Virgin Australia chief executive Paul Scurrah has revealed that the reborn business’ new strategy will see it become a “high-quality, value airline”.
In an exclusive interview on the Australian Aviation podcast, Scurrah said Virgin’s problems stemmed from spreading itself too thin and “trying to be too many things to too many people”.
However, he insisted the new-look airline would emerge from the pandemic with “75 plus” aircraft and offer a network “not too dissimilar” to what it had last year.
The Virgin chief executive’s interview will go live on Friday and marks the first time he has spoken in-depth about the plans for the business moving forward.
Speaking to host Phil Tarrant, Scurrah said his team have debated what to call the plan for the business after it emerges from the pandemic.
“It’s really hard … we’ve tried a few times to come up with a singular label,” said Scurrah. “The industry loves labels: full-service carrier, low-cost carrier, ultra-low-cost carrier or hybrid. We’re very reluctant to do that because we haven’t landed on one that’s very descriptive.
“But value is going to be an incredibly important part of our industry for quite a while after we come out of administration. And after we come out of COVID. Travel budgets for a lot of our loyal corporate accounts are going to be under pressure.
“Lowering our cost base, but also keeping a very corporate-friendly product, will be even more important to those corporate accounts.”
And despite recent concerns by unions that the airline was planning to slim down its service, Scurrah insisted he is still targeting returning to operating 75 aircraft in the fleet.
“We won’t look too dissimilar to the network coverage that Virgin had previously,” said Scurrah. “And it won’t be that dissimilar from a product point of view either.
However, he said the administration process had enabled the business to “uncomplicate” the fleet and “take advantage of scale and simplicity”.
“We’ve been able to look at the commercial contracts we have with all of our suppliers and make sure we now recalibrate them to a more market-like contract. We’ve been able to assess whether they’re even worth having at all, based on customer feedback and how much weighting they put on it.
“And we’ve been able to be fairly clinical looking at the lines of flying we had and make sure that we’re pretty disciplined about where we put our aircraft and where we fly.”
He said the business’ problems stemmed from spreading itself too thin, but that large parts of the company were very profitable. Scurrah insisted the strategy of hitting the sweet spot between a larger carrier and a low-cost was the right call, despite pressure previously to revert to the airline’s Virgin Blue roots.
“We believe so strongly in our plan. And the opportunity presented to us was that the plan was able to be executed in a far shorter period of time,” he said.
“One of the most important parts of our strategy, and this lines up really nice with Bain as well, is having the flexibility to pivot or change direction slightly based on changing circumstances.
“We need to be nimble and flexible. And we need to make sure that we can move our business around, maybe we do more seasonal flying, as opposed to year-round flying. Those sorts of flexibilities that we need, that we didn’t have, I think are important for the future. And I think that’s why they backed the bones of the plan that we had.”
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