Virgin Australia collapse: Gold Coast tourism leaders expect devastating fallout after airline goes into administration

The price of flying out of the Gold Coast is expected to go up after the collapse of Virgin Australia, with tourism leaders warning it will have a devastating impact on the city.

A DARK shadow was cast on the Gold Coast’s coronavirus revival last night with the collapse of Virgin Australia.

The debt-laden airline was put into voluntary administration by its board after failing to find a buyer, or secure a $1.4 billion loan from the Federal Government. It has debts of more than $5 billion.

Deloitte has been appointed as administrator, with a formal announcement expected this morning.

Virgin collapsed yesterday. (AAP Image/David Mariuz)

The decision sent shockwaves through the Gold Coast’s tourism industry which is already on its knees after the closure of state and national borders due to the COVID-19 pandemic.

Destination Gold Coast chief executive Annaliese Battista said the industry had prepared for the announcement but warned it would have a devastating effect on prices.

“We have had to prepare for this darkest eventuality for the economy and it is an absolute shame that the Government, Virgin and shareholders could not come to an arrangement to save our second carrier,” she said last night.

“I hope that Virgin can find its way out of administration and return to being a viable enterprise because the real losers will be travellers who are price sensitive.

Tourism leaders say the collapse of Virgin will be devastating for the Gold Coast (Photo by Saeed KHAN / AFP)

“Flying to destinations will no longer be as affordable and this will be devastating.”

Virgin employs more than 10,000 people and supports another 6000 indirect jobs. Crucially, it provides to a key foil to Qantas in the Gold Coast aviation market, ensuring competitive prices and services to millions of visitors each year.

Ms Battista said the loss of a second carrier would force a major rethink of the city’s tourism strategy.

“We are going to have to recalibrate our marketing efforts to drive traffic into a monopolised market,” she said.

“We will have to have a rethink of how we are engaging in the market.”

The State Government offered $200 million over the weekend to help bail Virgin out if it agreed to a number of conditions – including keeping its headquarters in Brisbane.

The Morrison Government had refused to fund a taxpayer-led bailout, saying it favours a market-based solution.

Before last night’s announcement, State Development Minister Cameron Dick yesterday told the NSW Government to “back off” as news filtered through it was planning to lure the aviation giant’s Queensland headquarters south.

Gold Coast Mayor Tate yesterday offered to put up council funds if it would help save the airline and warned its collapse would be catastrophic for the city as it tries to recover from the crippling of its $6 billion tourism industry.

“The market will dictate but if the feds say we all have to pitch in together, all tiers of government, I would not be offended by that at all. It is an essential infrastructure for tourism.

“Thereby this would save Virgin, but it is above my pay grade and we are a capitalist society so the market will dictate.”

Yesterday, the Gold Coast’s newest federal MP said it was critical that the nation's tourism capital continued to be served by two airlines.

Federal Moncrieff MP Angie Bell said the Commonwealth was focused on working hard to maintain and support the airline industry during the coronavirus crisis.

“The Federal Government is determined to do everything possible to keep airlines in the air throughout this pandemic and on the other side,” Ms Bell said.

“Two airlines flying is essential for the Coast’s economy which is so reliant on tourism.

“Sustaining Australia’s aviation network is critical to our nation’s success which is why the Government has put forward $1.28 billion to support the industry.”