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‘Absolutely ridiculous’: Queensland slaps down Melbourne Virgin pitch

written by Adam Thorn | April 24, 2020
Virgin 737-8FE lines up on runway 34 at Melbourne Airport at sunrise
Virgin 737-8FE lines up on runway 34 at Melbourne Airport at sunrise (Victor Pody)

Queensland’s Premier has branded Melbourne Airport’s pitch to woo a revived Virgin Australia away from Brisbane as “absolutely ridiculous”.

Annastacia Palaszczuk said, “Virgin’s headquarters are here, they should stay here and we will fight to keep them here because we need it for our regional communities.”

The strongly-worded rebuttal comes after the airport’s chief executive said on Wednesday that Brisbane “doesn’t provide the depth or diversity of traffic, business traffic, to compete with Qantas”.

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It’s also the latest in a week-long tit-for-tat battle between states and territories bidding to save Virgin Australia, now in administration, in exchange for the airline shifting its base.

Brisbane Airport chief executive Gert-Jan de Graaff also mounted a defence for the state, claiming his city has room to grow “in spades” compared with rivals Melbourne and Sydney.

“With a new runway opening in July, Brisbane Airport will be the only non-capacity constrained, curfew free capital city airport in the country,” de Graaff said.

The row between states began on Saturday when the Queensland government offered Virgin a $200 million lifeline on the condition that other states also contribute and the business maintains its base in Brisbane.

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However, the next day, NSW Treasurer Dominic Perrottet hinted that any contribution from its government would require the airline to move to Sydney, instead.

Then, on Monday morning, Queensland angrily hit back, with State Development Minister Cameron Dick insisting the move would force 1,200 staff to move states to remain in a job.

Minister Dick dramatically told NSW to “back right off” and said, “There is nothing more dangerous than Queenslanders with their backs to the wall.”

On Wednesday, Victoria joined Queensland and NSW by seemingly throwing its hat into the ring, claiming it had considered making a bid and hinting an offer could still happen.

Victorian Treasurer Tim Pallas said, “We would expect to see more jobs come to Victoria. We are almost exactly identical in size to Sydney and in practical terms, we don’t have a major domestic carrier based here and that strikes us as a little unreasonable.

Finally, on Thursday, Melbourne Airport’s chief executive joined in, saying that a reborn Virgin Australia should make the Victorian capital the cornerstone of its new network.

Lyell Strambi said, “That doesn’t necessarily have to mean corporate HQ, though it certainly could.”

Strambi added there was an “ongoing conversation” about how to make a Melbourne move happen and claimed the city is underutilised in terms of its value as a strategic hub.

“If a lean, fitter, stronger Virgin wants to rebuild, Melbourne has to be at the heart of the plan,” he said.

The airline group confirmed its collapse on Tuesday morning, after the announcement leaked the previous evening. The business was struggling to service a $4.8 billion debt pile with little revenue coming in.

After the announcement, Deloitte administrator Vaughan Strawbridge and Virgin chief executive Paul Scurrah revealed more than 10 parties have expressed interest in recapitalising the company, which they described as being “very sophisticated parties”.

For more of our in-depth coverage, click the links below:

Steer your own in-flight experience – available on print and digital Whether our classic glossy magazine in your letterbox, daily news updates in your inbox, peeling back a few layers in the podcast or our monthly current affair reports, you can count on us to keep you up to date. Sign up today for just $99.95 for more exclusive offers here. Subscribe now at australianaviation.com.au.

22 Comments

  • Lechuga

    says:

    “Room to grow in spades” to what exactly? This is the problem with basing it in Brisbane. There’s very few places in Queensland that if people want to go there they’ll fly to Brisbane first. Gold Coast, Sunshine Coast, Cairns, Townsville even Toowoomba can be directly accessed from other states. Melbourne definitely offers more, with a population greater than the whole state of Queensland, everyone that wants to come in or go out goes directly through Tullamarine making it a much better choice for that alone.

    If Queensland wants an airline based out of Brisbane for their regional towns, they’d be better off doing what WA used to have and starting their own regional airline, because I think the “leaner” Virgin on the other side of this won’t have a regional arm so there’s an opportunity there for QLD and WA, or they could always suck up to Qantas, after all what does the Q stand for?

    Bigger city, more centrally located, better international connections. They would be mad to not start up again in Melbourne, either that or they can lose all of that traffic to Qantas and let them have complete dominance on the 2 biggest cities and the 2nd busiest route in the whole world.

    • Bob from Inglewood

      says:

      What ignorance, typical of anyone from a socialist hegemony, and in this case from one who is wildly inaccurate.

      Melbourne centrally located? You must be joking. Have you ever looked at a map? Clearly not. Melbourne is right in the south-east corner of a vast continent, while Brisbane is the one in the middle.

      Your claim that Melbourne has a population greater than that of Queensland is another example of your unbelievably poor grasp of facts: Your crime-ridden Melbourne had a population of 5,078,193 as at 30 June last year, while Queensland’s population was a greater 5,115.500, not a hell of a lot less than cold, wet, poorly-placed Victoria’s 6,629,900.
      Maths was not your strong suit at school, was it – or are you still there? Those figures are from the ABS, by the way.

      Your mate Reg blew it, sport, in your physically tiny state; he should have stuck to operating a bus.

  • Scott

    says:

    Hopefully the Queensland Government grants Virgin some access to the regulated routes such as Longreach and Charterville to reward the airline being based in Queensland. Virgin should negotiate this now during administration, I’m unaware of them holding even 1 regulated route in ALL of Queensland, and that shows an imbalance.

  • Shane

    says:

    Victoria had an airline maintenance industry but failed to fight for it.
    Ansett collapsed and Qantas moved Heavy Maintenance to BNE, due in part to greater Government incentives.

    Surely in our current situation, value adding, efficient use of funds should be paramount for all, Industry and Government. Moving Virgin’s HQ would only waste millions of dollars for no National benefit. State Governments need to think of the National good, not only of themselves. After all we are talking about an airline, the location of it’s HQ is insignificant, the same (or streamlined) number of jobs, just relocated is pointless. As Lyell Strambi hinted at, improved network offerings is what they should be bidding for.

