What is Virgin Australia's strategy (post-administration)?

[henrus]

In my opinion, it doesn't seem to be a great start for VA in 2021 and I question the long-term goal of the airline but also the forward planning.

Obviously, a lockdown in Brisbane hasn't helped however on many routes flights have been canceled quite close to departure and there doesn't seem to be a clear path moving forward with a fixed schedule. Communication still seems to be nonexistent, with many people I know (who don't care about flying) still questioning if VA still exists and add to this pricing which is all over the shot with some routes more expensive than QF/JQ and others cheaper than anyone else.

More recently the lack of Trans Tasman flights is a big blow and sets them back 6-9 months (compared to QF/NZ) with the Australian reporting it was due to a lack of aircraft. Apparently, three VA aircraft that were sent to storage in the US are now coming back so it will be interesting to see where these fit in when they start using them again.

What seems odd is that despite all this they also claim they've had one of their busiest days of ticket sales with ~71,000 in 24 hours so obviously people are keen to travel but VA still seems slow to respond. Surely I'm not the only person who's confused by all this?

 

[Bell21]

I'm probably not as regular a flyer as some, but I've found VA quite seamless, responsive and cost-effective these last few months - I've flown SYD to HBA, BNE and MEL - and have flown on a mix of cash and reward points. They obviously haven't had the same no. of flights as QF, but there has generally been just enough. They've also been quite generous to gold and plat flyers with status extensions. I agree though that the lack of trans tasman flights isn't a good look, but as you indicate, maybe cost pressures coming out of VA coupled with lack of available planes has put them behind the 8 ball on that one.

 

[aleks12345]

I believe it’s going to take some time before we know what Virgin means by a hybrid carrier, as I honestly don’t think that the new management have figured this out yet either, and are taking things day by day.

With Bain under the helm, I feel that every component of the business will be reviewed , adjusted to make more efficient/ profitable, or removed if not financially beneficial.

I’d say their strategy for now is to get a grasp on day-to-day operations, figure out where to trim any fat, and look at sustainable growth opportunities.

I think once we are living in a post-covid world and travel returns to some sort of normality, Virgin will further tinker with food menus (both business and economy), expand products/services, velocity offerings ect; and as a result better define what they are now.

 

[aleks12345]

Further adding to my comments above, agree with you and @Bell21 that it’s probably a combination of cost pressures (trying to remain lean), and not expecting the NZ bubble announcement so soon; and not having the required planes as such.

Qantas is able to resume the flights quickly as it has its planes just sitting in storage.
As Virgin got rid off around 19 737 aircraft (had 85, now has 56 according to ET), they don’t have the luxury of building their network up again so quickly.

Besides NZ, pacific islands, and Bali (737 capable routes), I think it’s going to take a while for Virgin to reintroduce long haul international flying.

 

[jakeseven7]

As Virgin got rid off around 19 737 aircraft (had 85, now has 56

And some....

The also lost in administration
- About 15 ATR’s
- 8 A330’s
- 5 777’s
- Plus your 20 or so 737s

Plus just the year before they ditched all their Embraers (well parked them) about 15 of those went in 2018/19 from memory.

Add to this that QF have taken a strategic stake in one of their key partners before administration - Alliance Airlines who will launch flights under QantasLink in a few weeks.

So they are a much much smaller airline now, don’t have much fleet flexibility anymore to serve thinner/seasonal routes and have had to cut a lot of routes and frequency to match their flying capability to suit.

 

[BNEFlyer]

In my opinion, it doesn't seem to be a great start for VA in 2021 and I question the long-term goal of the airline but also the forward planning.

Obviously, a lockdown in Brisbane hasn't helped however on many routes flights have been canceled quite close to departure and there doesn't seem to be a clear path moving forward with a fixed schedule. Communication still seems to be nonexistent, with many people I know (who don't care about flying) still questioning if VA still exists and add to this pricing which is all over the shot with some routes more expensive than QF/JQ and others cheaper than anyone else.

More recently the lack of Trans Tasman flights is a big blow and sets them back 6-9 months (compared to QF/NZ) with the Australian reporting it was due to a lack of aircraft. Apparently, three VA aircraft that were sent to storage in the US are now coming back so it will be interesting to see where these fit in when they start using them again.

What seems odd is that despite all this they also claim they've had one of their busiest days of ticket sales with ~71,000 in 24 hours so obviously people are keen to travel but VA still seems slow to respond. Surely I'm not the only person who's confused by all this?

I'm a bit confused by your post, but not VA.

I agree re: NZ flights, but they have said for months that it would be a late 2021 start for those, so that's no surprise. Both Brisbane lockdowns were only for three days each, so while it would have affected flights on those six days I don't see how it would have any effect on future schedules.

What do you mean by "communication still seems non-existent"? In what way?

They are running at full fleet capacity and are actively getting cabin crew back into action.

Post automatically merged: Apr 9, 2021

And some....

The also lost in administration
- About 15 ATR’s
- 8 A330’s
- 5 777’s
- Plus your 20 or so 737s

Plus just the year before they ditched all their Embraers (well parked them) about 15 of those went in 2018/19 from memory.

