Virgin Australia downsizing and Velocity to stay

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We’ve been waiting a while, and today we got our first views of the future direction of Virgin Australia. This comes as the time in Voluntary Administration comes towards an end.

The update provided today goes a long way into giving us an idea of what the airline will look like going forward. There were a number of questions around what a ‘hybrid’ carrier would provide product-wise. Let’s have a look at what the announcements contained.

The Changes

Downsizing

The biggest change is that Virgin Australia will undergo a significant downsizing. This brings with it a number of changes:

  • To begin with, Virgin Australia will be mainly a domestic airline, operating 737 aircraft. As a result, the Boeing 777 and Airbus A330 aircraft will exit the fleet.
  • While Virgin has expressed a commitment to regional areas, it will be removing the ATR aircraft. This will see most regional flying being done by 737s
  • TigerAir will be retired. This will also see the A320 TigerAir aircraft being removed

All a result of the downsizing, about 3,000 staff members will be leaving the company.

International

Initially, the long haul international network will remain suspended. There are hints that these will return – but to do that, they will need to acquire new aircraft. So, the strategy on the long haul international remains to be seen.

It does seem likely that the short-haul international network will remain. That is typically those locations that are within the range of the 737. This includes New Zealand, Bali, and various Pacific Islands.

Business Class remains

At a product level, the 737 aircraft will remain in their 2 class configuration. As a result, Virgin Australia will continue to offer a Business class service. This is the 737 version of business class. Unfortunately, the excellent business class on the A330 and 777 aircraft will be a thing of the past.

While Business will remain, there is not much detail on what exactly this will be. As an example, at present, promotes its Luke Mangan meals – whether Luke Mangan has a role going forward remains to be seen.

Lounges to reopen

Good news for the lounge lizard. Bain is expecting the lounges to reopen when demand comes back. However, it has not committed to all the lounges reopening, just saying they will be in key locations.

Velocity

All points in the Velocity Program will be honoured. There were not lot of updates to Velocity today, however, Bain has previously indicated that the basic architecture of the program will remain.

It also appears that the current partners will largely remain. This will give Velocity members access to international flight redemptions.

When international travel restrictions ease, you’ll still be able to book redemption flights with global airline partners and to travel to destinations like New Zealand, Bali and Fiji with Virgin Australia.

There will also be changes to the user experience of Velocity. Bain has pointed toward a new IT platform for both the airline and the frequent flyer program. While I don’t know what they have in mind, a more seamless online experience should be a good thing.

Thoughts

It is good to see some concrete pointers to the future of Virgin Australia. By and large, it appears that Virgin is following a strategy that had previously put in place. This has been modified due to the effects that Covid-19 has had on travel.

They all seem like good moves, especially in the current market. Hopefully, Virgin will be able to expand again, once travel returns to a more normal footing.

 

 

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About Author

Mark is the founder of FlyStayPoints, and caught the travel bug early in life. He discovered the benefits of travel loyalty programs in 2001, and is always learning how they can make travel better. While work takes him between Perth and Melbourne, he is always plotting his next adventure.