Virgin Australia kicks off campaign against ‘monopoly in Australian skies’
With COVID-19 (coronavirus) paralysing the global airline industry, Virgin Australia has launched a campaign warning of the dangers of a local landscape in which only Qantas survives.
The ads by the airline – which is calling on the government for a $1.4bn bailout – urging regulators to “keep the air fair”, and warning “a monopoly in Australian skies will be good for no-one”.
A full-page ad ran in Sydney’s The Daily Telegraph today. It reads:
A monopoly in Australian skies will be good for no one.
I think the most pertinent question here is: Who Bloody Cares??!!! Nobody is flying for at least 3 months and this will be well forgotten by then. Waste of coin, Virgin!
You will care Krull. When Qantas has no competition airfares will skyrocket (both on Qantas and Jetstar). The level of customer service will tank. Let me remind you that the world class coast to coast buisness class service (with lie flat beds) we have in Australia is thanks to Virgin. Virgin introduced it and Qantas copied. Now with no competion Qantas will simply remove this high quility product and replace the lie flats beds with simple recliners; but dont be fooled, the prices for those flights wont change. And I here many of you saying that a new airline will enter the market to replace Virgin? Doubtful. Qantas has demenstrated time and time again it is unwilling to have competion. More importantly, for all the time Qantas wont have competition it will be ripping off customers and amassing a significant fortune so that any airline does enter the Auatralian market will struggle to make it against this golith we call Qantas.
9/10 domestic flights for me are work related, so price isnt my concern and generally speaking, I dont fly Qantas internationally except to the US once in a very blue moon. Also, I’ve never utilised a lie flat bed, so again, dont care.
I would assume the money they spent on this could have been used to support some of the staff they stood down.To repeat my original point, nobody will remember this in 3 months time when we are flying again, so it was an utter waste.
Why is it doubtful someone else would replace virgin? The market is clearly there. That’s a massive assumption – a $1.4bn assumption in fact. You could probably loan another airline $500million after this is all over to set up in Australia not only reducing the scale of the loan, but the risk of virgin even still being around after the bailout.
That’s not correct David. Qantas was operating 747s with lie flat beds on the trans-continental services and it decided to reconfigure it’s A330s to a similar standard. Virgin was launching it’s trans continental service at the time and business class so it was hardly going to put normal J class seats in when Qantas were configuring theirs for use also for international operations.
Air fares did not sky rocket after Ansett collapsed. In fact even before DJ appeared, as an Ansett employee, we flew to MEL for $55 each way in about 1999 because it was cheaper than the staff discount fare. Qantas and Ansett were both offering those fares. When DJ came, often AN and QF matched them plus a few dollars for the meal.
BTW, what is a ‘golith’ or did you mean Goliath.
Qantas does not want Virgin gone, it took months to recover and clear the backlog last time and Qantas carried many passengers for free during that period, including repatriating nearly all of Ansett’s former Cabin Crew who were told to just bring their ID and they’d be put on a flight for zip.
If Virgin fails, it’s aircraft will be available for a song and someone like Alliance or Air NZ will likely step in and expand to fill the gap. The Government will make sure of it, they have said repeatedly that a robust and competitive aviation market is non-negotiable.
Virgin Australia is a badly managed majority foreign-owned company.
It tried desperately to take out Qantas instead of focussing on carving out its own niche.
Its bad management should not be rewarded. A government bailout will only prolong the inevitable. We can’t keep supporting extremely poor business decisions made by Paul Scurrah.
We do need a second airline. Just not Virgin. It has to be a new airline with new management. The ground crew, aircrew, and pilots should be retained.
Very naive and incredibly ill-informed response.
I am sorry Sean but the proof is in the pudding…
1) 7 years of losses and running.
2) focusing on expensive lounges and provide certain service levels when they were having losses (to court business passengers from Qantas).
4) expanding rapidly by launching new domestic routes despite being unprofitable.
3) buying Tiger Air when they were making losses (all in an effort to create their version “Jetstar”).
4) trying to focus on international flights with whatever limited aircraft/service they had (i.e. flights to the US which are already being serviced by multiple carriers, some offering better products; eagerly scrambling to commence flights to Haneda by putting in a bid in to fly just to prevent Qantas from getting both landing rights- why commence on a new route when new routes are typically loss-making for the first couple of years and require capital injection?.