  • Craig

    says:

    Would not surprise me. The Supreme Leader of the Socialist State of Victoria, Daniel Andrews, will borrow Chinese money to pay down this debt, thereby appeasing his Mandarin masters – you can take that to the bank.

  • Col

    says:

    “Brisbane is the only capital city with a non constrained airport that has no curfew”
    Really- Darwin is a capital City ???? No curfew nor slot restraints.
    Or is she looking at a different map

  • Alan Pace

    says:

    Move QANTAS to Brisbane. That’ll get feathers flying (& as ‘Lechuga said) “And after all, what does the ‘Q’ stand for?”

  • Ten Tribes Of Texas

    says:

    Virgins O/S routes could easily be taken over any of its current owner partners so its the domestic routes that are important to save. Why pay hundreds of millions to an existing airline when another airline like Tiger can take up the domestic routes. Gov would be exposed to Virgjn’s massive debt with no guarantee it will continue fir long anyway given the amount of its debt Far too much risk involved here for gov involvement. Let it fail.

    • Ronald Spencer

      says:

      Tiger is owned by Virgin

  • Mark

    says:

    Wasn’t Ansett II doing the same before it died ?

  • Peter

    says:

    Strambi’s idea is the most practical. Leave the administrative HQ In Brisbane, but tge centre the operation on Melbourne.
    Where a HQ is located is almost irrelevant to an airline.
    Take RyanAir for example. HQ is in Ireland but the majority of the operation is in the UK and mainland Europe.
    The new Virgin needs to be low cost , but tgat does not mean lack lustre product. Hard to differentiate on a narrow body anyway.
    Most likely its international operation should be shut down. Only profitable route is USA but not likely to be viable to retain 3 x B777.
    Establish a partnership with all competitors of Qantas for inbound oncarriage – although that is not so big these days because of multiple gateways.
    Possibly shut down Tiger. Need to do the numbers but unlikely to be viable and.necessary to maintain.
    Currently Virgin has a higher cost base than Qantas mainline.
    Shows what a flawed strategy there was under Borghetti who dove them up a blind alley and overburdened the carrier with huge debt. He has a lot to answer for.
    So has old board of Virgin tgat did not properly oversee Borghetti. Only Air NZ wax a wake uo to him. When board did nothing about him, they sold there shares and parted company strategically.
    A lot could be done with a new Virgin, so long as they do not attempt to displacecQantas market share wise. Qantas holds all the cards to make their life difficult – and there is no way tgat they want to be a monopoly. They want another airline, but they also want to be ascendant with Virgin mark 2 with no more than 35% market share max.

  • Paul

    says:

    The funny point is Virgin do not directly operate flights to regional Qld. Qantas does a far better job.

    • Ronald Spencer

      says:

      There is absolutely no business case to fly two airlines in any regional place in Australia

  • James

    says:

    Jetstar is based in Melbourne….

  • Mark

    says:

    The revised version of VA if it goes ahead will be without their own international but obviously codeshare. Regional routes that aren’t profitable will be turfed unless government subsidy and the focus will be on the profitable routes ie Melbourne/Sydney. Don’t be all things to all people, use VA regional in WA to still do mining charter. Problem is the debt against aircraft and they aren’t worth much. One thing for sure is that if an equity coy buys in and turns it into this lean, mean machine it won’t be hanging around for long once the improvements have a track record. Dick Smith or Myer anyone ? However another airline still does the above but uses it for strategic purposes so happy to go long term.

    • Craigy

      says:

      75 aircraft in the Virgin fleet are leased so no asset at all.

      • Ronald Spencer

        says:

        Wrong they own a lot of their planes not all a leased

  • Marum

    says:

    Politicians posing and blustering as usual. All of them will have no power and no say, as is usual too. If somebody takes over Virgin, they will base it wherever suits them most.

    Regards….Marum.

  • Paul

    says:

    Let’s wait and see what the new owners of this airline have to say. After all it will be their devision and not some premier who likes media attention

  • Peter

    says:

    I do not think the Queensland Government has done any favours for Virgin especially with their regulated routes. We know Virgin approached the Victorian Government for assistance. Daniel Andrew was about to offer $500M for Virgin to relocate to Melbourne when he heard the front runner to buy Virgin was planning to shift the operation to Melbourne. There will still be assistance offered expected to be around $250M.

  • PB

    says:

    I’m amazed at the government intervention, playing Virgin like a yo-yo on a string.
    Qantas was government owned because, back in the day, Australia needed the foreign exchange that comes from having an airline. Governments needed to keep that Oz currency in Australia.
    After the USA deregulation, Australia thought that would be cool, as long as it profited. and it did. It sold off airports, charged unconscionable fees to air carriers, and profited from every angle of air travel. No airline can sustain that treatment for long.
    Qantas is alive today because it wrote down to zero all of its aircraft, creating the largest business loss ever seen in Australia. The Chairman and Managing Director are paid with a base and options, and the airline became profitable due to the debt service elimination, the share price rose due to the artificial earnings, and the two at the top profited hugely. Virgin didn’t do that, and while the debt was sustainable under normal conditions it isn’t now.
    But Australia does not need two domestic airlines. Now we see state governments and government controlled foreign airlines showing interest. What they should all do is to back away and let the chips fall. Foreign carriers will pick up the slack, if there is any.
    There really is no airline competition in Australia. It’s a small market at the end of long, skinny routes, and the real reason for having a domestic carrier is to feed the foreign carriers. To be profitable on those long haul flights the carriers need to draw from all over Australia with domestic feed, which Qantas has and Virgin some of. But while the Pacific routes are the cash cow, Virgin didn’t develop USA domestic feed, relying instead on its code share with Delta – until Delta decided to operate a daily flight itself. So there is Qantas, United, American, Delta, Hawaiian, Virgin, offering non-stop service on the Pacific. Fiji Air, Air New Zealand, Air Tahiti Nui offer one stop service. Then there are Asian carriers hubbing through various Asian ports. Sounds pretty crowded, so why resurrect Virgin? Does it make economic sense?

