Virgin Australia must exit international, dump Tiger, says Sir Rod Eddington

A restructured, back-to-basics Virgin’s exit from international flights should be non-negotiable, says airline veteran Sir Rod Eddington.

Virgin Australia needs to drop its Tiger subsidiary and exit international flights, says corporate and airline veteran Sir Rod Eddington. Picture: AAP

Virgin Australia will need to focus on its core operations in order to navigate a precarious aviation industry, corporate and airline veteran Sir Rod Eddington says.

Sir Rod said the owners of Virgin would need to determine whether the airline would continue as a full-service operation competing head on with Qantas, or return as a budget carrier.

“Is it going to be more like Virgin Blue, the original incarnation of Virgin, which is closer to a low-cost carrier, or is it going to be closer to a full service airline,” he said on ABC radio on Thursday.

“I think Virgin Australia can go back to its roots and be that, but not without some pain along the way.”

The former chief executive of British Airways said the aviation industry had always been highly sensitive to economic shocks. COVID-19 had been the catalyst of Virgin’s downfall in the same way Ansett was brought down by repercussions of 2001’s September 11 terrorist attacks.

Infrastructure Partnerships Australia chairman Sir Rod Eddington.

“Ansett collapsed after 9/11, Virgin has gone into administration in many ways as a consequence of the pandemic,” Sir Rod said.

“It’s a tough business and these airlines need to be well run in order to survive.”

He also said the Australian aviation industry is big enough to support two commercially viable major airlines.

On Wednesday, Fitch downgraded Virgin’s credit rating from CCC to a D, following the company’s move into voluntary administration.

International flights and low-cost offshoot Tiger Airways were drains on Virgin’s core operations, Sir Rod said. Scrapping both facets of the business should not be up for debate, he said.

Weighing in on whether the federal government should step in to resurrect the airline, Sir Rod said the uncertain timeline of the virus would have made it difficult to determine an appropriate bail out figure.

“Virgin’s problems began long before the coronavirus pandemic,” he said.

“[The government] effectively would have written a blank cheque … I think it is up to all involved to try and get Virgin back into the air in a sensible form.

Sir Rod is currently the chair of Infrastructure Partnerships Australia. He was appointed chairman of Ansett in 1997 and held the position of British Airways chief executive from 2000 to 2005.

Outside the airline sector, he noted the continuation of large construction projects would be crucial to Australia’s economic bounceback, with governments and the private sector needing to look at key infrastructure projects that would give long term economic benefit.

“There are plenty of projects that make sense, that have long term positive consequences for our country,” he said.

“What there is a shortage of is capital. Whether its private sector capital or government capital.”