Australia’s second largest carrier will go downmarket to target mid-market travellers, introduce meals for purchase, and close regional airport lounges.

Jayne Hrdlicka, a former Qantas executive, stepped up as Virgin Australia’s chief executive as the airline exited voluntary administration this week. Following a A$3.5 billion sale to US private equity group Bain Capital, Hrdlicka said the reborn Virgin Australia will be more competitive and resilient.

“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.”

Since its inception in 2000, Virgin Australia has flip-flopped in market positioning. What started out as a low-cost domestic carrier soon saw Virgin become full-service in 2011, acquire Boeing 777s, and launch long-haul flights to Asia and the US.

Prior to the pandemic, the carrier sank deep into the red as it competed head-to-head with flag carrier Qantas for a slice of the lucrative business travel market.

Under Hrdlicka’s leadership, the new strategy will see Virgin Australia instead target price-conscious corporate travellers, small and medium businesses, premium leisure travellers, and holidaymakers. 

Virgin will close regional airport lounges in Cairns, Darwin, and Mackay, and review its lounge in the Australian capital, Canberra. A revamped lounge concept will be unveiled in Adelaide early next year, which will then be rolled out across other locations such as Sydney and Melbourne.

In addition, the inflight product will see some changes. While Virgin will keep its business class cabin, it will conduct an end-to-end review and relaunch the product in 2021. In economy class, a buy-on-board menu will replace complimentary meals and snacks.

“[The new Virgin Australia] 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,” Hrdlicka added. 

“We will also continue to deliver our award-winning service, strong network of destinations, an award-winning frequent flyer program, and a safe and reliable operation.”