  • Ashley

    says:

    How about starting with a new name? What real value is there for the $10 Million paid annually to Branson?

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‘Absolutely ridiculous’: Queensland slaps down Melbourne Virgin pitch

written by Adam Thorn | April 24, 2020
Virgin 737-8FE lines up on runway 34 at Melbourne Airport at sunrise
Virgin 737-8FE lines up on runway 34 at Melbourne Airport at sunrise (Victor Pody)

Queensland’s Premier has branded Melbourne Airport’s pitch to woo a revived Virgin Australia away from Brisbane as “absolutely ridiculous”.

Annastacia Palaszczuk said, “Virgin’s headquarters are here, they should stay here and we will fight to keep them here because we need it for our regional communities.”

The strongly-worded rebuttal comes after the airport’s chief executive said on Wednesday that Brisbane “doesn’t provide the depth or diversity of traffic, business traffic, to compete with Qantas”.

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It’s also the latest in a week-long tit-for-tat battle between states and territories bidding to save Virgin Australia, now in administration, in exchange for the airline shifting its base.

Brisbane Airport chief executive Gert-Jan de Graaff also mounted a defence for the state, claiming his city has room to grow “in spades” compared with rivals Melbourne and Sydney.

“With a new runway opening in July, Brisbane Airport will be the only non-capacity constrained, curfew free capital city airport in the country,” de Graaff said.

The row between states began on Saturday when the Queensland government offered Virgin a $200 million lifeline on the condition that other states also contribute and the business maintains its base in Brisbane.

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However, the next day, NSW Treasurer Dominic Perrottet hinted that any contribution from its government would require the airline to move to Sydney, instead.

Then, on Monday morning, Queensland angrily hit back, with State Development Minister Cameron Dick insisting the move would force 1,200 staff to move states to remain in a job.

Minister Dick dramatically told NSW to “back right off” and said, “There is nothing more dangerous than Queenslanders with their backs to the wall.”

On Wednesday, Victoria joined Queensland and NSW by seemingly throwing its hat into the ring, claiming it had considered making a bid and hinting an offer could still happen.

Victorian Treasurer Tim Pallas said, “We would expect to see more jobs come to Victoria. We are almost exactly identical in size to Sydney and in practical terms, we don’t have a major domestic carrier based here and that strikes us as a little unreasonable.

Finally, on Thursday, Melbourne Airport’s chief executive joined in, saying that a reborn Virgin Australia should make the Victorian capital the cornerstone of its new network.

Lyell Strambi said, “That doesn’t necessarily have to mean corporate HQ, though it certainly could.”

Strambi added there was an “ongoing conversation” about how to make a Melbourne move happen and claimed the city is underutilised in terms of its value as a strategic hub.

“If a lean, fitter, stronger Virgin wants to rebuild, Melbourne has to be at the heart of the plan,” he said.

The airline group confirmed its collapse on Tuesday morning, after the announcement leaked the previous evening. The business was struggling to service a $4.8 billion debt pile with little revenue coming in.

After the announcement, Deloitte administrator Vaughan Strawbridge and Virgin chief executive Paul Scurrah revealed more than 10 parties have expressed interest in recapitalising the company, which they described as being “very sophisticated parties”.

For more of our in-depth coverage, click the links below:

Steer your own in-flight experience – available on print and digital Whether our classic glossy magazine in your letterbox, daily news updates in your inbox, peeling back a few layers in the podcast or our monthly current affair reports, you can count on us to keep you up to date. Sign up today for just $99.95 for more exclusive offers here. Subscribe now at australianaviation.com.au.

22 Comments

  • Lechuga

    says:

    “Room to grow in spades” to what exactly? This is the problem with basing it in Brisbane. There’s very few places in Queensland that if people want to go there they’ll fly to Brisbane first. Gold Coast, Sunshine Coast, Cairns, Townsville even Toowoomba can be directly accessed from other states. Melbourne definitely offers more, with a population greater than the whole state of Queensland, everyone that wants to come in or go out goes directly through Tullamarine making it a much better choice for that alone.

    If Queensland wants an airline based out of Brisbane for their regional towns, they’d be better off doing what WA used to have and starting their own regional airline, because I think the “leaner” Virgin on the other side of this won’t have a regional arm so there’s an opportunity there for QLD and WA, or they could always suck up to Qantas, after all what does the Q stand for?

    Bigger city, more centrally located, better international connections. They would be mad to not start up again in Melbourne, either that or they can lose all of that traffic to Qantas and let them have complete dominance on the 2 biggest cities and the 2nd busiest route in the whole world.

    • Bob from Inglewood

      says:

      What ignorance, typical of anyone from a socialist hegemony, and in this case from one who is wildly inaccurate.

      Melbourne centrally located? You must be joking. Have you ever looked at a map? Clearly not. Melbourne is right in the south-east corner of a vast continent, while Brisbane is the one in the middle.

      Your claim that Melbourne has a population greater than that of Queensland is another example of your unbelievably poor grasp of facts: Your crime-ridden Melbourne had a population of 5,078,193 as at 30 June last year, while Queensland’s population was a greater 5,115.500, not a hell of a lot less than cold, wet, poorly-placed Victoria’s 6,629,900.
      Maths was not your strong suit at school, was it – or are you still there? Those figures are from the ABS, by the way.

      Your mate Reg blew it, sport, in your physically tiny state; he should have stuck to operating a bus.

  • Scott

    says:

    Hopefully the Queensland Government grants Virgin some access to the regulated routes such as Longreach and Charterville to reward the airline being based in Queensland. Virgin should negotiate this now during administration, I’m unaware of them holding even 1 regulated route in ALL of Queensland, and that shows an imbalance.

  • Shane

    says:

    Victoria had an airline maintenance industry but failed to fight for it.
    Ansett collapsed and Qantas moved Heavy Maintenance to BNE, due in part to greater Government incentives.

    Surely in our current situation, value adding, efficient use of funds should be paramount for all, Industry and Government. Moving Virgin’s HQ would only waste millions of dollars for no National benefit. State Governments need to think of the National good, not only of themselves. After all we are talking about an airline, the location of it’s HQ is insignificant, the same (or streamlined) number of jobs, just relocated is pointless. As Lyell Strambi hinted at, improved network offerings is what they should be bidding for.