Add to this that QF have taken a strategic stake in one of their key partners before administration - Alliance Airlines who will launch flights under QantasLink in a few weeks.

So they are a much much smaller airline now, don’t have much fleet flexibility anymore to serve thinner/seasonal routes and have had to cut a lot of routes and frequency to match their flying capability to suit.

VA and QQ have approval to co-operate on 41 regional and 2 international routes, so we can expect to see their Embraers on routes where a 737 is too much.

 

[AIRwin]

The also lost in administration
- 8 A330’s

6 A330s (excluding 2 ex-EK's which had already exited the fleet previously)

 

[HS-TQE]

And some....

The also lost in administration
- About 15 ATR’s
- 8 A330’s
- 5 777’s
- Plus your 20 or so 737s

9 of those 20 737s are returning to BNE from the USA shortly under a new lease agreement for VA.

3 of the 9 have been reported to be in preparations and testing prior to the return ferry flights (multiple stops enroute of course) back to BNE. One of the 'repo' pilots that flew them out of BNE reported on twitter that he'll be flying one of them back to BNE as well.

 

[henrus]

I agree re: NZ flights, but they have said for months that it would be a late 2021 start for those, so that's no surprise. Both Brisbane lockdowns were only for three days each, so while it would have affected flights on those six days I don't see how it would have any effect on future schedules.

There were flights canceled this week that were blamed by the premium phone line on the Brisbane lockdown. I don't see why it would impact the next couple of weeks but according to them, that's whats happened.

What do you mean by "communication still seems non-existent"? In what way?

Qantas sends emails saying here is our current network here is what we're doing etc. I haven't received one of those from VA for a while now aside from the regular weekly sale emails. I'd love for an email from VA saying we're getting 20 more aircraft and here's what we're doing with them.

They are running at full fleet capacity and are actively getting cabin crew back into action.

I realise that but sometimes it just doesn't feel like it... Recent news stories don't help either.

 

[BNEFlyer]

9 of those 20 737s are returning to BNE from the USA shortly under a new lease agreement for VA.

3 of the 9 have been reported to be in preparations and testing prior to the return ferry flights (multiple stops enroute of course) back to BNE. One of the 'repo' pilots that flew them out of BNE reported on twitter that he'll be flying one of them back to BNE as well.

Coming back with new rego's. First one arrives in BNE on Sunday morning.

 

[henrus]

Add to this that QF have taken a strategic stake in one of their key partners before administration - Alliance Airlines who will launch flights under QantasLink in a few weeks.

Iconically the ACCC submission has just been approved. This means that VA and QQ can work together on some routes. It also means that QQ will be operating for both VA and QF again (something they've done in the past).

Virgin Australia & Alliance Airlines

On 23 October 2020 Virgin Australia and Alliance Airlines (the Applicants) applied for authorisation to cooperate in relation to the provision of services on 41 regional routes and two short-haul international routes (Relevant Routes). Details of the routes are provided in the application which...

www.accc.gov.au

 

[eastwest101]

Bain are starting to look very "flat footed" now. They are like the yappy dog next door - once it catches the car it was chasing it dosen't know what to do next.

They were super smart and sneaky winning the trust of gullible unions, wiping out bond/shareholders and winning the "beauty pagent" competition with the administrators and replacing management, but then they werent responsive enough and didnt seem to have any new answers other than those that were clear to everyone 12 months or more ago and have wasted many opportunities to reformat the business, now it looks like a company in the stages of paralysis by analysis.

Their decisions (and previous management decisions) have cemented the market dominance of the Qantas group which got time and space to get over its own massive issues, and also potentially allowed a third competitor into the market to make life more difficult for Virgin.

 

[Bell21]

Bain are starting to look very "flat footed" now. They are like the yappy dog next door - once it catches the car it was chasing it dosen't know what to do next.

They were super smart and sneaky winning the trust of gullible unions, wiping out bond/shareholders and winning the "beauty pagent" competition with the administrators and replacing management, but then they werent responsive enough and didnt seem to have any new answers other than those that were clear to everyone 12 months or more ago and have wasted many opportunities to reformat the business, now it looks like a company in the stages of paralysis by analysis.

Can you add some detail to what you see as missed opportunities? (As mentioned, on a pure tactical level, I've felt very comfortable re-engaging with them as a customer since post administration eg, they've handled some tricky situations with cancelled flights really responsively, I've been able to redeem VFF points for approaching decent value etc)

 

[hydrabyss]

Can you add some detail to what you see as missed opportunities? (As mentioned, on a pure tactical level, I've felt very comfortable re-engaging with them as a customer since post administration eg, they've handled some tricky situations with cancelled flights really responsively, I've been able to redeem VFF points for approaching decent value etc)

I am the same and for me I see no real difference from 12 months ago in my experience. I have booked flights for future travel and am glad I kept all my velocity points.

