330 aircraft, which offer our award-winning lie-flat business class," a Virgin Australia spokeswoman told Australian Business Traveller.

"We believe we have an appropriate business class offering for the transcontinental market at present, and will continue to review the business class product we offer on routes between Perth and the East Coast to ensure it remains appropriate for the market."

In related news, Virgin Australia has advised that its Brisbane international lounge is now planned to open in July 2019, some eight months after the lounge was first and obviously optimistically promised to open in November 2018.

David

David Flynn is the Editor-in-Chief of Executive Traveller and a bit of a travel tragic with a weakness for good coffee, shopping and lychee martinis.

31 Mar 2014

Total posts 314

I hope this isn't the first sign that Scurrah's plan is profitability through cuts instead of investing to make the product better.

I think it's the opposite, Scurrah rethinking all of JB's spending and trying to get the books to balance again. Doesn't mean they won't roll out a transcon business class for the B737s but he obviously wants to do things right instead of just accepting the way they were under JB, and more strength to Paul Scurrah for that.

Qantas - Qantas Frequent Flyer

09 Mar 2017

Total posts 20

A standard seat in the first two rows of the plane should never be called Business class. It’s actually misleading and deceptive. Call them upfront seats where you get an inauthentic smile, perhaps addressed by your name and some food that’s not served in a cardboard box. But Business class.... pffffft. Please

Qantas - Qantas Frequent Flyer

02 Sep 2018

Total posts 130

I'd argue that Australia has one of the best business class short haul products in the world when compared to other countries.

Qantas - Qantas Frequent Flyer

09 Mar 2017

Total posts 20

^insert.... on “some” aircraft

Qantas - Qantas Frequent Flyer

28 Oct 2011

Total posts 358

OK, so how would you define domestic Business class?

Qantas - Qantas Frequent Flyer

09 Mar 2017

Total posts 20

Business class is business class.... whether it’s domestic or international should not be a thing. The standards have been set with every seat aisle access and flat beds. They exist on “some” aircraft and are vastly different/more basic on others. And yet for domestic business fares in Australia, aircraft type doesn’t impact the fare. Bad luck to the flying novice

This would be sad if true. Virgin would be a perfect carrier for something like JetBlue's mint, especially when they phase out those aging and too-much-plane A330-200s.

Etihad - Etihad Guest

10 Oct 2018

Total posts 2

Aging 330's? They're all roughly 5-7yrs old?

02 Dec 2016

Total posts 91

"The majority of our transcontinental flights are currently operated by Airbus A330 aircraft, which offer our award-winning lie-flat business class,"
 
Well that's a surprise, I thought most trans cons to Perth were 738s now days. At least when I look from BNE and SYD.

But the delay of the MAXs means a delay of this product. That makes sense to me.
 
It's pretty tired in VA's 737 business class now days, but the service and food is good.

Qantas - Qantas Frequent Flyer

20 Aug 2014

Total posts 104

"The majority of our transcontinental flights are currently operated by Airbus A330 aircraft".....

I haven't checked every flight schedule, but I doubt this is true. Given that Brisbane is almost entirely 737 and Sydney and Melbourne look to be about 50/50 on weekdays, and mostly 737 on weekends.

Qantas - Qantas Frequent Flyer

04 Nov 2017

Total posts 193

Depending on HNA's financial situation and whether (if or not VA may partner with NH for Japan), the x2 A330 aircraft currently on SYD/MEL-HKG may find themselves back on TransCons within 12-24 months if HX goes into liquidation (therefore dissolving the HX/VA JV on HKG routes if HX goes under).

Oh No! Just when there was a chance of a better business class seat! Don't just think transcon - with the range of 737s these days it would be great to have a full lie flat offering in the narrow bodies used on overnight flights back from southern Asia and the south Pacific Islands.

While giving the new CEO a chance, he does not have a track (pun intended) record in passenger aviation.

Qantas - Qantas Frequent Flyer

02 Sep 2018

Total posts 130

Paul has a track record in the tourism sector and particularly flight Centre if I remember correctly. That could be really useful for virgin to not just have someone that knows about flights but a person that knows how to sell and I think that's what they want after years of losses and mild profit.

Actually most of his experience has been in rail, stevedoring and logistics. Relatively little in tourism and a short stint in Flight Centre was a long time ago. As I said, give him a chance, but providing premium experiences for travellers is not an obvious feature of his CV.

His track record is dominated by stevedoring, rail and logistics. Yes there was a short stint in Flight Centre but that was a long time ago. As I said, give him a chance - time will tell.

Virgin Australia - Velocity Rewards

24 Aug 2011

Total posts 749

Job #1 is to make money. VA needs to stay profitable. There's enough people in the VA world that are happy with the J product.

Virgin Australia - Velocity Rewards

26 Aug 2013

Total posts 8

You know what would make VA Profitable, joining *A. Heaps of my colleagues that are QF/OW Memebers said that they would switch over in a heartbeat if that were to happen!

