Buoyed by a resurgence in domestic business, Virgin Australia is looking to increase its fleet size by about 15%. Last year, amid the airline’s collapse and wider travel downturn, Virgin Australia downsized its fleet. Now, confident the worst is behind it, Virgin Australia is keen to reverse that trend and start expanding.
Virgin Australia eyes eight or nine new planes
A report in The Sydney Morning Herald on Tuesday says Virgin Australia is negotiating with lessors to take eight or nine aircraft. After culling the fleet last year, Virgin Australia ended up with 59 Boeing 737-800 aircraft. According to Planespotters.net, all but six of those planes are in the air.
When Virgin Australia was busy returning planes to lessors last year, there was a lot of talk of becoming a smaller, leaner airline. At the time, Virgin Australia was top-heavy with leased planes, many of which they were paying top of the market rates for.
These days, the amount of leased planes as a proportion of the overall fleet has decreased significantly. Interestingly, Virgin Australia is looking to lease aircraft again. But there’s a glut of leased planes on the market, and Virgin Australia’s new cash-conscious owners are probably not inclined to pony up for straight off the production line aircraft. It’s even possible lessors may simply lease back some of the planes Virgin Australia handed back last year.
A burst of confidence at Virgin Australia
There are a couple of reasons for a fresh burst of confidence at Virgin Australia. After a torrid year of open-close, open-close, Australia’s interstate borders are open and seem set to stay that way. That’s giving airlines some confidence to schedule flights and local travelers the confidence to book them.
Secondly, the Australian Government last week rolled out a stimulus package to get people in the air again. The Government subsidy will see around 800,000 domestic airline tickets sold at 50% off across the southern hemisphere winter. The theory is people will book a cheap air ticket and then spend money on hotels, hospitality, and good times at their destination.
Whether that theory holds up remains to be seen, but both Virgin Australia and Qantas were delighted when it was announced. Virgin Australia says it resulted in an immediate rise in ticket sales.
“This is a once in a generation event that is going to give the entire tourism industry supply chain a significant boost, which it desperately needs,” said Virgin Australia CEO Jayne Hrdlicka.
Government stimulus package boosts airline’s fortunes
Ms Hrdlicka also told The Sydney Morning she expected Virgin Australia to be flying at 65% of pre-travel downturn levels in April and 80% by the southern winter. Larger competitor Qantas is eyeing 90% to 100% of pre-downturn flying by winter. Qantas’ low-cost offshoot, Jetstar, is flying at about 100% of pre-downturn levels this month.
There’s a strong sense, and a growing feeling of confidence, that the worse is behind the Australian domestic airline industry. It’s been a tough 12 months for Virgin Australia. For much of that time, the airline just bunkered down and weathered the storm. It’s good to see Virgin Australia flying and looking at growing again.