Virgin Australia To Review Future Of Its Widebodied Fleet

Hot on the heels of announcing another half-yearly loss earlier this week, Virgin Australia’s CEO has sparked a fresh round of speculation, saying the airline’s widebody fleet is under review.

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Virgin Australia’s fleet of 11 widebodied aircraft is under review. Photo: Virgin Australia via Facebook.

The fate of Virgin Australia’s widebody fleet is up in the air

Virgin Australia operates a fleet of 11 widebody aircraft. These include six A330-200s and five Boeing 777-300s. All six of the A330s are leased and one Boeing 777 (VH-VOZ) is leased.

Their fate is undecided. In a media briefing this week, Virgin Australia’s CEO, Paul Scurrah, said the small widebody fleet was inefficient and was under review.

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The widebody jets are mostly used on international and transcontinental journeys. The five 777s scoot between Australia and Los Angeles. These flights, which operate under a joint venture agreement with Delta Air Lines, make money. They are the shining light in Virgin Australia’s threadbare, shaky and largely unprofitable international network.

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There are, however, rumors of falling profitability on this route. But in fairness, these are hardly halcyon times for any airline.

The A330s are more problematic. Passengers love them. Virgin’s Paul Scurrah is not so enamored. In response to a question when he released the financial results this week, Mr Scurrah said;

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“The A330, in particular, is not economical. When you look at its ownership costs combined with fuel performance, there are far better options out there which we are exploring at the moment.”

The 777s are successful, the A330s are not

The A330s are set to be deployed on the new route between Brisbane and Tokyo Haneda next month. This follows Virgin Australia’s ill-fated foray into Hong Kong. Flights to Hong Kong, which only began in 2017, were recently abandoned. This week, Mr. Scurrah admitted the airline lost USD$85.1 million on the venture.

There are high hopes for the new flights to Tokyo. But it is a terrible time to be launching a new premium service into North Asia. There is some speculation that these flights may be postponed.

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Virgin Australia recently abandoned flying its A330s to Hong Kong. Photo: InSapphoWeTrust via Wikimedia Commons

You can also see the A330s on services between the west and east coasts of Australia. There are weekend services to Nadi and New Zealand and if you’re lucky, you will soon be able to pick one up on the odd domestic service between Brisbane and Melbourne.

The transcontinental dilemma

The A330 is popular because it features a top tier lie-flat business class product. Through points redemptions and upgrade me bids, these blue-chip seats are reasonably accessible. However, passengers snagging a bargain business class seat to Perth is yet just one more reason why Virgin Australia is swimming in a sea of red ink.

Of course, Virgin Australia’s dilemma is that if they simply stick their workhorse 737 on routes like Sydney – Perth, premium passengers will simply head across to Qantas.

The transcontinental flights are interesting. These are five hour plus flights with a lot of corporate traffic. Qantas mostly has A330s on the route, featuring its latest Business Suites. On a good day, Qantas charges circa USD$1600 for a one-way fare across the Nullabor.

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Virgin Australia has a good premium cabin product across to Perth. Is it prepared to drop it and surrender the market to Qantas? Photo: Virgin Australia.

Unless Paul Scurrah wishes to hand over the premium market entirely to Qantas and see Alan Joyce cackle with glee, Virgin Australia needs to operate a widebody aircraft with a premium product on transcontinental routes.

But what aircraft would work across the different routes?

The problem for Mr. Scurrah and his board is: what widebody aircraft has the capacity to reach Los Angeles but also makes economic sense to send to Perth?

The aircraft being thrown around by the armchair chatterati and wannabe airline CEOs like myself are the A350 models, the A330neo, the 777-9 and the 787.

The problem is that while many of these aircraft might fit nicely into Virgin Australia’s routes to Los Angeles, most are simply too big to operate economically transcontinental flights.

It might suit me to be fine kicking back in a half-empty A350-900 en route to Perth after redeeming a swag of FlyBuys points, but it is not an ideal outcome for Virgin Australia or their long-suffering shareholders.

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Passengers like the A330s but the Virgin Australia CEO is not a fan. Photo: Virgin Australia.

Equally, the argument that Virgin Australia could deploy their new over-sized aircraft on services to Bali or Johannesburg is unlikely to fly. They’ve tried these routes with widebodies before and they didn’t work out. Given Mr. Scurrah is looking at reducing costs, he’s unlikely to be persuaded to have a crack at Jo’burg again. Or Phuket. Or Bali.

Two possible outcomes

The way I see it, two outcomes are likely. The first outcome is that Virgin sends the A330s back to their lessors, keeps the 777s for Los Angeles and uses their 737-800s on transcontinental routes. There are two problems with this. Firstly, what about the new services to Japan? Given the current climate, those flights may be over before they have begun. But granted, it does poke a hole in the theory.

Secondly, it means Virgin Australia quits the premium cabin transcontinental market. Unless of course, Paul Scurrah channels JetBlue and installs a version of its lie-flat Mint Class on some of his 737-800s and sends them to Perth. But that idea has been around for a while and the Virgin boss has not exactly radiated enthusiasm for it.

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Who really wants to squeeze into a 737 for the long flight to Perth? Photo: Virgin Australia.

The second outcome is that Virgin Australia runs with the Boeing 787. This plane is the right size to operate transcontinental flights successfully and has the legs to make it across the Pacific.

Given the preponderance of Boeing aircraft in Virgin Australia’s fleet, Boeing might be taken with the idea of an airline having an all Boeing fleet. They’d probably do a deal. Actually, considering the problems at Boeing the moment, they’d probably love to do a deal.

