Every airline is dealing with reduced demand in a different way, and Virgin Australia has just revealed how they plan on adjusting capacity.
Virgin Australia suspends international flying
Virgin Australia has announced that they plan to suspend all international flights, and also ground their wide body fleet. Virgin Australia will:
- Suspend all international flights from March 30 through June 14, 2020
- Reduce domestic capacity by 50% through June 14, 2020
Virgin Australia’s international routes include three flights to Los Angeles, from Brisbane, Melbourne, and Sydney. On top of that, the airline is suspending flights to New Zealand.
Virgin Australia was supposed to launch two new international routes on March 29 — from Brisbane to Tokyo Haneda, and from Melbourne to Bali — but both of those services are being postponed.
Virgin Australia isn’t alone in cutting flights between Los Angeles and Sydney, as American, Delta, and United, are all suspending these routes as well. All of this comes as Australia has warned against all international travel.
Virgin Australia grounding 53 aircraft
With this huge reduction in Virgin Australia’s flying schedule, the airline is also grounding planes. The airline has a fleet of about 94 aircraft, and says they plan to ground the equivalent of 53 aircraft, including the following:
- Grounding all five Boeing 777-300ERs
- Grounding all six Airbus A330-200s
- Grounding 34 Boeing 737s
- Grounding six Airbus A320s (as part of the Tigerair Australia fleet)
- Grounding two ATRs
We can expect these planes to be grounded for at least 2.5 months, though I’d say it’s highly possible the cancelations last longer than that.
Keep in mind that just recently Virgin Australia was talking about buying new long haul aircraft, though I imagine that’s being tabled for now.
How Virgin Australia’s workforce is impacted
With significantly reduced demand and capacity, the airline also doesn’t need as many people as they have.
While it seems that this is still in progress, Virgin Australia is undertaking a range of measures to address the current situation, including the use of accrued annual leave, leave without pay, redeployment, and in some circumstances, redundancies.
In addition to that, the Chairman and Board of Director is cutting fees by 15%, management bonuses are being removed, and there is no base salary increase for non-EA team members.
Hopefully Virgin Australia will make it through this
Virgin Australia was in a rough financial situation even before this crisis started, as they’ve struggled with profitability, and with figuring out their place in the market.
One has to wonder what impact this will have on the future of the airline.
However, I guess the reality is that even the most seemingly financially healthy airlines are in a tough spot here. Take Delta, for example, which is asking for government bailouts just weeks after this all started.
The reality is that Virgin Australia’s future probably lies in the hands of the government… as is the case for way too many airlines.
Arguably Virgin Australia has needed to come up with a new strategy for quite a while now, so I’ll be curious to see if this situation prompts some changes at Virgin Australia, or if we just see them resuming operations as normal in a few months.
I feel bad for all the employees at airlines that are negatively impacted by this, and for their sake hope that this gets worked out…
Do you think Virgin Australia will go back to business as usual after this, or do you think it will cause them to modify their strategy?
Qantas is now doing the same, just announced. Scary times!
I'm not entirely confident that Virgin Australia will weather this storm, without some dramatic change in strategy. If their major shareholders don't stump up some capital, then they are at severe risk. Call me a naysayer, but I lived through the disappearance of Ansett, and consequent loss of Frequent Flyer points, so I have moved my Velocity points over to Singapore Airlines as a precaution.
Qantas has just extended current Premium Frequent Flyer status to members for an additional year, even though a member hasn't earnt sufficient Status Credits or minimum flight requirements.
As a platinum VA member I have always enjoyed the service however I think this is going to be a big impact and we will see VA looking very different afterwards as a result
It looks like Virgin has enough cash on hand to weather this and if not the government looks like they'd bail them out.
The federal government allocated $716 million in bailout funds to the Australia aviation industry (virgin, Qantas, REx, airports etc) this morning.
Rumour (from good sources) is that Qantas will be doing the same. Hence the DFAT advice to Australians to get home ASAP.