Perhaps they should follow what Japan Airlines did. File for bankruptcy and make very deep cuts and restructuring.
A lot of truth in your comment Jenny but you can’t just wack a new airline together to challenge Qantas. QF have the huge advantage of being the Australian flag carrier and their international routes feed millions of passengers on to their highly profitable domestic flights. Virgin has tried to find a niche domestically as a full service carrier at a lower price but consistently miss the high yield business because Velocity cannot compete with QFFF. What niche would you suggest they take? If they reduce price or product they just become either another Jetstar but dearer, or another Qantas but without the perks. If Australians want decent airfares then Virgin needs to survive.
Jenny:
1) Virgin as a full service airline offers airfares with the same inclusions as Qantas for half the price. With often better service and food.
2) Again, they’re a full service airline.
4.1) How long would it take to set these vital domestic routes up again – they’re not serviced by Qantas at all, or serviced by QantasLink flights at sky high prices which funnel people onto other Qantas or Oneworld flights. Either way, they provide vital capacity on major routes. Melbourne to Sydney and Brisbane to Sydney are among the top ten busiest domestic routes in the world.
3) Virgin Australia started Tigerair Australia after they shifted from low cost to full service operations. They simply used the name from the Singaporean-based sister airline which is now owned by Scoot.
4.2) Their US routes have very high load factors, have attractive pricing for a full service airline, and they’re reliable. Unlike Qantas International which commonly has delays upwards of 2 hours. Hong Kong clearly didn’t work out for them, but neither do many routes for Qantas – for a century-old airline, their international destination network is not nearly comprehensive. Both airlines manage with their strong frequent flyer programs and airline partnerships. As for Haneda, you wouldn’t be so surprised if you knew new Haneda slots are rarely made available over the Narita airport that is inconveniently located in relation to Tokyo. This was a one-off for the Tokyo Olympics and Virgin couldn’t miss the opportunity on a very profitable route with Japan’s tourism booming.
I don’t think you know what it takes to start a new airline, even with old assets. CASA requires at least a year to provide a high capacity air transport licence, and think about all the assets that must be acquired, infrastructure that must be built up and procedures that must be set up. It takes years. Funnily enough Japan Airlines is a major partner of Qantas’, whereas ANA is partnered with VOZ. Learn how to count then research these major problems you didn’t take into account.
What’s ill informed? They tried to take on QANTAS under JB reign and they lost, and continue to loose millions under poor decisions.
‘We can’t keep supporting extremely poor business decisions made by Paul Scurrah.’
He literally just walked in the door and culled 750 jobs and executed a huge restructure to begin profitability, none of these ‘bad decisions’ where his.
Jenny, I am a pilot with Virgin Australia – so clearly I have a vested interest here.
I have worked for other airlines and feel appropriately qualified to make the following observations.
Virgin Australia is an exceptionally customer focused company, staffed by thousands of dedicated people that are passionate about what they do everyday. It has the best culture of any company I have every worked for.
Yes, the Company may have foreign investors but all the domestic employees are Australian. We have all invested an enormous amount of time and effort to bring genuine competition to the market place. The winners have been the travelling public.
We, the employees, in turn depend on the livelihood the Company provides to sustain our families. It puts a roof over our heads, food on the table and shoes on my child’s feet.
It is true that under the previous CEO some decisions were made that did not provide the anticipated financial return.
However, from the moment he assumed the role, the current CEO, Paul Scurrah rapidly identified key areas of the business that required rectification and had implement a series of sweeping changes to return the Company to profitability.
The Covid-19 crisis is having a devastating impact on ALL airlines, worldwide. Even those with the healthiest balance sheets will require some form of financial support to prevent collapse.
I would urge you to consider the bigger picture here. If the 10000 employees of Virgin Australia lose their jobs many will need to draw on Government support individually. This will place additional stress on the welfare system. If the Company is supported, and through Mr Scurrah initiatives returns to profitability, we will contribute to recovery of the Australian economy.
If Virgin is customer focused why are they dodging paying refunds so hard?
Good riddance to half a duopoly. Maybe the next entrant will be genuine competition.
