Virgin Australia to position itself as mid-market airline: new CEO

[SYDNEY] Virgin Australia will position itself as a mid-market airline targeting around a one-third share of the domestic aviation market under the ownership of US private equity firm Bain Capital, the airline's new chief executive said on Wednesday.

Virgin's shift from being a full-service carrier will mark the end of a decade-long arms race with Qantas Airways for corporate travellers involving lavish airport lounges, celebrity chefs and lie-flat business seats on longer domestic flights.

"Australia already has a low-cost-carrier and a traditional full-service airline, and we won't be either," new Virgin Australia chief executive Jayne Hrdlicka said in a statement, in reference to Qantas and its low-cost offshoot Jetstar.

"Virgin Australia will be a mid-market carrier appealing to customers who are after a great value airfare and better service."

The country's second-biggest airline said it would introduce new on-board food purchase options in economy class but would retain business-class seats and airport lounges in major cities.

It would also continue to include checked baggage in its economy-class fares. In-flight Wi-Fi and entertainment remains under review.

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Virgin was delisted from the stock exchange on Tuesday after the Bain purchase closed, allowing it to exit from voluntary administration.

Qantas chief executive Alan Joyce said he expected Virgin to emerge "leaner and meaner" given it was able to change the terms of its aircraft leases as part of the administration process, Australia's nearest equivalent to the US Chapter 11 bankruptcy regime.

Qantas has announced plans to achieve A$1 billion (S$980 million) in annual savings by the 2023 financial year to help weather the coronavirus pandemic.

Analysts have said Virgin's move down market would give Qantas room to trim product expenses or introduce fees on cheaper fares while maintaining its premium market position.

"We have no intention of changing the Qantas product apart from what we have done around Covid-19," Mr Joyce said at an Aviation Week webinar.

REUTERS