  • Craig

    says:

    Would not surprise me. The Supreme Leader of the Socialist State of Victoria, Daniel Andrews, will borrow Chinese money to pay down this debt, thereby appeasing his Mandarin masters – you can take that to the bank.

  • Col

    says:

    “Brisbane is the only capital city with a non constrained airport that has no curfew”
    Really- Darwin is a capital City ???? No curfew nor slot restraints.
    Or is she looking at a different map

  • Alan Pace

    says:

    Move QANTAS to Brisbane. That’ll get feathers flying (& as ‘Lechuga said) “And after all, what does the ‘Q’ stand for?”

  • Ten Tribes Of Texas

    says:

    Virgins O/S routes could easily be taken over any of its current owner partners so its the domestic routes that are important to save. Why pay hundreds of millions to an existing airline when another airline like Tiger can take up the domestic routes. Gov would be exposed to Virgjn’s massive debt with no guarantee it will continue fir long anyway given the amount of its debt Far too much risk involved here for gov involvement. Let it fail.

    • Ronald Spencer

      says:

      Tiger is owned by Virgin

  • Mark

    says:

    Wasn’t Ansett II doing the same before it died ?

  • Peter

    says:

    Strambi’s idea is the most practical. Leave the administrative HQ In Brisbane, but tge centre the operation on Melbourne.
    Where a HQ is located is almost irrelevant to an airline.
    Take RyanAir for example. HQ is in Ireland but the majority of the operation is in the UK and mainland Europe.
    The new Virgin needs to be low cost , but tgat does not mean lack lustre product. Hard to differentiate on a narrow body anyway.
    Most likely its international operation should be shut down. Only profitable route is USA but not likely to be viable to retain 3 x B777.
    Establish a partnership with all competitors of Qantas for inbound oncarriage – although that is not so big these days because of multiple gateways.
    Possibly shut down Tiger. Need to do the numbers but unlikely to be viable and.necessary to maintain.
    Currently Virgin has a higher cost base than Qantas mainline.
    Shows what a flawed strategy there was under Borghetti who dove them up a blind alley and overburdened the carrier with huge debt. He has a lot to answer for.
    So has old board of Virgin tgat did not properly oversee Borghetti. Only Air NZ wax a wake uo to him. When board did nothing about him, they sold there shares and parted company strategically.
    A lot could be done with a new Virgin, so long as they do not attempt to displacecQantas market share wise. Qantas holds all the cards to make their life difficult – and there is no way tgat they want to be a monopoly. They want another airline, but they also want to be ascendant with Virgin mark 2 with no more than 35% market share max.

  • Paul

    says:

    The funny point is Virgin do not directly operate flights to regional Qld. Qantas does a far better job.

    • Ronald Spencer

      says:

      There is absolutely no business case to fly two airlines in any regional place in Australia

  • James

    says:

    Jetstar is based in Melbourne….

  • Mark

    says:

    The revised version of VA if it goes ahead will be without their own international but obviously codeshare. Regional routes that aren’t profitable will be turfed unless government subsidy and the focus will be on the profitable routes ie Melbourne/Sydney. Don’t be all things to all people, use VA regional in WA to still do mining charter. Problem is the debt against aircraft and they aren’t worth much. One thing for sure is that if an equity coy buys in and turns it into this lean, mean machine it won’t be hanging around for long once the improvements have a track record. Dick Smith or Myer anyone ? However another airline still does the above but uses it for strategic purposes so happy to go long term.

    • Craigy

      says:

      75 aircraft in the Virgin fleet are leased so no asset at all.

      • Ronald Spencer

        says:

        Wrong they own a lot of their planes not all a leased

  • Marum

    says:

    Politicians posing and blustering as usual. All of them will have no power and no say, as is usual too. If somebody takes over Virgin, they will base it wherever suits them most.

    Regards….Marum.

  • Paul

    says:

    Let’s wait and see what the new owners of this airline have to say. After all it will be their devision and not some premier who likes media attention

  • Peter

    says:

    I do not think the Queensland Government has done any favours for Virgin especially with their regulated routes. We know Virgin approached the Victorian Government for assistance. Daniel Andrew was about to offer $500M for Virgin to relocate to Melbourne when he heard the front runner to buy Virgin was planning to shift the operation to Melbourne. There will still be assistance offered expected to be around $250M.

  • PB

    says:

    I’m amazed at the government intervention, playing Virgin like a yo-yo on a string.
    Qantas was government owned because, back in the day, Australia needed the foreign exchange that comes from having an airline. Governments needed to keep that Oz currency in Australia.
    After the USA deregulation, Australia thought that would be cool, as long as it profited. and it did. It sold off airports, charged unconscionable fees to air carriers, and profited from every angle of air travel. No airline can sustain that treatment for long.
    Qantas is alive today because it wrote down to zero all of its aircraft, creating the largest business loss ever seen in Australia. The Chairman and Managing Director are paid with a base and options, and the airline became profitable due to the debt service elimination, the share price rose due to the artificial earnings, and the two at the top profited hugely. Virgin didn’t do that, and while the debt was sustainable under normal conditions it isn’t now.
    But Australia does not need two domestic airlines. Now we see state governments and government controlled foreign airlines showing interest. What they should all do is to back away and let the chips fall. Foreign carriers will pick up the slack, if there is any.
    There really is no airline competition in Australia. It’s a small market at the end of long, skinny routes, and the real reason for having a domestic carrier is to feed the foreign carriers. To be profitable on those long haul flights the carriers need to draw from all over Australia with domestic feed, which Qantas has and Virgin some of. But while the Pacific routes are the cash cow, Virgin didn’t develop USA domestic feed, relying instead on its code share with Delta – until Delta decided to operate a daily flight itself. So there is Qantas, United, American, Delta, Hawaiian, Virgin, offering non-stop service on the Pacific. Fiji Air, Air New Zealand, Air Tahiti Nui offer one stop service. Then there are Asian carriers hubbing through various Asian ports. Sounds pretty crowded, so why resurrect Virgin? Does it make economic sense?

