Virgin Australia needs to own one market –
and the logical market is Melbourne
With the international market expected to remain largely in shutdown for the next 12-18 months, Australia is anticipating a domestic-led recovery of its ailing tourism industry. The resurrection of Virgin Australia beyond this crisis is vital to the industry’s future, and its owning one market is a crucial ingredient in the recipe to retain two strong carriers servicing the aviation needs of the nation right now, according to the Victoria Tourism Industry Council (VTIC).
VTIC Chief Executive Felicia Mariani said, “For any future iteration of Virgin to be viable, the airline must ‘own’ one market, and that logical market is Melbourne.
“The past approach has seen Virgin stretch its capacity over three capital cities, which means it has failed to be the dominant capacity provider in any one market.
“For an airline model to work effectively, it must have strong penetration of the business segment as a first priority. This allows it to then essentially subsidise a successful leisure market.”
At the end of last year, the Qantas Group, including Jetstar, had a dominant position in Melbourne delivering more than 60% of the total capacity into Victoria. For a new Virgin model to be sustainable, it will need to match or exceed the offering of the Qantas Group.
“In order to become the first choice for Victorian travellers, any Virgin Mach II simply must deliver stronger capacity into Victoria.
“Winning the hearts and minds of the business traveller is something that has eluded Virgin to date. Owning a market is a crucial step in that strategy and laying claim to a component of one of the world’s busiest and most lucrative domestic air routes – being Sydney / Melbourne – is a logical first step.
“Sydney is not an option as that is and has always been the domain of Qantas. Owning the Melbourne end of this critical Australian route means a restructured Virgin can be far more effective at gaining much needed traction in the business market,” Ms Mariani said.
“Diverting more capacity into Victoria to deliver a dominant position here, rather than pointing so much of the available aircraft into leisure destinations, would provide a strong position to emerge as a multipurpose carrier with a clear business hub, then supporting what can be a more sustainable leisure market.
“Melbourne and Victoria deliver the best of both worlds with an enviable business market position, while at the same time serving up some of the best tourism assets in Australia across our repertoire of major events, business events, nature-based and culinary tourism experiences.
“Victoria is the clear strategic partner in any future Virgin model and can be a positive union to ensure that Australia continues to be competitively served by two viable carriers,” Ms Mariani concluded.