Virgin Australia plans to consolidate its turboprop operations to routes within the ACT, New South Wales and Victoria as it prepares to reduce the number of ATRs in the fleet from 14 to six.
A memo to staff from Virgin Australia group executive for airlines John Thomas, as seen by Australian Aviation, said all six ATR 72-500s would be withdrawn along with two ATR 72-600s. This process would begin in July.
As a result, the airline will end turboprop operations in Queensland.
“The consolidation of ATR flying will unfortunately result in the closure of the Brisbane ATR flightcrew base to ensure our crew are positioned in the locations which best support the remaining ATR network,” Thomas said in the memo.
“We recognise that this may be disappointing news for some of you, however this will ultimately help us achieve a sustainable fleet and network mix to meet customer needs and continue to provide further opportunities for our people.
“This decision will allow us to have appropriate resources and schedules for the market and to focus on profitably growing our network elsewhere.”
The decision to reduce Virgin’s ATR fleet, as well as its Embraer E190 regional jet fleet, was first announced in June 2016.
Thomas said Virgin there would be a consultation period for affected staff.
Currently, Virgin operates ATRs from Brisbane to regional Queensland destinations such as Moranbah, Gladstone, Bundaberg and Rockhampton, as well as to Port Macquarie in NSW.
However, the downturn in the resources sector has led to a a drop in demand on a number of Queensland regional routes.
While a Virgin Australia spokesperson confirmed the existence of the memo, the spokesperson was unable to offer any additional information on what the decision would mean for routes currently served with the aircraft to be withdrawn.
In his Traffic column in the May edition of Australian Aviation, Gordon Reid reports the six ATR 72-500s to be withdrawn by July are VH-FVH, VH-FVI, VH-FVL, VH-FVM, VH-FVU and VH-FVX.
Virgin Independent Pilots Association (VIPA) president John Lyons said the airline had offered all affected pilots new roles in Brisbane or at another base.
Further, Captain Lyons said cabin crew were expected to be retrained onto other fleet types such as the Boeing 737.
“They may move to remain on the same aircraft or remain in Brisbane to fly on a different fleet,” Captain Lyons told Australian Aviation.
“There are no redundancies or job losses.”
VIPA represents about 60 per cent of pilots at the Virgin Australia group of airlines, comprising Virgin Australia, Virgin Australia International, Tigerair Australia and Virgin Australia Regional Airlines (VARA).
Asked if Virgin would be able to replace a withdrawn ATR on a route with another aircraft as part of a wet lease arrangement, Captain Lyons said: “I think they can do that provided they get permission from the pilot representatives.”
One such example of a wet lease arrangement is Virgin’s Brisbane-Emerald service, which is operated by Alliance Aviation on behalf of Virgin with Fokker 70s.
Figures from the Bureau of Infrastructure, Transport and Regional Economics show passenger traffic on Brisbane-Gladstone fell 18.3 per cent in the 12 months to December 31 2016, compared with the prior corresponding period.
Meanwhile, Brisbane-Moranbah was down 15.4 per cent and Brisbane-Mount Isa (which Virgin serves with Fokker 100s operated by Alliance Aviation Services) was 7.3 per cent lower.
The memo said Virgin was “investigating a number of different options” for the future of its regional Queensland routes that were currently served with ATRs.
In addition to Queensland, Virgin’s ATR fleet is used on intrastate routes from Sydney, as well on Sydney-Canberra and Melbourne-Canberra services.
On February 17, Virgin reported a statutory net loss of $36.1 million, falling back into the red from net profit of $45.7 million in the prior corresponding period.
Underlying profit before tax, which removes one-off items and is regarded as the best indication of financial performance, was $42.3 million, a decline of 48 per cent from $81.5 million in 2015/16 first half. Revenue dipped 0.9 per cent to $2.63 billion.
A slide presentation accompanying the financial results showed Virgin booked $69.8 million in restructuring changes in the 2016/17 first half as part of its “Better Business” program, which aims to reduce costs through fleet simplification and operational efficiencies in catering, maintenance and fuel consumption.
Virgin said the program was on track to achieve net free cash flow savings of $300 million by the end of 2018/19.