Virgin Australia has revealed it’s close to agreeing a deal to lease eight or nine more 737s to expand its domestic capacity.
The agreement comes as a surprise given new owners Bain said last year it intended to downsize the business’ 737 fleet from 85 to 56 as well as removing all other aircraft models.
Chief executive Jayne Hrdlicka told the Sydney Morning Herald she believed the domestic market was now “moving off life support”.
“We are committing to more aircraft and we are just really positive about the outlook,” Hrdlicka added.
The move appears to be prompted in part by a spike in ticket sales last week when the government announced it would supplement 800,000 half-price fares.
“I think what we saw … was consumers going: oh fantastic, the government is encouraging everybody to get out and about because it’s safe to do that. There’s a lot of pent-up demand – Australians just wanting to get out of the house and get back to normal, and have the opportunity to travel.
“I’m very confident that state premiers are going to do the right thing now and protect the community while also keeping the borders open.”
When Virgin first exited administration in August last year, it announced it was to cut 3,000 jobs, reduce its 737 fleet from 85 to 56 and also axe its ATR, Boeing 777, Airbus A330 and Tigerair Airbus A320s altogether.
It’s not yet known whether these additional 737s will be in addition to the 56, or within this number, given many aircraft are grounded and the airline’s capacity is significantly lower than pre-pandemic.
The news comes a week after Qantas chief executive Alan Joyce said the government’s new package of financial support would accelerate its return to 80 per cent domestic capacity.
The flag carrier has long maintained that it expects to increase its market share from 60 to 70 per cent post-COVID.
Virgin’s fleet expansion also follows criticism from the TWU’s national secretary, Michael Kaine, who told the Australian Aviation Podcast last month that the “jury is still out” on business’ plan to become a hybrid carrier.
“Virgin needs to get better at articulating what the hell mid-market means,” said Kaine. “Because it’s a source of great concern to the workforce that that’s not able to be done.”
The airline has been adamant since it emerged from administration that it would not return to its Virgin Blue budget routes, but there has been concerns as to whether it could make the strategy successful after the exit of its architect, former CEO Paul Scurrah.
Kaine reiterated he believes Virgin’s intentions are genuine but hinted more work needs to be done to make it a success.
“There’s one thing crazier than having a full-throttled go at Qantas at the very, very top of the market, it’s thinking that you’re going to beat them at the bottom of the market,” Kaine said.
“Yes, you need to hit the sweet spot in the middle. But the sweet spot in the middle means that you still have to have an offering that is attractive to the Australian leisure and business markets.
“They want lounges, a good frequent flyer system, a system of points that connects beautifully with international travel when that’s available again. And they want the capacity to travel regionally.”