All airlines are avoiding refunding money to cancelled flights and are instead handing out vouchers which is the usual practice. The airline industry runs on razor thin margins and it’s not viable to hand back cash especially in times like this when they’re on the verge of collapse. It’s night right regardless and maybe after the Covid-19 mess things may change in the industry for the better, albeit more expensive in the long run.
Well in Paul Scurrah defence, he has recently joined Virgin Australia and has been making the hard decisions to turn the company around. I think your points are valid but should be directed towards the previous CEO in regards to poor management.
Couldn’t agree more on the poor strategy, but hard to throw Paul Scurrah under the bus with that one. He inherited the poorly managed and underperforming business from John Borgetti who held the reigns for over 10 years and too focussed on what Qantas was doing. Paul Scurrah’s short tenure as CEO (just over 12 months) has been fought with tough decisions to get the company in a better financial position and he hasn’t even had a chance to execute a well-laid strategy. It just needs a chance to come to fruition, it will be the best outcome for all Aussies.
To add onto my other comment. Paul Scurrah just walked through the door as CEO. You’re talking about John Borghetti who previously had an executive position at Qantas and has managed Virgin Australia for almost the past decade and splashed out on aircraft. Please cut the misinformation.
Why would you spend money on ads that could go to your employees ?
I think the News agencies are offering up free advertising to airlines. They offered up free ads to Qantas I would assume the same offer was taken up by Virgin.
Ok but any recapitalisation should be done via a rights issue not from government handouts of tax payer funds
The government has virtually already committed almost $200m for Virgin in the form of Jobkeeper payments (when enacted). This is on top if the 715m further committed. So that I would presume to be close to half a billion already to protect Australian jobs.
This is a foreign company, with 40% owned by Chinese firms (HNA and Nanshan) hence The Chinese Communist party indirectly has a controlling interest.
VA hasn’t paid a single cent in tax over the past few years; half a billion dollars in taxpayer support for a foreign company is outrageous enough.
VA should do the right thing and seek capital injection from its owners or seek debt capital like Qantas has.
The money would be better spent on grants to smaller locally owned airlines like Rex to compete against Qantas domestically. And maybe even prop up a state owned airline for full service domestic routes to be later privatised or made public. International routes already have plenty of foreign competition on the key non stop routes, which basically makes no difference when compared to VA.
REX is not locally owned it has majority Singaporean ownership…. and Qantas whilst it has just over 40% foreign ownership can and has had up to 49% foreign ownership. The arguments of how much of what airline has foreign ownership will be damaging to the entire aviation industry in this nation. Take a look at how much tax has been paid by all our ASX listed Australian airlines…it’s a pointless and damaging argument.
Let her a few point straight. The $715m package that the government released about 10 days ago isn’t worth a single dollar going forward if aircraft are not flying. The package was made up of fuel excise waivers and airways charges. If the aircraft are parked on the ground then no rebates on the fees.
On the fuel excise let’s figure out what a 777 contributes on one sector. It burns 100000 litres of jet fuel. Excise is 0.36c per litre.
100000×0.36= 36000. Virgin have 5x 777 operating to the US daily.
5×36000=$180000 per day for just five aircraft or just short of $66 million per year. Do the same sums on the 100 737 they operate and you will find the Virgin pay in excess of 2 billion dollars a year in excise tax alone to the Australian Government.
Virgin has a payroll bill of $1.5 billion, employing 12,000 Australians. Average marginal income tax rate is 28.5%. Virgin employees pay about $420 million a year in income tax to the Australian Tax Office.
I could keep on going with many other contributing factors. Like tourism, business, competition. Anyone who thinks Virgin Australia don’t contribute to the Australian Economy clearly don’t understand economics.
You may want to double check who actually owns REX, it’s major shareholder is actually Singaporean
Arguments about the survival or not is missing the big picture. Customers are not coming back anytime soon, and a vaccine is the only certainty for the airline industry. By then Virgin Australia will all be long forgotten and Qantas will be on life support. Projections are that international airline travel will be 50% of pre corona 2 years out. The domestic will fair better but not much. Most people will be too broke, business will have adapted to the new normal of not flying and Boeing will need to be bailed out by the US government as used aircraft flood the market.
Wasting money on this ad is just another example of this mismanagement at Virgin.
