⁍ Virgin’s shift from being a full-service carrier will also mark the end of a decade-long arms race with Qantas.
⁍ Both carriers include free checked baggage allowances, free Wi-Fi and complimentary food and drinks.
⁍ Virgin, which entered voluntary administration in April, is repositioning itself in a mid-market spot under new owner Bain Capital.
– Starting next month, Virgin Australia will no longer be a full-service airline and passengers will have to pay for things like checked baggage and food. New CEO Jayne Hrdlicka says the airline, which is being taken over by private equity firm Bain Capital, will start charging fees for items like checked baggage and seat selection, as well as cut basic fares, reports the Sydney Morning Herald. Virgin will also stop offering international-style business class on longer domestic flights and end a decade-long arms race with rival Qantas Airways, which offers free checked baggage, free WiFi, and complimentary food and drinks, per Reuters. “You can take costs out, you can do some unbundling, but that doesn’t mean that you have got to unbundle all of your passengers,” says a former Virgin executive. “For your corporates and for your business clients and your premium passengers, you can still keep it as a bundled offering.” Hrdlicka, a former head of Qantas’ low-cost arm Jetstar, says Virgin lost customers to Jetstar when it included baggage and food in its fares, because ticket prices rose. “Virgin just became too expensive,” she said at an aviation summit. A consultant and former Qantas chief economist says he expects both household and business customers will be price sensitive for the next few years, meaning it made sense for Virgin to gravitate more toward a Jetstar type of model. Qantas earned nearly 24% of its revenue from add-ons in 2019.
Source: https://www.reuters.com/article/us-australia-airlines-strategy-focus/new-virgin-australia-strategy-spells-end-of-business-travel-arms-race-idUSKBN2750EX