  • Ashley

    says:

    How about starting with a new name? What real value is there for the $10 Million paid annually to Branson?

Leave a Comment

Your email address will not be published. Required fields are marked *

‘Absolutely ridiculous’: Queensland slaps down Melbourne Virgin pitch

written by Adam Thorn | April 24, 2020
Virgin 737-8FE lines up on runway 34 at Melbourne Airport at sunrise
Virgin 737-8FE lines up on runway 34 at Melbourne Airport at sunrise (Victor Pody)

Queensland’s Premier has branded Melbourne Airport’s pitch to woo a revived Virgin Australia away from Brisbane as “absolutely ridiculous”.

Annastacia Palaszczuk said, “Virgin’s headquarters are here, they should stay here and we will fight to keep them here because we need it for our regional communities.”

The strongly-worded rebuttal comes after the airport’s chief executive said on Wednesday that Brisbane “doesn’t provide the depth or diversity of traffic, business traffic, to compete with Qantas”.

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Advertisement

It’s also the latest in a week-long tit-for-tat battle between states and territories bidding to save Virgin Australia, now in administration, in exchange for the airline shifting its base.

Brisbane Airport chief executive Gert-Jan de Graaff also mounted a defence for the state, claiming his city has room to grow “in spades” compared with rivals Melbourne and Sydney.

“With a new runway opening in July, Brisbane Airport will be the only non-capacity constrained, curfew free capital city airport in the country,” de Graaff said.

The row between states began on Saturday when the Queensland government offered Virgin a $200 million lifeline on the condition that other states also contribute and the business maintains its base in Brisbane.

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However, the next day, NSW Treasurer Dominic Perrottet hinted that any contribution from its government would require the airline to move to Sydney, instead.

Then, on Monday morning, Queensland angrily hit back, with State Development Minister Cameron Dick insisting the move would force 1,200 staff to move states to remain in a job.

Minister Dick dramatically told NSW to “back right off” and said, “There is nothing more dangerous than Queenslanders with their backs to the wall.”

On Wednesday, Victoria joined Queensland and NSW by seemingly throwing its hat into the ring, claiming it had considered making a bid and hinting an offer could still happen.

Victorian Treasurer Tim Pallas said, “We would expect to see more jobs come to Victoria. We are almost exactly identical in size to Sydney and in practical terms, we don’t have a major domestic carrier based here and that strikes us as a little unreasonable.

Finally, on Thursday, Melbourne Airport’s chief executive joined in, saying that a reborn Virgin Australia should make the Victorian capital the cornerstone of its new network.

Lyell Strambi said, “That doesn’t necessarily have to mean corporate HQ, though it certainly could.”

Strambi added there was an “ongoing conversation” about how to make a Melbourne move happen and claimed the city is underutilised in terms of its value as a strategic hub.

“If a lean, fitter, stronger Virgin wants to rebuild, Melbourne has to be at the heart of the plan,” he said.

The airline group confirmed its collapse on Tuesday morning, after the announcement leaked the previous evening. The business was struggling to service a $4.8 billion debt pile with little revenue coming in.

After the announcement, Deloitte administrator Vaughan Strawbridge and Virgin chief executive Paul Scurrah revealed more than 10 parties have expressed interest in recapitalising the company, which they described as being “very sophisticated parties”.

For more of our in-depth coverage, click the links below:

Steer your own in-flight experience – available on print and digital Whether our classic glossy magazine in your letterbox, daily news updates in your inbox, peeling back a few layers in the podcast or our monthly current affair reports, you can count on us to keep you up to date. Sign up today for just $99.95 for more exclusive offers here. Subscribe now at australianaviation.com.au.

22 Comments

  • Lechuga

    says:

    “Room to grow in spades” to what exactly? This is the problem with basing it in Brisbane. There’s very few places in Queensland that if people want to go there they’ll fly to Brisbane first. Gold Coast, Sunshine Coast, Cairns, Townsville even Toowoomba can be directly accessed from other states. Melbourne definitely offers more, with a population greater than the whole state of Queensland, everyone that wants to come in or go out goes directly through Tullamarine making it a much better choice for that alone.

    If Queensland wants an airline based out of Brisbane for their regional towns, they’d be better off doing what WA used to have and starting their own regional airline, because I think the “leaner” Virgin on the other side of this won’t have a regional arm so there’s an opportunity there for QLD and WA, or they could always suck up to Qantas, after all what does the Q stand for?

    Bigger city, more centrally located, better international connections. They would be mad to not start up again in Melbourne, either that or they can lose all of that traffic to Qantas and let them have complete dominance on the 2 biggest cities and the 2nd busiest route in the whole world.

    • Bob from Inglewood

      says:

      What ignorance, typical of anyone from a socialist hegemony, and in this case from one who is wildly inaccurate.

      Melbourne centrally located? You must be joking. Have you ever looked at a map? Clearly not. Melbourne is right in the south-east corner of a vast continent, while Brisbane is the one in the middle.

      Your claim that Melbourne has a population greater than that of Queensland is another example of your unbelievably poor grasp of facts: Your crime-ridden Melbourne had a population of 5,078,193 as at 30 June last year, while Queensland’s population was a greater 5,115.500, not a hell of a lot less than cold, wet, poorly-placed Victoria’s 6,629,900.
      Maths was not your strong suit at school, was it – or are you still there? Those figures are from the ABS, by the way.

      Your mate Reg blew it, sport, in your physically tiny state; he should have stuck to operating a bus.

  • Scott

    says:

    Hopefully the Queensland Government grants Virgin some access to the regulated routes such as Longreach and Charterville to reward the airline being based in Queensland. Virgin should negotiate this now during administration, I’m unaware of them holding even 1 regulated route in ALL of Queensland, and that shows an imbalance.

  • Shane

    says:

    Victoria had an airline maintenance industry but failed to fight for it.
    Ansett collapsed and Qantas moved Heavy Maintenance to BNE, due in part to greater Government incentives.