Virgin is at least 91% foreign owned and, through payments to its foreign owners, manages to avoid paying Australian tax. Instead of asking for Australian Government handouts, how about Paul Scurrah goes back to the Singapore, UAE and Chinese Governments who own the foreign entities that own Virgin.
If the Government was to back any airline, it should be the profitable Qantas that by law is majority Australian owned. If the only reason for propping up the failing Virgin is to stop airfares rising too much, then this can be achieved via other means such as legislation (e.g. the health funds need Government approval to raise fees).
If Qantas did have to pick up the pieces of Virgin collapsing, they would need to hire a lot of the Virgin staff, just as they did after Ansett collapsed. It would also improve the probability that Qantas survives covid19 without needing Government money. So overall, a Virgin collapse would not be as bad a thing as the Virgin propaganda predicts.
Don’t need Virgin? Really? Do you actually travel by air?? If Virgin fails Qantas will have 100% of the intra-continental airline market. Do you think that will be good for the flying public? Do you think it will be good for Qantas staff? Alan Joyce has over the years shown his true colors, sadly people seem to forget. A fair few years ago when Qantas was’nt in such a strong position it is today (…and it was having industrial disputes with its staff), Alan Joyce grounded the airline hurting its staff and ordinary Australians who were left stranded. Alan Joyce said the airline could not give its pilots a pay rise because of the current financial situation of the airline. Funny though, as he was still able to get one of the highest payrises of an Australian CEO at the time. Be careful what you wish for. The collapse of Virgin will be a very dark day in aviation history for Australia.
A government handout to another mismanaged company won’t help anyone. Taxpayers or travelers.
Some time ago….2001 there was a massive decline in travel. We had an airline then call Ansett. It Failed. Qantas survived.
I’d like to know how much was spent on the campaign, how much to the agency, how much to the papers, Facebook etc. How much time did the team spend on it?
Virgin could have spent that money on their team. The team could have been thinking of creative ways to come out of this crisis. Ansett at the time lost 9500 jobs and Virgin Blue appeared stronger. This time Virgin Australia might fail, Another will come up to compete. This is what makes a free market. Government bailouts might save the airline but the “customers & staff” still pay through their taxes and higher airline fees later anyway. So the Bailout is not the answer.
Virgin had a handful of planes when Ansett collapsed, took them 10 years to be able to expand to a decent size. No one has the money anymore to come into our market in this economic climate. Who would want to enter when you know the govt wouldnt support you against QF, the home team. If Joyce had his way, QF would be foreign owned.
Sorry, not sorry, Australian taxpayers should not have to work hard and pay taxes to bail out a foreign-owned company, especially a historically very poorly performing one.
Most know this virus was majority spread by infected passengers transported here by the airlines, and that it originated in China. There was further infusion of the virus by infected passengers transported via cruise ships.
Many Australian’s don’t know that TWO of Virgin’s major shareholders are Chinese companies holding around 40% of shares in Virgin Australia – one being the Chinese company, Nanshan Group, and the other being NHA, which is now owned by the Chinese government.
Google this yourself or look up Virgin’s annual reports – Etihad Airways (20.94%) Singapore Airlines (20.09%) Nanshan Group (19.98%) HNA Group (19.82%) Virgin Group (10.42%).
While some people like directly benefitting aviation journalists, may argue otherwise, with the above knowledge not often highlighted by those journalists, investing in Virgin is not going to sit well at many Australian taxpayer dinner tables.
The tourism sector brought this virus and its consequences to us without implementing safety measures when it could have and should have. That same tourism sector that is being most heavily impacted, and Virgin Australia, is part of that sector.
Given what we as people are now dealing with, and the impact this is having on our lives, most wouldn’t care, we just want the transportation and transmission of the virus to stop. Flight attendants weren’t even being required to self-isolate after returning from international flights (ask Virgin for a copy of their emails to staff), why the hell not as they’re more exposed than individual passengers?
The bulk of Australia’s tourism income comes from foreign tourists and sorry Virgin, but we’re not reliant on you bringing them here. Domestically there will still be options Qantas, Jetstar, Rex, smaller operations that may benefit and new operators, or we could revert to old fashion family road trips.
The Government may also, and for far less than handing 1.4 billion to Virgin, simply lift some domestic flight restrictions to create competition, if that becomes necessary.
