Virgin Australia, one of Richard Branson’s largest airlines and Australia’s second-largest. It has flown for over 20 years and is now fighting for survival in this increasingly harsh market.
In a time of flight cancellations, repatriation flights and the overall mess of the aviation industry due to the major virus that we aren’t allowed to talk about on here, a major airline is fighting for survival. Virgin Australia has been suffering for years, making loss after loss after loss, just last year it lost a cool $349 million. The reason for this? A weak travel market, high fuel costs and a weakening Australian dollar. Any increase of capacity to popular routes just resulted in emptier planes just drove profits into losses, which is really bad news for the once-thriving airline. The virus hasn’t helped either, most states within Australia have closed their borders, they have been forced to reduce their capacity by 90%, standing down 80% of their staff and to park their money-making aircraft on taxiways. A few months ago one of the world’s busiest routes, Sydney to Melbourne, was serviced by 20 Virgin Australia return flights a day in February, today it was served by 2. All of this is bad but this has been bad for a while, no one realised the extent of it and you could say that the recent events might be the killing blow to the once profitable Virgin Australia, this could be the end and Virgin know it.
In its fight for survival, Virgin has made the step of publishing a full-page ad on one of the countries top newspapers. It reads
A monopoly in Australian skies will be good for no one.
Not the 25 million people who fly with Virgin Australia, who have seen a 37% reduction in airfares over the 20 years we’ve been operating.
Not our 10,000 incredible people.
Not our 4,000 loyal partners.
Not the Australian economy, to which this airline adds 11 billion dollars a year. Or the 600,000 people who work in tourism.
Our biggest competitors need a challenger to keep them honest and innovative. A monopoly won’t even work for them.
It’s as clear as the blue sky.
A competitive airline industry is good for every one of us, and will be an essential part of economic recovery.
Let’s keep the air fair.
Here’s the thing you have to know about the aviation industry in Australia. We have 4 airlines with two-parent companies. Virgin Australia and Tigerair belong to the Virgin group while Qantas and Jetstar belong to the Qantas group. We also have a few regional airlines but they are either part of either of the two groups or are very very small. We have no third player, no one to take over the reins if Virgin goes under. Airfares would jack up to double the price with the Qantas Group monopoly, which is good for Qantas but terrible for the consumer.
Due to the virus Virgin Australia has asked the government for a financial bailout. Senior government figures are reluctant while Qantas chief is questioning why an airline that was managed so badly should be given any money at all. Qantas for the record, made almost $900 million last year, Virgin meanwhile has been given months to survive. Airlines rating site Fitch has given the airline until September until it runs out of cash and collapses unless a government bailout is given. Hopes cling to an unlikely bailout while Virgin clings for survival
Happier times, Richard Branson celebrates the launch of Virgin Blue (later Australia) in 2000 image credit