    Surely in our current situation, value adding, efficient use of funds should be paramount for all, Industry and Government. Moving Virgin’s HQ would only waste millions of dollars for no National benefit. State Governments need to think of the National good, not only of themselves. After all we are talking about an airline, the location of it’s HQ is insignificant, the same (or streamlined) number of jobs, just relocated is pointless. As Lyell Strambi hinted at, improved network offerings is what they should be bidding for.

  • Craig

    says:

    Would not surprise me. The Supreme Leader of the Socialist State of Victoria, Daniel Andrews, will borrow Chinese money to pay down this debt, thereby appeasing his Mandarin masters – you can take that to the bank.

  • Col

    says:

    “Brisbane is the only capital city with a non constrained airport that has no curfew”
    Really- Darwin is a capital City ???? No curfew nor slot restraints.
    Or is she looking at a different map

  • Alan Pace

    says:

    Move QANTAS to Brisbane. That’ll get feathers flying (& as ‘Lechuga said) “And after all, what does the ‘Q’ stand for?”

  • Ten Tribes Of Texas

    says:

    Virgins O/S routes could easily be taken over any of its current owner partners so its the domestic routes that are important to save. Why pay hundreds of millions to an existing airline when another airline like Tiger can take up the domestic routes. Gov would be exposed to Virgjn’s massive debt with no guarantee it will continue fir long anyway given the amount of its debt Far too much risk involved here for gov involvement. Let it fail.

    • Ronald Spencer

      says:

      Tiger is owned by Virgin

  • Mark

    says:

    Wasn’t Ansett II doing the same before it died ?

  • Peter

    says:

    Strambi’s idea is the most practical. Leave the administrative HQ In Brisbane, but tge centre the operation on Melbourne.
    Where a HQ is located is almost irrelevant to an airline.
    Take RyanAir for example. HQ is in Ireland but the majority of the operation is in the UK and mainland Europe.
    The new Virgin needs to be low cost , but tgat does not mean lack lustre product. Hard to differentiate on a narrow body anyway.
    Most likely its international operation should be shut down. Only profitable route is USA but not likely to be viable to retain 3 x B777.
    Establish a partnership with all competitors of Qantas for inbound oncarriage – although that is not so big these days because of multiple gateways.
    Possibly shut down Tiger. Need to do the numbers but unlikely to be viable and.necessary to maintain.
    Currently Virgin has a higher cost base than Qantas mainline.
    Shows what a flawed strategy there was under Borghetti who dove them up a blind alley and overburdened the carrier with huge debt. He has a lot to answer for.
    So has old board of Virgin tgat did not properly oversee Borghetti. Only Air NZ wax a wake uo to him. When board did nothing about him, they sold there shares and parted company strategically.
    A lot could be done with a new Virgin, so long as they do not attempt to displacecQantas market share wise. Qantas holds all the cards to make their life difficult – and there is no way tgat they want to be a monopoly. They want another airline, but they also want to be ascendant with Virgin mark 2 with no more than 35% market share max.

  • Paul

    says:

    The funny point is Virgin do not directly operate flights to regional Qld. Qantas does a far better job.

    • Ronald Spencer

      says:

      There is absolutely no business case to fly two airlines in any regional place in Australia

  • James

    says:

    Jetstar is based in Melbourne….

  • Mark

    says:

    The revised version of VA if it goes ahead will be without their own international but obviously codeshare. Regional routes that aren’t profitable will be turfed unless government subsidy and the focus will be on the profitable routes ie Melbourne/Sydney. Don’t be all things to all people, use VA regional in WA to still do mining charter. Problem is the debt against aircraft and they aren’t worth much. One thing for sure is that if an equity coy buys in and turns it into this lean, mean machine it won’t be hanging around for long once the improvements have a track record. Dick Smith or Myer anyone ? However another airline still does the above but uses it for strategic purposes so happy to go long term.

    • Craigy

      says:

      75 aircraft in the Virgin fleet are leased so no asset at all.

      • Ronald Spencer

        says:

        Wrong they own a lot of their planes not all a leased

  • Marum

    says:

    Politicians posing and blustering as usual. All of them will have no power and no say, as is usual too. If somebody takes over Virgin, they will base it wherever suits them most.

    Regards….Marum.

  • Paul

    says:

    Let’s wait and see what the new owners of this airline have to say. After all it will be their devision and not some premier who likes media attention

  • Peter

    says:

    I do not think the Queensland Government has done any favours for Virgin especially with their regulated routes. We know Virgin approached the Victorian Government for assistance. Daniel Andrew was about to offer $500M for Virgin to relocate to Melbourne when he heard the front runner to buy Virgin was planning to shift the operation to Melbourne. There will still be assistance offered expected to be around $250M.

  • PB

    says:

    I’m amazed at the government intervention, playing Virgin like a yo-yo on a string.
    Qantas was government owned because, back in the day, Australia needed the foreign exchange that comes from having an airline. Governments needed to keep that Oz currency in Australia.
    After the USA deregulation, Australia thought that would be cool, as long as it profited. and it did. It sold off airports, charged unconscionable fees to air carriers, and profited from every angle of air travel. No airline can sustain that treatment for long.
    Qantas is alive today because it wrote down to zero all of its aircraft, creating the largest business loss ever seen in Australia. The Chairman and Managing Director are paid with a base and options, and the airline became profitable due to the debt service elimination, the share price rose due to the artificial earnings, and the two at the top profited hugely. Virgin didn’t do that, and while the debt was sustainable under normal conditions it isn’t now.
    But Australia does not need two domestic airlines. Now we see state governments and government controlled foreign airlines showing interest. What they should all do is to back away and let the chips fall. Foreign carriers will pick up the slack, if there is any.
    There really is no airline competition in Australia. It’s a small market at the end of long, skinny routes, and the real reason for having a domestic carrier is to feed the foreign carriers. To be profitable on those long haul flights the carriers need to draw from all over Australia with domestic feed, which Qantas has and Virgin some of. But while the Pacific routes are the cash cow, Virgin didn’t develop USA domestic feed, relying instead on its code share with Delta – until Delta decided to operate a daily flight itself. So there is Qantas, United, American, Delta, Hawaiian, Virgin, offering non-stop service on the Pacific. Fiji Air, Air New Zealand, Air Tahiti Nui offer one stop service. Then there are Asian carriers hubbing through various Asian ports. Sounds pretty crowded, so why resurrect Virgin? Does it make economic sense?