Virgin Australia - Velocity Rewards

14 Mar 2017

Total posts 143

Don't know why this was downvoted, it's on the money. VA's failing international alliance strategy is its achilles heel.

Qantas - Qantas Frequent Flyer

04 Nov 2017

Total posts 193

The chance of VA joining *A has well and truly sailed since the messy and hostile break up with NZ.


NZ alongside their friends at UA will use their veto to block any VA application into *A.

In addition, joining any Alliance in general has ongoing membership fees, which VA doesn't have the cash flow for. Plus airline alliances in general would very likely be at the very bottom of CEO Scurrah's priorities for VA.

abr
abr

Etihad - Etihad Guest

03 May 2019

Total posts 10

"You know what would make VA Profitable, joining *A."


LOL - That didn't help Ansett, BMI, Varig and Mexicana.

It's difficult for VA to join Star Alliance when
1. Star Alliance had publicly stated that they were not interested.
2. VA doesn't have the money to join an Alliance
3. NZ and VA despise each other. New members have to be voted in unanimously. There's no way that NZ would vote yes to any VA application on the back of the public and messy break up.

Virgin Australia - Velocity Rewards

01 Mar 2012

Total posts 169

Would with a new CEO at VA things changes between NZ and VA? Usually these things are due to personality clashes at CEO level than actual cultural issues. One would think there is a bit of “the King is dead, long live the King” in corporate relations that could occur. So while it is unlikely I feel that any possibility is open at this time.

Qantas - Qantas Frequent Flyer

04 Nov 2017

Total posts 193

Problem is that NZ's Luxon allegedly stated that Virgin Australia should "dump all international" and "dump Delta" leading to all major shareholders (all with competing interests e.g EY, Virgin Group, etc) siding with Borghetti due to Luxon allegedly letting his ego get in the way.


Unless if Luxon either changes his mind, or moves on from NZ. NZ will likely continue to veto any VA application into *A unless if Luxon gets his aim of removing VA from international all-together. But seeing that NZ had joined forces with QF, this is already moot.

If the likes of DL purchases any of the HNA, EY or even SQ stakes, the final nail can be put in the coffin for any future *A membership.

SkyTeam is Virgin Australia's only Alliance choice available to them, alongside older brother VS with long time b.f.f DL sponsoring both Virgin carriers.

Virgin Australia - Velocity Rewards

11 Dec 2016

Total posts 59

It's Skyteam or no team realistically. Joining Star is never going to happen.

Would be very happy to use the alliance with Skyteam though.

Qantas - Qantas Frequent Flyer

02 Sep 2018

Total posts 130

Barring the cost of joining, Skyteam would be their preferred alliance right now I believe. Whilst their current investors won't be happy, its the alliance they have the least 'enemies' with.

Virgin Australia - Velocity Rewards

06 Oct 2017

Total posts 32

Oh the doom and gloom....

Makes pretty reasonable sense. If anyone of us were in charge of the purse strings, we too would not be spending money on refits of planes that in due course won't be servicing a route.

Aside from not being fiscally responsible, why would you release a new seat today, that won't see action until 2021 at the very earliest?

24 Aug 2011

Total posts 655

As soon as the MAX's were deferred, this was always going to happen. I don't think JB planned on installing the new J class seats into any of the existing 737NGs either.


The 737 J class product is competitive with QF and it appears that the int'l expansion has slowed so the A332s will be available for trans-continental services for the forseeable future. Like QF, VA does not put A332s on all trans-continental services; the demand is just not there.

Scurrah has been hired with a mandate to continue to build the profitability of the core domestic business. International is only a small part of VA and the business can stand a break-even result there but domestic is key. Capex in advance of need was always going to be on the chopping block and the MAX issues gave VA the opportunity to re-time orders without financial penalty.


Qantas - Qantas Frequent Flyer

04 Nov 2017

Total posts 193

Simply "upgrading" services and having to fill the plane with "promotion" fares doesnt automatically equal profit.


Simply, full plane =/= profit. It's all about the yields, not bums on seats.
VA may have likely found that the yields on BNE-PER is lower than SYD/MEL-PER

Cathay Pacific - Asia Miles

27 Nov 2012

Total posts 43

Scurrah announced that VA will be ordering the Max 10 instead of the 800 for first delivery in 21, giving the airline the opportunity to fit out these airframes with JB’s business class for trans continental. Done properly these will release the A330’s for more Asian destinations, and shake QF up with a new lay flat J seat.

Qantas - Qantas Frequent Flyer

22 May 2018

Total posts 23

Mr Scurrah's recent background was with Qld rail.. just ask anyone in Brisbane that travels by train to see what a farce that is.. an airline..well .. lets wait and see

Lmc
Lmc

Qantas - Qantas Frequent Flyer

09 Nov 2018

Total posts 66

You can hardly justify $4k+ on a business class fare perth to the east coast 3.5 hour flight or vice versa especially In a simple recliner! The red eye I understand.