Most importantly, this virus is costing lives and breaking families, on top of that the virus is costing our country, and will continue to cost each and every one of us personally at the expense of our hard-earned tax payments well into the foreseeable future.
First and foremost local Australian owned business that we have all taken for granted will need our support, so to the health system, and cost-effective manufacturing enterprises so that we’re less reliant on imports (sovereign capability), is where we should be directing our money IMHO.
Richard Branson, who many believe owns Virgin Australia as they strategically promote him as if he does, only holds around 10% of shares in Virgin Australia. Branson likely earns more from the licensing FEE for them to use ‘his’ Virgin branding than he has made in recent time with the company posting year of years losses into the hundreds of millions.
Virgin Australia is only 10% or less Australian owned. Companies should not be allowed to include and promote Australia in their trading name, if they are NOT a majority Australian owned company. It’s simply misleading.
If Virgin goes under, another company will certainly enter the Australian market, while this may not be overnight, it could well be there by the time Australians are comfortable to start flying domestically again. Or, the Australian government may simply lift the restrictions to enable other airlines to fly domestics routes.
Virgin Australia ownership structure is the following:
Singapore airlines ~ 20%
Etihad airways ~ 20%
Virgin Group (sir Richard Branson) ~ 10%
HNA Group (Chinese Conglomerate) ~ 20%
Nanshan Group (Chinese Conglomerate) ~ 20%
Remaining 10% is listed on the Australian Stock Exchange which anyone can own.
The owners of Virgin Australia are also owned by foreign governments.
Singapore Airlines ~ 56% owned by Singaporean Government
Ethihad Airways ~ 100% owned by Abu Dhabi government which essentially is their King
HNA Group and Nanshan Group ownership structure is so complicated and convoluted it is not clear who owns them. The information is not readily available. But both companies look to have been started up by Chinese state government owned companies and ‘charities’ with buy-ins by several Chinese billionaires. These two companies are absolute behemoths and own HUNDREDS of billions of $$$$$ in assets across the globe.
If anything, Virgin Australia has probably the strongest and richest owners in the world.
So asking Australian taxpayer for a bailout is quite poor form.
10 000 staff – 600 kiwis and 200 TigerAir so 9200 staff.
Just saying let not the truth get in the way of a good spin.
WOW! A newspaper campaign when most people don’t buy and read them anymore that’s sensible expenditure.
Hey Virgin, just a heads up. People are being told to stay at home and isolate themselves, save money and get rid of the people who came up with this bright campaign idea.
The best thing for economic recovery would be for ALL AIRLINES to stop delivering coronavirus infected people to our airports!
James,
You are wet behind the ears. Excise on jet fuel is Tariff Item 10.17. The rate is $0.036 per litre not $0.36 per litre as you have stated. Your example for the B777 is invalid as excise on fuel is not applicable for international flights. Likewise GST is not applicable on international flights.
The remainder of your argument is flawed. If a poorly managed Virgin does not operate in the future somebody else will who will pay tax on company profits.
Can I assume you are one of the Virgin specialists !
James misses the point entirely.
Taxes and excise are just part of operating a company, and that has no relevance to the commercial mismanagement of Virgin over the last 10 years.
I don’t think you understand the simple economics – if the company can not trade profitably, it won’t succeed. That’s clearly been demonstrated.
Virgin has limited cash with essentially no operating income – the board has to make a decision as to solvency in the very near future, if for nothing else but to protect creditors, particularly the staff.
It’s as simple as that.
The board requirement of not trading while insolvent was waived a couple of weeks ago.
Wow the Qantas sockpuppets are strong on this one. Notice how they all rehash the same talking points? Fancy that.
Perhaps it’s because they’re all logical and very valid points. Fancy that!
We are going through a difficult time with is full of doubt and frustration. So, please do research on the subject of Virgin Australia. Firstly, the CEO Paul Scurrah took over the role in February last year. So, let’s be fair, how do you expect him to turn it around in that timeframe? Secondly, in the Sydney Morning Herald on the 15/7/17, Richard Branson said ” Alan Joyce was pushing the Abbott government to allow Qantas to flood the market with flights to drive Virgin out of business”. So it appears that Mr Joyce is repeating history. Ask yourself who is running the country, Alan Joyce or Scott Morrison? ?