  • Ashley

    says:

    How about starting with a new name? What real value is there for the $10 Million paid annually to Branson?

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‘Absolutely ridiculous’: Queensland slaps down Melbourne Virgin pitch

written by Adam Thorn | April 24, 2020
Virgin 737-8FE lines up on runway 34 at Melbourne Airport at sunrise
Virgin 737-8FE lines up on runway 34 at Melbourne Airport at sunrise (Victor Pody)

Queensland’s Premier has branded Melbourne Airport’s pitch to woo a revived Virgin Australia away from Brisbane as “absolutely ridiculous”.

Annastacia Palaszczuk said, “Virgin’s headquarters are here, they should stay here and we will fight to keep them here because we need it for our regional communities.”

The strongly-worded rebuttal comes after the airport’s chief executive said on Wednesday that Brisbane “doesn’t provide the depth or diversity of traffic, business traffic, to compete with Qantas”.

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It’s also the latest in a week-long tit-for-tat battle between states and territories bidding to save Virgin Australia, now in administration, in exchange for the airline shifting its base.

Brisbane Airport chief executive Gert-Jan de Graaff also mounted a defence for the state, claiming his city has room to grow “in spades” compared with rivals Melbourne and Sydney.

“With a new runway opening in July, Brisbane Airport will be the only non-capacity constrained, curfew free capital city airport in the country,” de Graaff said.

The row between states began on Saturday when the Queensland government offered Virgin a $200 million lifeline on the condition that other states also contribute and the business maintains its base in Brisbane.

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However, the next day, NSW Treasurer Dominic Perrottet hinted that any contribution from its government would require the airline to move to Sydney, instead.

Then, on Monday morning, Queensland angrily hit back, with State Development Minister Cameron Dick insisting the move would force 1,200 staff to move states to remain in a job.

Minister Dick dramatically told NSW to “back right off” and said, “There is nothing more dangerous than Queenslanders with their backs to the wall.”

On Wednesday, Victoria joined Queensland and NSW by seemingly throwing its hat into the ring, claiming it had considered making a bid and hinting an offer could still happen.

Victorian Treasurer Tim Pallas said, “We would expect to see more jobs come to Victoria. We are almost exactly identical in size to Sydney and in practical terms, we don’t have a major domestic carrier based here and that strikes us as a little unreasonable.

Finally, on Thursday, Melbourne Airport’s chief executive joined in, saying that a reborn Virgin Australia should make the Victorian capital the cornerstone of its new network.

Lyell Strambi said, “That doesn’t necessarily have to mean corporate HQ, though it certainly could.”

Strambi added there was an “ongoing conversation” about how to make a Melbourne move happen and claimed the city is underutilised in terms of its value as a strategic hub.

“If a lean, fitter, stronger Virgin wants to rebuild, Melbourne has to be at the heart of the plan,” he said.

The airline group confirmed its collapse on Tuesday morning, after the announcement leaked the previous evening. The business was struggling to service a $4.8 billion debt pile with little revenue coming in.

After the announcement, Deloitte administrator Vaughan Strawbridge and Virgin chief executive Paul Scurrah revealed more than 10 parties have expressed interest in recapitalising the company, which they described as being “very sophisticated parties”.

For more of our in-depth coverage, click the links below:

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22 Comments

  • Lechuga

    says:

    “Room to grow in spades” to what exactly? This is the problem with basing it in Brisbane. There’s very few places in Queensland that if people want to go there they’ll fly to Brisbane first. Gold Coast, Sunshine Coast, Cairns, Townsville even Toowoomba can be directly accessed from other states. Melbourne definitely offers more, with a population greater than the whole state of Queensland, everyone that wants to come in or go out goes directly through Tullamarine making it a much better choice for that alone.

    If Queensland wants an airline based out of Brisbane for their regional towns, they’d be better off doing what WA used to have and starting their own regional airline, because I think the “leaner” Virgin on the other side of this won’t have a regional arm so there’s an opportunity there for QLD and WA, or they could always suck up to Qantas, after all what does the Q stand for?

    Bigger city, more centrally located, better international connections. They would be mad to not start up again in Melbourne, either that or they can lose all of that traffic to Qantas and let them have complete dominance on the 2 biggest cities and the 2nd busiest route in the whole world.

    • Bob from Inglewood

      says:

      What ignorance, typical of anyone from a socialist hegemony, and in this case from one who is wildly inaccurate.

      Melbourne centrally located? You must be joking. Have you ever looked at a map? Clearly not. Melbourne is right in the south-east corner of a vast continent, while Brisbane is the one in the middle.

      Your claim that Melbourne has a population greater than that of Queensland is another example of your unbelievably poor grasp of facts: Your crime-ridden Melbourne had a population of 5,078,193 as at 30 June last year, while Queensland’s population was a greater 5,115.500, not a hell of a lot less than cold, wet, poorly-placed Victoria’s 6,629,900.
      Maths was not your strong suit at school, was it – or are you still there? Those figures are from the ABS, by the way.

      Your mate Reg blew it, sport, in your physically tiny state; he should have stuck to operating a bus.

  • Scott

    says:

    Hopefully the Queensland Government grants Virgin some access to the regulated routes such as Longreach and Charterville to reward the airline being based in Queensland. Virgin should negotiate this now during administration, I’m unaware of them holding even 1 regulated route in ALL of Queensland, and that shows an imbalance.

  • Shane

    says:

    Victoria had an airline maintenance industry but failed to fight for it.
    Ansett collapsed and Qantas moved Heavy Maintenance to BNE, due in part to greater Government incentives.

    Surely in our current situation, value adding, efficient use of funds should be paramount for all, Industry and Government. Moving Virgin’s HQ would only waste millions of dollars for no National benefit. State Governments need to think of the National good, not only of themselves. After all we are talking about an airline, the location of it’s HQ is insignificant, the same (or streamlined) number of jobs, just relocated is pointless. As Lyell Strambi hinted at, improved network offerings is what they should be bidding for.

