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 a “mid-market” airline that would retain 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 reopen 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.

Today is also 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 said this morning 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.

“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.”

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.

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.

There has been little clarity on 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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