Tag: Virgin

New Virgin Australia strategy spells end of business travel arms race

SYDNEY (Reuters) – Virgin Australia looks set to cut basic fares and start charging fees for items like checked baggage and food under new chief executive Jayne Hrdlicka, prompting a wider industry shake-up as the country’s airlines reawaken from the coronavirus crisis.

FILE PHOTO: A Virgin Australia Airlines plane takes off from Kingsford Smith International Airport in Sydney, Australia, March 18, 2020. REUTERS/Loren Elliott/File Photo

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

Unusually for airlines globally, both carriers include free checked baggage allowances, free Wi-Fi and complimentary food and drinks even in the cheapest economy class tickets on domestic flights.

Virgin, which entered voluntary administration in April, is repositioning itself in a mid-market spot under new owner Bain Capital as it looks to weather ongoing low demand from the pandemic.

Company sources and industry experts said they expect Hrdlicka will re-introduce fees the airline had cut when it went upmarket under long-serving former chief executive John Borghetti.

Unbundling, or charging fees for previously included services like checked baggage, seat selection, Wi-Fi, food and in-flight entertainment is a strategy that helps airlines attract price conscious travellers with a low base fare while allowing them to pay extra for chosen add-ons.

This could become even more important post-pandemic due to the economic downturn, analysts say, with Virgin’s move downmarket also opening options for Qantas to stop providing an international-style business class service on transcontinental flights and to consider charging for some add-ons on its cheapest sale fares without losing customers.

Corporate fares are more likely to be all-inclusive, but Virgin plans to reduce its airport lounge network and will no longer attempt to match Qantas’ premium product when it unveils its new offering in around two weeks, according to a company source who said the details were not finalised. Virgin and Bain declined to comment.

“I think at least it allows the optionality for Qantas to go downmarket,” said John Thomas, a Boston-based former senior executive at Virgin who helped introduce baggage fees in the United States more than a decade ago as an airline consultant.

“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,” he told Reuters. “For your corporates and for your business clients and your premium passengers, you can still keep it as a bundled offering.”

Virgin’s fleet reduction under Bain will widen Qantas’ advantage in network size and flight frequency, which can be even more important to corporate travellers than creature comforts, said a Qantas source who was not authorised to speak with media. Qantas declined to comment.

VARYING FARE PACKAGES

One potential model for Virgin’s fare structure is Air New Zealand Ltd AIR.NZ. For domestic flights and those to and from Australia, it offers fare packages starting from a

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New Virgin Australia Strategy Spells End of Business Travel Arms Race | Investing News

SYDNEY (Reuters) – Virgin Australia looks set to cut basic fares and start charging fees for items like checked baggage and food under new chief executive Jayne Hrdlicka, prompting a wider industry shake-up as the country’s airlines reawaken from the coronavirus crisis.

Virgin’s shift from being a full-service carrier will also mark the end of a decade-long arms race with Qantas Airways Ltd

for corporate travellers involving lavish airport lounges, celebrity chefs and lie-flat business seats on longer domestic flights.

Unusually for airlines globally, both carriers include free checked baggage allowances, free Wi-Fi and complimentary food and drinks even in the cheapest economy class tickets on domestic flights.

Virgin, which entered voluntary administration in April, is repositioning itself in a mid-market spot under new owner Bain Capital as it looks to weather ongoing low demand from the pandemic.

Company sources and industry experts said they expect Hrdlicka will re-introduce fees the airline had cut when it went upmarket under long-serving former chief executive John Borghetti.

Unbundling, or charging fees for previously included services like checked baggage, seat selection, Wi-Fi, food and in-flight entertainment is a strategy that helps airlines attract price conscious travellers with a low base fare while allowing them to pay extra for chosen add-ons.

This could become even more important post-pandemic due to the economic downturn, analysts say, with Virgin’s move downmarket also opening options for Qantas to stop providing an international-style business class service on transcontinental flights and to consider charging for some add-ons on its cheapest sale fares without losing customers.

Corporate fares are more likely to be all-inclusive, but Virgin plans to reduce its airport lounge network and will no longer attempt to match Qantas’ premium product when it unveils its new offering in around two weeks, according to a company source who said the details were not finalised. Virgin and Bain declined to comment.

“I think at least it allows the optionality for Qantas to go downmarket,” said John Thomas, a Boston-based former senior executive at Virgin who helped introduce baggage fees in the United States more than a decade ago as an airline consultant.

“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,” he told Reuters. “For your corporates and for your business clients and your premium passengers, you can still keep it as a bundled offering.”

Virgin’s fleet reduction under Bain will widen Qantas’ advantage in network size and flight frequency, which can be even more important to corporate travellers than creature comforts, said a Qantas source who was not authorised to speak with media. Qantas declined to comment.

One potential model for Virgin’s fare structure is Air New Zealand Ltd

. For domestic flights and those to and from Australia, it offers fare packages starting from a seat without checked bags and rising to “worksdeluxe”, including two checked bags, food and seatback entertainment.

“That would allow Virgin to straddle both sides of the divide,” said

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Virgin Hyperloop CEO reveals how fast you can travel

Virgin Hyperloop, the technology company seeking to commercialize high-speed ground travel, is looking at transportation that can reach speeds of up to 670 mph, its CEO said Friday.

Jay Walder said the company is looking at a range of possibilities that include incredibly fast travel that is high-capacity and non-polluting.

“We’re really looking at the first new form of mass transportation that we’ve had in over 100 years,” Walder told Fox Business’ Neil Cavuto on “Cavuto: Coast to Cost.” “We’re looking at transportation that will be high-capacity that will carry people and cargo simultaneously so it meets our needs in both of those areas.”

Earlier this month, Virgin Hyperloop announced the selection of West Virginia as the site for its $500 million certification center that will serve as a test track. The concept of high-speed travel includes enclosed pods that will take passengers underground at speeds of more than 600 mph using electromagnetic levitation.

Construction of the facility is expected to begin in 2022.

Ideally, a trip from New York to Washington would take about 30 minutes. The technology would link American cities more closely, but also could effect the airline industry.

“I think it really works best for routes that are what the airlines refer to “short hauls,” Walder said. “It’s not changing New York to Los Angeles for example, but I do think it offers a much, much more convenient way of connecting cities across the country.”

He likened Hyperloop to the creation of the interstate highway system under the presidential administration of Dwight D. Eisenhower.

“We now have in our mind that the time it takes to get between places is defined by the highway system,” Walder said. “Today, if you want to go from Columbus [Ohio] to Pittsburgh, that’s a three-hour trip. With Hyperloop, it’s 25 minutes.”

A rendering of Virgin Hyperloop’s slated certification center and test track expected to be built in West Virginia. (VIRGIN HYPERLOOP)

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He added that a regulatory scheme of standards for the technology will be defined by the government.

“Ultimately, there will be standards that come from this. Certainly, we want to make sure that the standards that achieve the best outcomes for everybody,” Walder said. “And I think we’ll get there. I don’t think that’s the most difficult challenge for us to be able to meet.”

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