  • Craig

    says:

    Would not surprise me. The Supreme Leader of the Socialist State of Victoria, Daniel Andrews, will borrow Chinese money to pay down this debt, thereby appeasing his Mandarin masters – you can take that to the bank.

  • Col

    says:

    “Brisbane is the only capital city with a non constrained airport that has no curfew”
    Really- Darwin is a capital City ???? No curfew nor slot restraints.
    Or is she looking at a different map

  • Alan Pace

    says:

    Move QANTAS to Brisbane. That’ll get feathers flying (& as ‘Lechuga said) “And after all, what does the ‘Q’ stand for?”

  • Ten Tribes Of Texas

    says:

    Virgins O/S routes could easily be taken over any of its current owner partners so its the domestic routes that are important to save. Why pay hundreds of millions to an existing airline when another airline like Tiger can take up the domestic routes. Gov would be exposed to Virgjn’s massive debt with no guarantee it will continue fir long anyway given the amount of its debt Far too much risk involved here for gov involvement. Let it fail.

    • Ronald Spencer

      says:

      Tiger is owned by Virgin

  • Mark

    says:

    Wasn’t Ansett II doing the same before it died ?

  • Peter

    says:

    Strambi’s idea is the most practical. Leave the administrative HQ In Brisbane, but tge centre the operation on Melbourne.
    Where a HQ is located is almost irrelevant to an airline.
    Take RyanAir for example. HQ is in Ireland but the majority of the operation is in the UK and mainland Europe.
    The new Virgin needs to be low cost , but tgat does not mean lack lustre product. Hard to differentiate on a narrow body anyway.
    Most likely its international operation should be shut down. Only profitable route is USA but not likely to be viable to retain 3 x B777.
    Establish a partnership with all competitors of Qantas for inbound oncarriage – although that is not so big these days because of multiple gateways.
    Possibly shut down Tiger. Need to do the numbers but unlikely to be viable and.necessary to maintain.
    Currently Virgin has a higher cost base than Qantas mainline.
    Shows what a flawed strategy there was under Borghetti who dove them up a blind alley and overburdened the carrier with huge debt. He has a lot to answer for.
    So has old board of Virgin tgat did not properly oversee Borghetti. Only Air NZ wax a wake uo to him. When board did nothing about him, they sold there shares and parted company strategically.
    A lot could be done with a new Virgin, so long as they do not attempt to displacecQantas market share wise. Qantas holds all the cards to make their life difficult – and there is no way tgat they want to be a monopoly. They want another airline, but they also want to be ascendant with Virgin mark 2 with no more than 35% market share max.

  • Paul

    says:

    The funny point is Virgin do not directly operate flights to regional Qld. Qantas does a far better job.

    • Ronald Spencer

      says:

      There is absolutely no business case to fly two airlines in any regional place in Australia

  • James

    says:

    Jetstar is based in Melbourne….

  • Mark

    says:

    The revised version of VA if it goes ahead will be without their own international but obviously codeshare. Regional routes that aren’t profitable will be turfed unless government subsidy and the focus will be on the profitable routes ie Melbourne/Sydney. Don’t be all things to all people, use VA regional in WA to still do mining charter. Problem is the debt against aircraft and they aren’t worth much. One thing for sure is that if an equity coy buys in and turns it into this lean, mean machine it won’t be hanging around for long once the improvements have a track record. Dick Smith or Myer anyone ? However another airline still does the above but uses it for strategic purposes so happy to go long term.

    • Craigy

      says:

      75 aircraft in the Virgin fleet are leased so no asset at all.

      • Ronald Spencer

        says:

        Wrong they own a lot of their planes not all a leased

  • Marum

    says:

    Politicians posing and blustering as usual. All of them will have no power and no say, as is usual too. If somebody takes over Virgin, they will base it wherever suits them most.

    Regards….Marum.

  • Paul

    says:

    Let’s wait and see what the new owners of this airline have to say. After all it will be their devision and not some premier who likes media attention

  • Peter

    says:

    I do not think the Queensland Government has done any favours for Virgin especially with their regulated routes. We know Virgin approached the Victorian Government for assistance. Daniel Andrew was about to offer $500M for Virgin to relocate to Melbourne when he heard the front runner to buy Virgin was planning to shift the operation to Melbourne. There will still be assistance offered expected to be around $250M.

  • PB

    says:

    I’m amazed at the government intervention, playing Virgin like a yo-yo on a string.
    Qantas was government owned because, back in the day, Australia needed the foreign exchange that comes from having an airline. Governments needed to keep that Oz currency in Australia.
    After the USA deregulation, Australia thought that would be cool, as long as it profited. and it did. It sold off airports, charged unconscionable fees to air carriers, and profited from every angle of air travel. No airline can sustain that treatment for long.
    Qantas is alive today because it wrote down to zero all of its aircraft, creating the largest business loss ever seen in Australia. The Chairman and Managing Director are paid with a base and options, and the airline became profitable due to the debt service elimination, the share price rose due to the artificial earnings, and the two at the top profited hugely. Virgin didn’t do that, and while the debt was sustainable under normal conditions it isn’t now.
    But Australia does not need two domestic airlines. Now we see state governments and government controlled foreign airlines showing interest. What they should all do is to back away and let the chips fall. Foreign carriers will pick up the slack, if there is any.
    There really is no airline competition in Australia. It’s a small market at the end of long, skinny routes, and the real reason for having a domestic carrier is to feed the foreign carriers. To be profitable on those long haul flights the carriers need to draw from all over Australia with domestic feed, which Qantas has and Virgin some of. But while the Pacific routes are the cash cow, Virgin didn’t develop USA domestic feed, relying instead on its code share with Delta – until Delta decided to operate a daily flight itself. So there is Qantas, United, American, Delta, Hawaiian, Virgin, offering non-stop service on the Pacific. Fiji Air, Air New Zealand, Air Tahiti Nui offer one stop service. Then there are Asian carriers hubbing through various Asian ports. Sounds pretty crowded, so why resurrect Virgin? Does it make economic sense?

  • Ashley

    says:

    How about starting with a new name? What real value is there for the $10 Million paid annually to Branson?

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