Virgin Australia and Etihad lounges ‘in the House!’ post Air NZ divorce

What you do when things are not going well

What is going on over at Etihad and Virgin Australia? Well, you may ask.

Having lost over 1.52 Billion in the 2017 financial year and closer to 2 billion the year before – Etihad has had to trim their spending, ambitions, routes and investments, and find as many new income sources as possible, including selling access to their lounges – or, it would seem, just selling their lounges.

If you have your ear to the wing, Etihad is having a few (Ahem!) financial problems.  It feels like they peaked with The Residence when every avegeek was trying to work out how they could travel in this apartment in the sky for the least amount of money.

Etihad also pursued a strategy of buying up or into teetering airlines, hoping to make them profitable, and gain a network at the same time. Unfortunately, this strategy was just a tiny weeny bit disastrous. The ‘equity alliance’ that CEO James Hogan created included stakes in Air Berlin (went broke), Alitalia (is broke), Jet Airways (not yet broke) and Virgin Australia (heavy losses) and a few others. Most of these investments, Etihad has got out of or is rumoured to be trying to get out of.

As a result, it has been madly cost-cutting in both major and nitpicky ways. All that ebullience of their visual re-branding, and the launch of The Residence seems but a distant memory.

So where is Virgin Australia up to then?

Virgin Australia, after a period of expansion and a direct challenge to competitor Qantas, has moved to what I think we call ‘consolidation’ – mainly because with Qantas’s bigger pockets, it could last longer and afford to make greater losses than Virgin. Mind you Virgin did achieve its major ambition, changing from a low-cost carrier (remember Virgin Blue?) to a fairly good competitor domestically to Qantas, with a network of lounges, and a business class cabin. They also launched an international service with routes to New Zealand, Bali, Fiji, USA (Los Angeles), and most recently Hong Kong. Not being a member of any of the airline alliances, they have used ‘partnerships’ to extend their destinations. Their partners include:

• Air New Zealand Alliance (not for much longer – turns on heel, and leaves with attitude)
• Delta Air Lines Alliance
• Etihad Airways Alliance
• Hainan Airlines Alliance
• Hong Kong Airlines Alliance
• Singapore Airlines Alliance
• Air Canada
• Alitalia
• Hainan Airlines
• South African Airways
• Virgin Atlantic

Plus they have interline agreements with Aeromexico, Air Serbia, Bangkok Airways, Garuda and SilkAir.

Virgin has not been performing that well financially, although a lot of their losses are accounting or one-offs. Perhaps their biggest issue is they will lose their current CEO John  Borghetti in 2020. He has lead their expansion and consolidation, so the next CEO has big shoes to fill.

Join the Houses!

So what do you do in adversity? Combine and conquer – sort of.

Etihad is handing the management of its first and business lounges in Sydney and Melbourne (and elsewhere) to No1 Lounges who currently mainly manage various lounge categories in the UK. It’s also rebranding these lounges as ‘The House – home of Etihad Airways and other leading airlines’.

The Sydney version will be available from October 23, 2018, and the Melbourne version from Saturday, October 27. Premium Etihad members and travellers will have access:

Complimentary entry will continue to be offered to Etihad Airways Business Class and First Class customers, and to those travelling in The Residence. Gold and Platinum members of the airline’s Etihad Guest frequent flyer programme and Business Class and First Class travellers ticketed on codeshare partner services operated by Etihad Airways will also eligible for access.

But, you can also buy your way in:

The airline will also offer paid-for access to The House for its Economy Class travellers. The lounge will also continue to be used by the premium passengers of a small number of other airlines and, subject to availability, will be available for purchase by passengers of other airlines.

This seems to be a trend. Airlines seem to be slowly moving to ‘share’ lounges rather than run their own.

Virgin Australia breaks up with Air New Zealand lounges – Etihad now their new lounge husband

Air New Zealand and Virgin Australia are breaking up, and at least one of them is walking away in a huff. (Air NZ has run back to its long lost lover Qantas for codeshares) Air NZ used to supply the international lounges in Sydney and Melbourne. So with the break-up, they have adopted the Etihad ‘The House’ lounges at Sydney and Melbourne and are adding an all-new ‘My Lounge’ in Brisbane. The break-up is scheduled for October 28 – so that’s when access starts for Virgin’s premium passengers and status holders.

Overall Virgin Australia’s lounge situation is – to put it bluntly, a shemozzle. Your access relies on what carrier you are travelling on, and what destination, or where you are flying from. You will be confused, so check on the chart below.

Virgin is saying there are interim arrangements in Brisbane until the new ‘My Lounge’ opens ‘in the next month’. Below is a screen grab of the Virgin Australia international lounge eligibility from their Air NZ breakup date of October 28:

 

Is that all there is? Is that all you’ve got?

Well, I suspect not. I think this is the beginning of a saga rather than the end. If I were Virgin  (and its way too late for that), I’d be looking at some more rationalisation. Probably keeping the domestic lounges – they are important for branding, product differentiation and loyalty – and trying to unify the international lounges as far as possible. Why introduce a whole new concept of ‘My Lounge’ in Brisbane?