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Government unveils new $165m domestic bailout, Virgin staff return

written by Adam Thorn | April 17, 2020
A file image of a Virgin Australia and Qantas Boeing 737-800. (Seth Jaworski)
A Virgin Australia and Qantas Boeing 737-800, pictured together. (Seth Jaworski)

The government has finalised a deal with Qantas and Virgin to underwrite a minimum domestic network, to the value of $165 million.

The services will cover all capital cities and begin to roll out immediately before being reviewed in eight weeks’ time.

It means the number of passenger flights operated by the Qantas Group will increase from 105 to 164 per week; while Virgin will shift from running only Sydney-Melbourne services to now flying 64 return services.

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The latter has already confirmed it is now in a position to rehire some of its stood-down employees, which Australian Aviation understands could number 200.

The bailout, first outlined on the weekend, comes after increasing reports emerged of Australians arriving back in the country, completing their 14-day hotel isolation, but then struggling to find flights across states to return home.

To see a full list of the new routes, see our story here.

Deputy Prime Minister Michael McCormack announced the deal on Thursday evening and confirmed it would also extend to major regional centres such as Alice Springs, Dubbo and Tamworth.

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“We are ensuring secure and affordable access for passengers who need to travel, including our essential workers such as frontline medical personnel and Defence personnel, as well as supporting the movement of essential freight such as critical medicine and personal protective equipment,” McCormack said.

The services will begin from Friday, 17 April and be “fully operational” by Monday, 20 April. In particular, the network will focus on regional towns that are more than two hours’ drive from key transport hubs.

The intervention will provide a small lifeline to Virgin, which announced before the Easter weekend that it was suspending all domestic services, except one return flight between Sydney and Melbourne.

Previously, the airline had reduced domestic capacity by 90 per cent, flying to just 19 destinations, and cancelled all international journeys due to the coronavirus crisis.

The new domestic bailout is in addition to the already announced $715 million in support for airlines in the form of waived fees and levies plus another $298 million for regional carriers.

While both airlines have suspended their normal international network, they are still committed to flying a handful of repatriation flights, part-funded by the government, from London, Los Angeles, Hong Kong and Auckland.

The services will run during April and include freight capacity for imports and exports.

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12 Comments

  • Chris

    says:

    The headline is misleading, it’s not a bailout it’s funding to provide a minimum level of air services to key destinations.

    • Adam Thorn

      says:

      Hi Chris,

      It’s an interesting point, and it depends on how you define the word “bailout”, which is really quite a catch-all term. I would argue the government are putting up a lot of money to underwrite routes that previously weren’t financially viable. This has allowed Qantas and Virgin to make small ‘profits’, and rehire staff, they previously wouldn’t be able to. It’s always the case that stories start off as a summary, before moving into more detail further down, as I have outlined here.

      Thanks for your comment,

      Adam

  • RD

    says:

    This only puts more pressure on Virgin as they are spending money they dont have and wont get the money from Govt. until after its spent, only a matter of time.

  • James

    says:

    Is it a bailout? Or a subsidised network to get the country working again?..

  • Jim Thorn

    says:

    Totally beyond the comprehension of then Virgin management at the time, imagine just how useful those wonderful Embraer jets would be in today’s environment.

    • James

      says:

      Only useful Jim if they are operated cost effectively…

      On a lighter note, great to see you still commenting. I grew up reading AA with you as editor and reading your stories. Be great to see you writing again..just saying!

  • Matt

    says:

    Wouldn’t call it a bailout – it is the minimum standard in a pandemic that keeps a massive country like Australia connected – Australia needs regular air transport to survive – it ensures capital cities and regional areas are connected.

  • Toni

    says:

    But what have the owners done, ie SQ etc.
    Hope this isn’t going to be another Holden, our money put in, then the owners pull out.

  • James

    says:

    Just like the REX business model, operate on thin routes and get the Govt to subsidise it!

    Look, Virgin need to have a viable business model, and tax payers shouldnt have to pay for it, otherwise if we take the risk for Virgins bad management practice’s, then tax payers need to get the profits. Simple.
    You gotta be sick to think that 15000 people losing their jobs is worth 1.4 Billion! No way! Billionaires need to prop up their own business’s, and if not, well they can join the rest of us at Tigerair on the unemployment line.

  • James

    says:

    Mayne they should offer that money to bail out Tigerair, after all, Virgin just axed ALL of them, and in reality it was Virgin making them lose money this past several years!

  • Roger

    says:

    Which ever way you seen it Australians need to get home and Virgin are more than happy to do that cause that’s what the frontline staff get paid to do pressure well maybe but we get a directive from our bosses and are more than happy to support him through these tough times yes the airline may be cash strapped but the comeaderie amongst the frontline staff is none like no other the commitment the togetherness and the tight knit group we are always here to support each other no matter what the circumstances are so having that right now means more than anything especially now they will stay strong no matter what and it’s a pleasure to help out those in need and be humble and grateful in what you have so sad every one is suffering and I only hope every one can bounce back to the way it was before. You mention profits well that’s nice but helping out Australians I think that’s the most paramount thing at this stage but Virgin has done that for 20 years and gave the Australian public the choice they deserve and as they used to say Keep The Air Fair that’s the contribution they have made no body has mentioned that but that’s ok every one has an opinion.

  • PS

    says:

    Waste of money. The airlines are majority foreign owned. There are hundreds of airlines in the world, one of which will take there place. Use the $1B to improve speed and travel time on regional rail services. Most of them only average 70kph. In this day and age we should be looking at least 150kph+

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