Virgin Australia: What the new ‘value carrier’ will look like

Virgin Australia says it will become a “value carrier” as it outlines its recovery from near-collapse. But what does that mean for passengers?

Among the huge changes announced by Virgin Australia yesterday – job cuts, an aircraft cull, the death of Tigerair – a particular word recurred again and again as the airline outlined its blueprint for the future.

And that word was “value”.

“Virgin Australia aims to be the best value carrier in the market, not a low-cost carrier,” the company said in its statement to the ASX yesterday.

“We will be very focused on delivering the best value in the market for customers,” chief experience officer Danielle Keighery said in a press briefing afterwards.

“We will focus on providing great value,” chief executive Paul Scurrah told viewers of ABC News Breakfast this morning.

As it emerges from administration with new ownership amid the uncertainty a pandemic, Virgin Australia says “value” will be its focus. But what, exactly, does that mean — and what changes might we see on board?

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Virgin Australia will cull 3000 staff, fly only 737 aircraft and focus on domestic and short-haul international routes. Picture: Albert Perez/Getty Images

Virgin Australia has confirmed it will keep its two-class cabin structure – business class and economy – and some business lounges will come back, once travel demand does.

But it is yet to confirm the finer details of its on-board experience.

Finder.com.au’s editor-in-chief and travel expert Angus Kidman said some changes could come with the “value airline” experience.

“Virgin already charges for selecting better seats and proper meals on most domestic flights. I expect that to continue, and the cheapest Getaway fares might lose seat selection altogether,” he told news.com.au.

“In-flight entertainment could also be a victim: most people can bring their own on their phones, so it’s an easy way to cut operating costs.

Virgin Australia’s Premium Economy cabin (pictured) is no longer part of its future.

“I wouldn’t imagine changes to luggage rules though, as charging for checked baggage is venturing a bit too far into Jetstar territory.”

And that’s key – Virgin Australia will not become a budget carrier like Jetstar.

As it spelled out in its AXS statement, Virgin Australia will remain a full-service airline, but with a heavily reduced cost base and a promise to keep fares competitively priced both for leisure and business travellers.

Mr Scurrah said a cheap, no-frills airline was not what the market wanted.

“We had the opportunity to reset some of the onerous costs we had on us, which gives us the opportunity to significantly lower that cost base without bringing the product down-market. We’re not doing that,” Mr Scurrah said yesterday.

Virgin Australia CEO Paul Scurrah. Picture: Albert Perez/Getty Images

After Virgin Australia slipped into voluntary administration in April and potential buyers began circling, at least one prospective bidder proposed returning the airline to its low-cost roots as Virgin Blue, which launched in 2000.

The winning bidder, Bain Capital, talked up turning Virgin into a “hybrid airline” – halfway between a full-service carrier like Qantas and a budget carrier like Jetstar.

Aviation and business experts now think Virgin Australia 2.0 will land on the upper end of the quality spectrum, with a better on-board experience than Jetstar, but with better valued airfares than Qantas.

Meanwhile, the killing off of Tigerair Australia eliminates Jetstar’s only direct competitor.

AirlineRatings.com’s editor-in-chief Geoffrey Thomas said the next iteration of Virgin Australia sounded promising from a customer perspective.

Virgin will ditch Tigerair Australia as it rebuilds after administration. Picture: Shae Beplate

“Firstly I don’t think any traveller’s going to shed a tear over the demise of Tigerair. It never really worked in this marketplace, mainly because Jetstar does such a good job, and I think Tiger went too far down-market for Australians,” he told 2GB’s Money News.

“But the Virgin proposition was always a good proposition. It’s also a great value proposition in economy, and they’ve got some really cheap fares in economy, and both Qantas and Virgin have been putting good fares into the marketplace to try and stimulate travel,” he said.

Mr Scurrah said competitive prices would also be key for business travellers with budgets likely to be under pressure due to the pandemic.

And while budget Virgin Blue would not be resuscitated as speculated, Mr Scurrah said that playful Virgin spirit would carry on.

“You won’t see us go back to the days of Virgin Blue, cracking jokes and rolling toilet paper down the aisle,” he said yesterday.

“But you will see a very human, more jovial culture than any other airline in the country.”