Virgin Australia plans to introduce new fares for domestic and international travel that it says will offer travellers more choice.
The airline has rebranded its fares with names such as Go, Go Plus, Getaway, Elevate, Freedom, each of which have different levels of flexibility and inclusions. There are also new fare categories for premium economy and business class tickets.
The nine new fare categories, which collectively Virgin has branded “Fares for you”, are due to come into effect for tickets booked after September 7.
“The new fare structure provides increased flexibility for guests during the booking process,” Virgin said in a note to travel agents.
“We want to provide our guests with a range of fares across our domestic and international routes so they can choose the fare that most suits them every time they travel.”
“Coupled with our award-winning service, we’re confident that our new fare structure will be popular with travellers.”
As part of the changes, Virgin is removing certain benefits for its elite frequent flyer members travelling on the cheapest economy tickets.
For example, the most restrictive and lowest priced Getaway domestic fare will not earn silver, gold and platinum Velocity members bonus points, while gold and platinum members will lose the ability to “Fly Ahead” (catch an earlier flight) if they arrive at the airport early.
Further, all travellers, including elite Velocity members, will have to pay to select their seat at any point between the time they booked their ticket until when checkin opens 48 hours before departure when on a Getaway domestic fare.
Virgin said in the note to travel agents the introduction of “preferred paid seating is part of our greater range of fares across all domestic and international routes to offer guests more choice and flexibility during the booking process”.
On the international front, Virgin is re-introducing a carry-on only fare for its international short-haul network, such as flights to Bali, Fiji and the South Pacific (excluding trans-Tasman routes), called “Go”.
Virgin already offers a seat-only fare for flights between Australia and New Zealand, aligning its product with alliance partner Air New Zealand on trans-Tasman routes.
There were also new fares for premium or business, with “Premium Saver” and “Business Saver” categories that offer less flexibility and more restrictive cancellation conditions.
The proposed changes follow Virgin posting a $224.7 million loss for 2015/16 – the second biggest full year loss in the airline’s history – after it booked a series of one-off and restructuring charges as part of fleet restructuring and cost-reduction initiatives.
Virgin’s Getaway domestic fare with reduced benefits mirrors a trend globally for so-called basic economy fares.
In the US, Delta Air Lines was the first to roll out a bare bones economy fare on selected routes, with “Basic Economy” a non-refundable, non-changeable ticket that offered limited frequent flyer benefits and no advanced seat selection. American and United were planning to follow suit with a similar product of their own.
A March 2016 research note from thinktank CAPA – Centre for Aviation said these “branded fares” have become an increasing popular way for the big US network carriers to compete effectively with ultra low-cost carriers such as Spirit and Frontier.
“The introduction of more segmented fares should actually allow American, Delta and United to add more sophistication to their revenue management and avoid dilution of revenue,” CAPA said.
“These fare products aim to create pricing segments which cater to a wide swathe of passengers.”
CAPA cautioned that although these branded fares had the potential to generate billions of dollars of annual revenue for the three large US global network airlines, it created “more complexity in the methods they use to price fares”.
John Thomas, who will join Virgin as group executive for the airline’s domestic and international operations in September, said Air New Zealand led the industry with the introduction of these branded fares through its Seat, Seat+Bag, The Works and Works Deluxe fares.
“The industry is moving very much towards the branded fares,” Thomas told reporters during Virgin’s business class launch in Los Angeles on July 20.
Virgin said more information would be made available closer to the September 7 launch date.
Virgin’s new fare categories
Domestic: Economy – Getaway (least flexible), Elevate, Freedom (most flexible). Business – Business Saver, Business
International short-haul: Economy – Go (carry on luggage only), Go Plus, Getaway, Freedom. Business – Business Saver, Business
Trans-Tasman: Economy – Go (carry on luggage only), Go Plus, Getaway, Freedom. Premium Economy – Premium Saver, Premium. Business – Business Saver, Business
International long-haul: Economy – Getaway (least flexible), Elevate, Freedom (most flexible). Premium Economy – Permium Saver, Premium. Business – Business Saver, Business