The primary problem with the 787 is that it isn’t a wildly popular aircraft with economy class passengers. That might not be an issue if you have enough Velocity points to cash in for a lie-flat seat and a run on VA’s raspberry and white chocolate brownies. But most passengers travel in the main cabin and the 787 in the standard 3-3-3 configuration is a little tight.

The A330s, while uneconomic for Virgin Australia, is a much nicer aircraft to fly in for most passengers.

A difficult decision for Virgin Australia

That’s the dilemma for Virgin Australia. From a passenger perspective, Virgin Australia a pretty decent airline. From a shareholder and management perspective, it is a work in progress.

The challenge for Paul Scurrah is to find a widebody aircraft that maximizes the earning potential for the airline and provides a decent travel experience for all passengers.

It’s not necessarily an easy thing to do.

What do you think? If Virgin Australia were to adopt just one widebody aircraft, what should it be? Why?

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TonytTDK

It would appear to be shouting A330-neo, loud & clear.
Maybe the smaller -800.???

Jethro

ditch the 737 max and go for cheaper a320 ditch the a330 and go a330neo-800 might get a good deal because there are very few orders

Bennelby

Probably the A350 or 787. They are economical, can meet demands, fairly new, clean, fuel efficient and can comfortably carry lots of people

Tonyxb70

Virgin simply can not afford new planes. However, their part owners including Singapore have lots of spare capacity because of Coronavirus. Good plan is to lease theses, maybe even wet lease. Apart from profits on the LA route, VAR are making good profits in the WA FIFO market using ancient Fokker 100’s. So it’s not always about best fuel efficiency, cost of ownership is important for short haul.

Andrew

No wide body planes across Australia would push me away from Virgin quickly.

The 787 isn’t a favorite either because of the narrow seats. Hopefully 330 neos would work, A330s are a really nice plane to fly on.

Neil W

In their current financial health it is difficult to see Virgin ordering any new widebody aircraft. The new CEO is there to cut cost’s – not spend precious capital.

Here2go

The whole Virgin Australia concept has failed – Qantas has won that battle. They should go back to their “Virgin Blue” roots, and focus on providing a cheerful service that is more along the lines of Southwest (except for non-allocated seating), and get rid of Tiger.
Virgin Blue was an admired brand, but Virgin Australia destroyed the culture that made it an admired institution.

Gary

I think Virgin Australia should start by getting rid of the dead wood in there main offices first.
Get a new marketing manager for sales.
Find out what waste age in offices and the airports.
As well as the food supplier.
See how you can do better maintenance on the aircraft and what waste can be reduced there.
Then look at the aircraft to see what needs to be done.

John

If VA wants to simplify its widebody fleet to one type it’s either the 787 or A350. The A330N could work if VA decides to ditch Los Angeles and stay in their part of the world, giving capacity to QF and partner DL (though DL doesn’t have the capacity to expand Australia flying)

Louis

I recon the B787, although take someone’s point about new aircraft being a high cost. I would rather do trans-continental on one of these than a B738, but perhaps not over to LAX.
I do like the Jet Blue Mint idea and wonder if some B737-900s could be used for transcontinental, giving space for premium and more space for cattle class than doing this to the B737-800s they have now.
They could then retain the B777-300s operating LAX and focus on promoting Australia and utilising their DLpartnership.
Just a thought

Gary

MAX 10 will be doing the transcon. It will have lie flat business class.

Chris

They can afford it because it’s a transfer of leasing costs from what their currently paying for A330 to a new aircraft with similar leasing costs and better efficiencies. And I say better leasing costs because VA pay more than normal for their A330 leases as they required them in a hurry ten years ago. The airline has not lost the battle against Qantas – they are simply losing money due to excessive cost bases than were left unattended with previous management focused on change and growth only.

GEOFFREY Walker

No widebody to Perth means my 10 trips a year will be on Qantas even though I have declared I will not use QF while the leprechaun is in the chair.

Vince

Sounds like what virgin needs is an NMA. A321XLR perhaps?

Nick Sydney 348395

As a Qantas FF I’m biased but to be honest prefer the on board VA experience over QF domestically. IMHO virgin should bin international traffic and stick to domestic. Get that working well.

Hendarto Adi

A330 neo or A321XLR

Leeroy

I flew SYD-PER in January on 330-200 and upgraded to business via their premium (minimum) bid for only $A360. This was my 1st time flying business and I enjoyed the lie flat seat and the service. On return (Red eye)I also upgraded via bid for $A350 but this was 737-800 and it’s chalk and cheese. Not worth it for slightly wider seat.

Adam

Let’s put it in perspective.

Virgin have lost over $4M a week in the jet six months.

Ansett were loosing $1M a week when they folded.

Virgin are fighting to survive here.

Travis

I really hope they go with A330neos. I love their a330-200 product and see would see it as a massive downgrade to a 787. Possibly A350 to replace 777’s unless theh are considering the 777x

Patrick de Marigny

787 is a noisy aircraft I just stepped off a flight from Delhi to Mauritius on an Airbus A330-900 neo, what a pleasant aircraft to fly into. I also used Turkish on a similar plane and that was good too, much better than the 787. The only 787 I like is the Air India one because it has generous legroom in economy. But the A330neo 2-4-2 set up is a winner and it’s a quieter plane and I believe economical.

Don Scott

Give up the long haul international completely. Concentrate on the best domestic and regional service. Offer the best package economy, premium and first on a total B737 fleet, no MAXs. Cover Tahiti in the east to SiN in the west. Concentrate on becoming the “best”, .

Eric

They probably will need more MAXs than they have on order. So I could see them getting some type of package deal just to secure some MAX orders.