Wants tax payer’s money but doesn’t pay tax!
This wouldn’t be the same company that just fired 550 people in New Zealand would it? Presumably not part of their 10,000 “incredible” people.
https://businessdesk.co.nz/article/virgin-australia-shutting-nz-bases-550-jobs-gone
All these people saying Virgin should not be bailed out as they are mostly foreign owned are missing the point.
With Virgin gone, there will be no competition, and Qantas/Jetstar will charge exorbitant prices, just because they can.
My experiences with Virgin have always been good. Their customer service is good, and there is a strong focus on providing a warm and friendly service to the customer.
In contrast, so many Qantas employees are rude, disinterested etc. There is no emphasis on proving good service. I’ve had so many bad experiences with them. I’ve flown so many different carriers the world over, including developing countries, and Qantas is by far the worst.
Alan Joyce has used this pandemic, that has brought suffering the world over, to launch a hate campaign against Virgin, to take out the rival. People are suffering, and all he can see is an opportunity to capitalise one that.
Virgin Aust is foreign owned by
10 % British company
20% Singaporean company
20% Arab company
40% Chinese companies
Has paid no tax for five years.
In debt to the tune of $3 billion.
AUSTRALIANS FIRST no bailout for foreign companies.
Well first the flying wig, a dubious communication strategy if ever I saw one. Now an even more blatant strategic error.
The Australian Government is on the record as being committed to a competitive airline industry, verified as recently as yesterday on ABC TV’s Insiders programme. In other words, a single-airline Australia is a non-issue. So this ad is a waste of money.
Virgin should concentrate their efforts on becoming that second airline on merit, instead of playing the victim card.
I didn’t fly until the late 90s because it was so damned expensive. Flights to Melbourne were north of $400. To go overseas you had to be pretty bloody rich.
Virgin Blue changed that, with their famous line: ‘Keeping the air fair.’
Yep cause QF has no international ownership… 35.78% foreign owned in September 2020. Theres a reason it was legislated to be majority owned as Joyce wanted more foreign ownership. RM Williams, surely they are Australian. Wrong. Westpac? Wrong. It’s a global market, complaining about foreign investment is ludicrous.
Which large companies pay tax here? Shall I start again? Payroll tax, income tax, the Australian staff pay.
“Not the 25 million people who fly with Virgin Australia”.
Does that mean that 25 million paid-for seats or people?
There seems to be an implication that 25m people fly with Virgin (I assume annually). In a country of 24.6m. Yes, many Virgin passengers will be overseas visitors, but it feels like they are counting frequent Virgin flyers (i.e. people) multiple times in their 25m. It’s an old trick in pumping up your numbers.
I agree with the comment above that Virgin should concentrate their efforts on becoming that second airline that Australia needs, on merit, instead of playing the victim card as it’s doing.
It’s not good form, nor is blocking their ”””” customers choice ””””” and restricting how they can use their Velocity Points (preventing transferring to another airline and by limiting redemption options) is really poor form.
Hey, isn’t that taking advantage of and monopolising their position?
Using their own spin, that’s good for no one. Except Virgin!
People. Many valid comments, but where and when is the big upswing happening? When will Covid19 no longer restrict our lives and movements? Where and when and who in their right mind is placing their foot inside the so very slightly adjar door of what is the Australian market. Answer. No one.
We do however have an operation that can gradually increase / re introduce their hardware and people as required, not ideal, but it will be 12 – 24 months for any other operator to establish anything close.
The Australian taxpayer (hence Australian government) through payroll taxes, fuel excises, and all manner of taxes.
People are quick to take the spin from Qantas and Joyce, people forget conveniently that not so long ago he had his grubby little hands out for federal government $$$ – but now so conveniently takes the ‘what about us’ role. People are very narrow minded when questioning a 1.4 B $AUD loan facility, when you consider that a company / airline like VAA contribute in the wider picture. (ie: tourism)
Oh, then there’s the fact that the Keating Government back in the day (early 90’s) effectively bailed out Qantas to the tune of 400 million thought the merger of Australian Airlines and the very poorly managed and loss making Qantas. What a joke.
Save 10,000 Australian jobs.