Considering i just paid $5.5k return to Europe, Australia domestic J fares are insane.

Virgin Australia - Velocity Rewards

03 May 2019

Total posts 1

You are indeed Resolute... resolute enough to go down in a ball of flames in a beautiful new business class suite in a 737-max?? The only option was to delay the transcontinental business class seat given delay in the 737-max and if you are arguing against not delaying delivery of the 737-max then I think you would be on your own! They could get some a320-neos but that too will bring its own cost inefficiencies with most of the domestic fleet being 737s. You might be right about Scurrah but as you say old man time will be the judge of that.

Virgin Australia - Velocity Rewards

07 Dec 2015

Total posts 43

I suggest some here should go and bounce around the US for a month in business class and report back. We are seriously spoilt in this country when it comes to airlines and service

Virgin Australia - Velocity Rewards

11 Dec 2016

Total posts 59

US Business class is the equivalent of Oz economy class.

Qantas - Qantas Frequent Flyer

09 Mar 2017

Total posts 20

Hardly spoilt. We have ONE acceptable airline (QF) with a decent business class on SOME aircraft. I’ve flown in the US domestically plenty of times and had equivalent or better aircraft, nicer cabins and good enough service as back home. Flying on our B737s (QF or VA) and being charged the ridiculous fares for “business class” is just ludicrous.


AT
AT

Qantas - Qantas Frequent Flyer

14 Sep 2012

Total posts 293

Very smart move to ditch it. While the dominant home carrier QF has recliners in its 737 J cabin, VA will match it. Imagine the money needed to retrofit VAs entire 737 fleet with lie flat beds in J for domestic Oz and short haul Pacific routes, how would you guarantee the return on that investment, so much risk! Sure pax would love it, but would it move enough QFF status members over to VA, I doubt it, the flights on 737 are just not long enough to really care.

24 Aug 2011

Total posts 655

The real problem with a lie flat J arrangement in a 737 is the amount of real estate consumed. To maintain 8 J seats, it is likely 12 economy seats would have to have been sacrificed. Unless J class pax are prepared to pay a 50% premium over the existing J product, this just doesn't make sense. The economics of lie-flat J may work a bit better on the MAX10 but on the MAX8/73W it was never going to fly.


Qantas - Qantas Frequent Flyer

28 Aug 2015

Total posts 13

It makes sense for VA to refocus on the fundamentals, converting the current 8 seats in 737 product I can’t see as a priority over reducing their leasing cost (75% of VA fleet is leased aircraft) shift that % and then update product would make better business sense - I would love a better product, however would rather VA stay flying for the long term versus add more debt and potentially impact size of their operations

23 Oct 2014

Total posts 166

The latest fleet figures from and ASX annual meeting, VAA fleet is 50% owned and 50% leased, I don’t know where your getting your 75% figure from.

Qantas - Qantas Frequent Flyer

25 May 2017

Total posts 70

While this is disappointing and again a lost opportunity to secure high yield business travelers perhaps CEO Paul Scurrah's has accepted defeat and VA is nothing more than a glorified JQ. Maybe he has been travelling on QF as a business class passenger and accepted that in no way do VA even come close. From the "bus shelter" lounges, no true recognition of Platinum FF, to the outdated terminals and reduced benefits of Velocity the are the key items need to be looked at before high yield customers may consider VA.

Virgin Australia - Velocity Rewards

20 Nov 2017

Total posts 104

I can assure you that VA does everything better than QF (on like-for-like routes).

23 Oct 2014

Total posts 166

Blamex and resolute that is total rubbish, the current 737 J product Mirrors QF’s exactly, I’d say the lie flat J 737 seat was always meant to be rolled out on the MAx10 due to the extra 4-8m fuselage and space, with the Max delayed to 2021 that’s when this product would arrive no earlier as the 330’s with J widebody lie flat will stay on trancon to do the majority of the flights. No product downgrade.

As for platinum travellers, VA invented priority boarding, you get access to EconX at no cost, fares are generally cheaper like for like, lower points needed to gain and hold platinum, family pooling, and the lounges in my opinion are great, modern open and later back. Not stuff and old fashion. I’ve never had a problem accessing rewards seats either, to call it JQ is uneducated and with fact.

QF

11 Jul 2014

Total posts 404

Everyone is really missing the point here, the new business class was being launched on the 737 Max, would you currently fly on a 737 Max anywhere in the world or have family fly on a 737 Max, NEVER EVER. So a delay of 20 months which will go in a minute of time.

Virgin Australia - Velocity Rewards

09 May 2019

Total posts 2

Whatever Virgin plan, their current B737 Business class seat is one of the most uncomfortable for me. I am a tall person of about 100kg, and after an hour feel the seat getting harder and flatter. I will no longer use their B737 flights, swapping to the A332 or not going at all. Recent flight to NZ proved that the B738 is the mainstay of Australian Air travel unfortunately. Future flight to SYD is on the Airbus...by choice.


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