 

[HS-TQE]

Iconically the ACCC submission has just been approved. This means that VA and QQ can work together on some routes. It also means that QQ will be operating for both VA and QF again (something they've done in the past).

Virgin Australia & Alliance Airlines

On 23 October 2020 Virgin Australia and Alliance Airlines (the Applicants) applied for authorisation to cooperate in relation to the provision of services on 41 regional routes and two short-haul international routes (Relevant Routes). Details of the routes are provided in the application which...

www.accc.gov.au

With 19% of those wetleasing costs going to QF (and the remainder of those wetleasing fees going to the Superannuation companies which has 10-15% stakes in QQ).

Considering QF isn't allowed to go above 20% at this stage courtesy of the ACCC (and has NO seat on the board either), plus the various superannuation companies with 10-15% stakes.

I'd say this is one example where multiple owners are able to work together, unlike the ownership mess that is Virgin Australia mk 1.

 

[AustraliaPoochie]

None of us can fortell, but we can presuppose.
It all plays into the hands of QF/JQ and ZL.
They all took the opportunity that VA1 left behind.
Maybe not VA2's strategy, but the way they are doing things, all allows the other 3 to take up opportunities.
VA2 could now, say, if they are going to keep partnering with SQ/DL/NH/EY, before REX makes the partnership to feed international travellers into parts of Aust that VA does not fly, or even does fly.
Maybe its better with the VA2 situation as it now, than VA1 being totally bankrupt, if PS didn't jump and put VA1 into admin.
I can't say who is right, who is wrong, who erred, but ZL did take a lot of chances of taking over the former fleet of VA1 and now flying the capital city routes.
Edit:

Besides NZ, pacific islands, and Bali (737 capable routes), I think it’s going to take a while for Virgin to reintroduce long haul international flying.

To be financially smart, they (VA2) would be better off doing partnerships, than buying or leasing planes to fly international long haul again.
Partnership, ie, profit share, and less costs, ie, no cost of buying/ownership, less cost of aircraft maintenance/or indirectly less cost of maintenance.
Would be nice if VA2 announced if they are going to continue their discussion with NH ANA about FF points and SC earnings with flights to Japan.

 

[aleks12345]

To be financially smart, they (VA2) would be better off doing partnerships, than buying or leasing planes to fly international long haul again.
Partnership, ie, profit share, and less costs, ie, no cost of buying/ownership, less cost of aircraft maintenance/or indirectly less cost of maintenance.
Would be nice if VA2 announced if they are going to continue their discussion with NH ANA about FF points and SC earnings with flights to Japan.

I agree with you that instead of doing long haul themselves, they just might decide it’s cheaper and easier just to do partnerships with other airlines.
I am kind of on the fence to be honest on which way they’ll go, though do feel they’ll expand their aircraft type eventually (whether it’s an 787, a350, A321XLR, or something else is anybody’s guess).

 

[AustraliaPoochie]

OT & guesswork here, but Air NZ have decided to use the 737neo to fly AKL - ADL - AKL, where as they used to use their 787 in the past.
VA2 might go this way, seeing that the 737max has some bad connotations to it, they might go the 737neo way, its a bit longer, ie can carry a bit more pax for not much more, as in costs...
Who knows, imagine, if down the track, they (VA2) decide to do ADL - AKL with the 737neo!
Yes, I know, I can dream on.
For the long haul, the fuel efficient 787 would be their best bet, but that might be 10 years down the runway, if they last that long, and if they decide to use their slot into HND, partnering with NH in the meantime.
Imagine, if they (VA2) had decided to keep all their (former) 737s, ZL would have had a harder time starting their capital city flights, as they have had to buy/lease aircrafts, and none would have fallen their laps so easily, as it did in the past few months.
For now I am not flying ZL, but will and see what sort of a FF system they bring up first.

 

[jb747]

Who knows, imagine, if down the track, they (VA2) decide to do ADL - AKL with the 737neo!

No such animal as a 737neo. Virgin had orders for the 737 MAX. ANZ and the QF group (whoever that is) have orders for the 320/321NEO.

 

[HS-TQE]

I agree with you that instead of doing long haul themselves, they just might decide it’s cheaper and easier just to do partnerships with other airlines.
I am kind of on the fence to be honest on which way they’ll go, though do feel they’ll expand their aircraft type eventually (whether it’s an 787, a350, A321XLR, or something else is anybody’s guess).

International Partnerships would ultimately be up to Bain. The JVs under DL, EY, SQ have expired or will be expiring shortly. All of the 'Big 3' of VA's international partners had since announced a 'scaled-back' interline/minimal codeshare partnership since VA went into administration.

Considering JH was on record of singling out DL and SQ, it can almost be certain those two would be on the top of Bain's list when it comes to negotiations.

But considering Bain's record thus far, it could go either way. The decade long 'alliance membership', taking into considerations that at least two 'enemies' that VA mk 1 made at a certain large alliance over the years, would be at the very bottom considering the ongoing membership costs of joining one.

Would not be surprised if for example KE and UA came to the party to replace or supplement existing Velocity/VA partners.