What Virgin Australia will look like after Bain Capital takeover

Free snacks will go, business class will stay and fares are promised to be cheaper as Virgin Australia’s new boss unveils details of the new-look airline.

Incoming chief executive officer Jayne Hrdlicka said Virgin Australia 2.0 would be neither a full service or budget carrier but a “mid-market” airline that retains its Economy, Economy X and Business classes.

Complimentary snacks in economy will be replaced by purchase-only food, although free tea, coffee and water will keep being offered.

In-flight entertainment and Wi-Fi on Virgin Australia flights are under review.

Virgin Australia’s lounges will start reopening from today in Melbourne, Sydney, Brisbane, Adelaide, Perth and the Gold Coast.

The Darwin, Cairns and Mackay lounges will close and the Canberra lounge is under review.

Virgin Australia said there would be no material change to the Velocity Frequent Flyer program.

The changes were announced this morning as US private equity firm Bain Capital formally takes over Virgin Australia as it emerges from seven months in administration.

Administrator Deloitte handed over the reins after the $3.5 billion sale to Bain Capital was completed on Tuesday.

Virgin Australia will become a mid-market airline, its new boss says. Picture: James D. Morgan/Getty ImagesSource:Getty Images

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Ms Hrdlicka said Virgin Australia would be neither a low-cost carrier or a full-service airline, but in the “mid-market”.

“Australia already has a low-cost-carrier and a traditional full-service airline, and we won’t be either,” she said.

“Virgin Australia will be a mid-market carrier appealing to customers who are after a great value airfare and better service. We will continue to evolve our offering for our customers based on data and feedback, but the Virgin Australia experience millions of travellers know and love is here to stay.”

The announcement today also talks up a “re-imagined” business class lounge at Adelaide Airport as well as new state-of-the-art check-in facilities that will be rolled out across major airports by December 2021.

The company will also keep Virgin Australia Regional Airlines after a strategic review of its operating model. It has already closed its low-cost subsidiary Tigerair Australia.

Little has been revealed today about Virgin Australia’s domestic network or whether international travel would make a return.

The company said it was committed to holding around one third of the domestic market share, which was the case before the pandemic.

“As we have seen with the recent issues with South Australia, the travel market remains uncertain. We are however seeing some positive signs of recovery,” Ms Hrdlicka said.

“Borders are beginning to open and a potential vaccine is on the way. We expect continued volatility, but as demand recovers, we’ll achieve a market share consistent with our pre-COVID position and continue to invest in, and grow, the fleet in line with increases in demand.

“Shaping our future will be a collaborative effort across the Virgin Australia Group and I’m thrilled to see the genuine excitement from our people about the future of their airline.”

Today is Ms Hrdlicka’s first day in the top job as she replaces Paul Scurrah, who announced his departure from the airline last month after steering Virgin Australia through its worst year during the COVID-19 pandemic.

Ms Hrdlicka previously served as chief executive at Jetstar and A2 Milk and was part of the team that helped secure Bain Capital’s purchase of Virgin Australia.

Jayne Hrdlicka is the new chief executive of Virgin Australia.Source:News Corp Australia

“It’s a privilege to join Virgin Australia as CEO at such an important moment, and I’ve spent the past few weeks meeting and listening to our team and hearing their ideas,” she said.

“I’m impressed with their understanding of and passion for our guests and look forward to their continued input as we work to refine our plans and define our future together.”

Ms Hrdlicka said as the travel environment continued to change, travellers and companies were seeking better value.

“They are hungry for flexibility and choice, a trusted brand that resonates with their values, and great prices, along with the premium features they value most,” she said.

“Today, we’ve announced a plan that will ultimately give our customers what they value without the big price tag: premium lounges, a new and fresh retail offering on-board, a choice of cabins, better digital technology and a more streamlined check-in experience. We will also continue to deliver our award-winning service, strong network of destinations, an award-winning frequent flyer program and a safe and reliable operation.”

Bain Capital has taken ownership of Virgin Australia. Picture: NCA NewsWire / Christian GillesSource:News Corp Australia

Speculation has mounted in recent months Bain Capital planned to strip the airline back to a low-cost carrier, reneging on assurances in its purchase bid that was accepted by creditors in September.

Virgin Australia has already announced it would streamline its aircraft fleet to only Boeing 737s, axe budget subsidiary Tigerair and lay off around 3000 workers as it rebuilt into a “value” airline.

Before today there was little clarity around what the on-board experience would be like with Virgin Australia 2.0, or the future of the company’s frequent flyer scheme, Velocity.

Virgin Australia went into voluntary administration in April, with a debt pile of around $6.8 billion, after years of financial trouble.

The COVID-19 pandemic forced the airline to suspend its international operations and ground almost its entire domestic fleet.

The job cuts announced in August affected about one-third of the Brisbane-based airline’s workforce across cabin crew, ground crew, engineers, baggage handlers and some international head office staff.

The airline’s transition to a single Boeing 737 fleet for domestic and short-haul international travel means it has ditched its ATR, Boeing 777, Airbus A330 and A320 aircraft.

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