Flight Centre boss calls for lifting domestic travel bans

Graham Turner says all airlines, not only Virgin Australia, will suffer unless the government lifts domestic travel restrictions.

Flight Centre co-founder Graham Turner. Picture: Liam Kidston.

Graham Turner, co-founder of the embattled Flight Centre group, says all airlines, not only Virgin Australia, will suffer unless the federal government immediately lifts domestic travel restrictions.

At the same time former long-serving Qantas chief executive Geoff Dixon said it would be a tragedy for the Australian tourism and aviation industry if Virgin does not survive as a strong carrier.

“Two strong airlines have been vital to the growth of tourism over the past ten years, and efforts are being made for that to continue,” Mr Dixon told The Australian.

“I would not rule out governments, both state and federal, having some part to play in the outcome of the administration that Virgin is undergoing now.”

Virgin was on Monday placed in voluntary administration after the Morrison government rejected an 11th-hour appeal for a $200m grant to keep it afloat for another two weeks, as private equity firms circle the airline.

Virgin Australia was unable to service more than $5bn of debts following the effective grounding of the sector in the wake of the Covid-19 crisis.

Property developer Harry Triguboff, came out swinging in defence of Virgin. He labelled the federal government’s decision not to assist Virgin Australia with a financial lifeline as “a very bad decision”.

“The government should rethink it and give them the money,” said Mr Triguboff, founder of Meriton Apartments. “One of the reasons they went bad is because there is no business. It’s beyond their control.”

Earlier on Tuesday Finance Minister Mathias Cormann said bailing out Virgin Australia would set an inappropriate “precedent across the economy” for the government to bail out big businesses.

Senator Cormann said the government could ultimately provide “sensible support” for Virgin, but the government only wanted to take sector-wide measures.

Mr Triguboff conceded that while he was no expert on the running of airlines, he knew about business adding that he was a great advocate of Virgin Australia.

“I like Virgin very much, and Virgin in time overtook the others as far as satisfaction of customers”.

“It’s a company we should help, it is a big asset for the country. Now we will have Qantas and Qantas will raise the prices”. Aviation analysts have warned airfares might climb if Qantas remained as a monopoly operator.

Gerry Harvey, a self-confessed “lover of the Virgin Lounge”, said he didn’t think the government should be involved. “I can’t imagine the government will go into it.” “The owners of Virgin are pretty influential and they will work up something else,” he said.

“They are big players, they will all have their plan. Obviously part of the plan was that Virgin Australia had to go into voluntary administration first. Then they have got to work out what to do, they would all be jockeying around.

“A new airline will be born without any government help.”

Mr Harvey said it was better for Virgin Australia’s investors, rather than the taxpayer, to take the financial pain. But he said Virgin Australia won’t disappear: “It won’t happen that Qantas will be a monopoly. That will not happen.”

One senior banker with knowledge of Virgin’s accounts said there was still expectation the airline can survive.

“This was the balance sheet from hell. (Virgin Australia) will be recapitalised and streamlined and have a future,” said the banker. “Where it got messy, the share register got ‘balkanised’, all these different power groups wanted different things,” he said of its shareholder mix.

Virgin Australia’s shareholders were split between Singapore Airlines, Etihad Airways, Chinese conglomerates HNA Group and Nanshan and Richard Branson’s Virgin Group The remaining 10 per cent was listed on the ASX.

Flight Centre’s Mr Turner said: “The bigger thing is relaxing the airlines’ conditions sooner rather than later. No airline can survive this. It’s fairly obvious the government needs to relax the interstate or domestic travel bans because no one will rescue Virgin if it looks like months rather than weeks before the bans are lifted.”

Mr Turner has shut more than 400 of his Flight Centre travel stores since the virus hit Australia.

Bob Ansett, founder of Budget car rental and the son of Sir Reg Ansett, says there is no question there needs to be airline competition in Australia.

“I think that if Richard Branson isn’t going to take the initiative and pull together something that could provide the financial support the airline needs, it will be difficult for anybody else.

“But it will depend on private equity. It doesn’t appear as though other airlines will be in a position to acquire it. But I guess the other airlines around the world are all going through a fairly difficult time with the virus.”

“I am certainly hopeful it will remain as a major player in the aviation system.