Melbourne Airport’s chief executive has said that a reborn Virgin Australia should make the Victorian capital the cornerstone of its new network.
Speaking to The Australian Financial Review on Thursday morning, Lyell Strambi said, “That doesn’t necessarily have to mean corporate HQ, though it certainly could.”
The news comes after the state’s Treasurer, Tim Pallas, said on Wednesday his government considered joining a bailout bidding war for the airline before administration, and may still have a role to play in future.
The comments from Strambi are particularly pertinent given his history as a former CEO of Qantas Domestic and COO of Virgin Atlantic.
Strambi said there’s an “ongoing conversation” about how to make a Melbourne move happen and said 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.
“Brisbane is a great source of tourism inflow but on its own it doesn’t provide the depth or diversity of traffic, business traffic, to compete with Qantas.”
In the days leading up to Virgin’s collapse into administration on Tuesday, an apparent bidding war began between states, offering the airline money in exchange for retaining or moving its base to their capital cities.
The row 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.
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.
“It’s a nonsense to think the Prime Minister would even consider a NSW plan to move the airline there,” he said.
Minister Dick then dramatically told NSW to “back right off” and said, “There is nothing more dangerous than Queenslanders with their backs to the wall.”
Finally, on Wednesday, Victoria seemingly threw its hat into the ring, claiming it had considered making a bid and hinting an offer could still happen.
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.
“We will play our part but we are not going to bankroll essentially this company at the risk of considerable cost to the taxpayer.”
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:
- Velocity Frequent Flyer points have been paused, but won’t be cancelled;
- Sir Richard Branson hits out at the Australian government as he pays tribute to Virgin staff;
- The TWU and opposition urges the government to make a ‘bold’ move to save the airline;
- Virgin’s administrator, Deloitte, insisted there are ‘several’ interested parties in the running to save the business, thought to include BGH Capital, a private equity operator run by Ben Gray.