New Virgin CEO Hrdlicka reaffirms hybrid plan

written by Adam Thorn | November 18, 2020

Jayne Hrdlicka began her first day as Virgin chief executive doubling down on the reborn business’ plans to become a mid-market ‘hybrid’ and not a budget airline.

“Australia already has a low-cost carrier and a traditional full-service airline, and we won’t be either,” said Hrdlicka. “Virgin Australia will be a mid-market carrier appealing to customers who are after a great value airfare and better service.”

On Tuesday, Virgin officially exited administration and new owners Bain took charge, with ex-Jetstar boss Hrdlicka taking the role vacated by Paul Scurrah.

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Scurrah’s surprise exit last month was significant because he was synonymous with the airline’s plan to operate as a mid-market ‘hybrid’ rather than reverting back to being a low-cost carrier like predecessor Virgin Blue.

However, Hrdlicka started her first full day in the job by unveiling details of Virgin’s relaunch and strongly insisting it would fill the gap between Jetstar and Qantas.

“The travel environment is changing and so are our customers’ preferences,” said Hrdlicka. “We know that leisure travellers, small and medium businesses, and many corporates are now emerging from COVID-19 wanting better value.  They are hungry for flexibility and choice, a trusted brand that resonates with their values, and great prices, along with the premium features they value most.

“Today, we’ve announced a plan that will ultimately give our customers what they value without the big price tag: premium lounges, a new and fresh retail offering onboard, a choice of cabins, better digital technology and a more streamlined check-in experience.”

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The airline also reaffirmed its plans to open a domestic lounge network that include Melbourne, Sydney, Brisbane, Adelaide, Perth and the Gold Coast.

It also said business-class would continue, but will first undergo an “end-to-end review’ before relaunching next year alongside its premium economy service.

Significantly, the airline will now use self-service and assisted check-in and baggage drops, though it said “guest services agents can come out from behind a desk and provide a more concierge-style service for passengers”.

Finally, the airline also seemingly rebuffed Alan Joyce’s claim that Virgin’s relaunch would allow it to increase its market share by 10 per cent, insisting it plans to maintain its pre-COVID market status.

“We emerge today stronger, more competitive, and ready to face the challenges ahead,” said Hrdlicka. “We removed an enormous amount of complexity from our business, greatly improved our cost base, and have an extraordinary team on the ground and in the air to deliver our new plan.

“We are more resilient than ever and have the backing of Bain Capital who are deeply invested in seeing us succeed over the long term. As we have seen with the recent issues with South Australia, the travel market remains uncertain. We are however seeing some positive signs of recovery. Borders are beginning to open and a potential vaccine is on the way.”

Bain has resolutely defended the appointment of incoming chief executive Hrdlicka, arguing that she would provide a “different form of leadership” needed to survive, despite a bad relationship with unions.

“We need a hands-on CEO with deep aviation, commercial, operational and transformation experience,” said Bain Capital managing director Mike Murphy in a statement. “She has extensive airline experience and I know she, alongside Bain Capital, wants nothing more than to see Virgin Australia prosper and thrive well into the future.”

Yesterday, Australian Aviation reported how Scurrah has insisted his departure as chief executive of Virgin was mutual and said Hrdlicka is the “right person” to deliver on new owner Bain’s plan.

The comments were released hours before the business formally exited administration in a candid interview with the Curveball podcast.

He went on to insist he would be “cheering from the sidelines” and said he was very good at restructuring firms while taking the staff on board with him.

“As hard as it was to ask a lot of people … to leave the company, through no fault of their own … [it] didn’t have to come with being callous or brutal,” Scurrah continued.

“And we did it in a way where people who have left have all expressed their gratitude to the way they were handled. And that’s something I’m particularly proud of.”

 

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12 Comments

  • Paul Considine

    says:

    Jane is correct – they will be neither a full service or low cost operator – they will be a former operator.

    They have management cultural issues so deeply seated that unless there is complete clean out of the C suite (with the exception of John McLeod) and all of the operational GM’s and most of the other GM’s there will be nothing but procrastination and obfuscation.

    Despite the rhetoric parts of the airline are absolutely toxic

  • AgentGerko

    says:

    Will be interesting to watch. Middle positioning rarely works. Look at retailers like Myer and Target. Both failing because David Jones has the top end and K Mart the bottom and the middle offers nothing to either demographic. But her words just seem to indicate a full service carrier at cheaper prices if indeed they will continue offering a Business Class and lounges. I really hope it works as nobody want a Qantas/Jetstar behemoth controlling everything.

  • How can anyone take this seriously? VA are saying they will hold 30% of the domestic market share with 57 737-800 and no twin aisle or regional aircraft like the A330 for SYD-PER.
    It is all spin about a product that is clearly work in progress ie catering.
    The new deal with TWU and pilots is far from resolved.

  • What about the Virgin Lounge in Canberra. If Virgin want the government public service to use them as well as the travelling public that are used to the lounge in Canberra they better open it again.

  • What’s that saying ‘Time will Tell’

  • Nate

    says:

    Yeah, right!
    That’s just for now. Bain will want to run it as cheap as chips, so it’ll eventually be an LCC.
    And if it doesn’t make money in foreseeable ie next few months’, future, they’ll dump it, as they did to ‘Toys R Us’.
    Bain isn’t the ‘white knight’ that many think it is. Maybe research what PE companies’ ‘do’, & you’ll get your answer to VA’s not-so-bright future(?)

  • Danny

    says:

    Disappointed that the hybrid model is going to be in play. Just because Jetstar is there as a LCC does mean there is no space for a 2nd LCC. The gap in the market for me would have been to be an LCC in terms of plane configuration (so one class) but keep the lounges to attract some business travel as well. Apart from the east-west coast traffic flight between the big cities are not long enough to warrant a business class or economy + class on board and just bring extra cost.

    I really hope I’m wrong as I would love to see VA prosper again but it is going to be a bumpy ride trying to pull it off as a hybrid.

  • david morrison

    says:

    Middle Market can work but there margins will be tight and could save money by clearing out executive’s

  • Rocket

    says:

    @ PAUL CONSIDINE

    Spot On. But I don’t think Jane will be one to sit back and let them procrastinate, if someone is prepared to sweep a big broom, it’s her.

  • AgentGerko

    says:

    I am assuming Danny that you fly quite frequently and would like the cheaper LCC fares but then will hold a lounge membership. This would no doubt work for you but then not everyone is in your position to justify an annual membership. I fly less frequently but enjoy VA’s excellent Business Class and that gets me into the lounge without having to hold a membership. Domestic flights are long enough to warrant a Business Class if there are people prepared to pay for it.

  • PS

    says:

    This plan is a mistake. There is no mid-market in Australia. Bain should be using Hrdlicka’s knowlwdge of Jetstar to take them on in the low cost space. Forget taking on Qantas. BTW – No way am i taking a 737 to Perth !

  • Mitch

    says:

    For many years’, I flew Business Class, domestically. It had many advantages, even on a short hop, but more specifically on long ones’.
    I did enjoy flights to/from Perth on the beautiful Boeing 767, a twin-engined Aircraft.

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