VIRGIN AUSTRALIA: CEO, Jayne Hrdlicka wants Qatar flights to Australia decision re-opened

Jayne Hrdlicka on Radio National today, called for the decision to reject Qatar Airways application for an additional 28 flights per week into Australia should be re-opened. She has written to the government regarding the decision, asking that it be reopened.

Background

I feel like I have spent most of this week so far reporting on Qantas and Alan Joyce about their massive profits and flight credits. Added to that is the government’s decision to reject the request for more flights by Qatar Airways. Stephen Johns, Assistant Treasurer and Minister for Financial Services gave the most cogent reason yet for the decision. He said it was to preserve the profits of Qantas. Virgin Australia CEO Jayne Hrdlicka must have seen red! Qatar are a major partner of Virgin Australia.

On seat availability

Hrdlicka said that international capacity was now at two-thirds pre-pandemic capacity – so we are still one-third down. Accounting for inflation, the cost of international airfares is between 40% and 50% above pre-pandemic levels. If that additional third of seats were returned to the market then

‘airfares would be as low as they possibly could be … and I guess that would be a 30% maybe 40% reduction in airfares.’

Jayne Hrdlicka on Radio National

She thinks it is important to return those seats to the market as soon as possible, and not wait until 2028, which is when Qantas boss Alan Joyce says they will return. She also challenges Joyce’s point that airlines are already returning capacity to Australia. Hrdlicka says that some airlines will not be returning that capacity due to aircraft shortages.

‘Allowing Qatar to add one service per day into Sydney, Melbourne and Brisbane in addition to Perth would make a huge difference’

Jayne Hrdlicka on Radio National

She also challenges Joyce’s comments that Qatar could use bigger planes, or increase flights to minor capitals like Canberra Adelaide and Darwin.

‘You need to add seats where the demand exists … its a bit of an obfuscation … to say fly into places where … we don’t have enough people to support those seats. The volume of demand as Qantas well knows sits in the major capital cities, in the biggest cities in Australia. That’s where the seats need to come, and that’s what Qatar has applied for’

Jayne Hrdlicka on Radio National

Hrdlicka also describes as a ‘nonsense’ the characterisation of the request as leading to a ‘distortion’, given that so little of the market has recovered. She points out that Qantas and Emirates, as partners, have about 45% share of the market of international flights to Europe via the Middle East. Qatar has 22%, and the additional flights would add about 2%

Preserving the profit of the ‘national’ airline

She questioned the notion of Qantas as a ‘national carrier’ since they are privately owned, not government-owned, and they shut down their international operations during COVID-19. Jayne Hrdlicka doesn’t think the government has made a fully informed decision. She cites the half a billion the tourist industry relies on from international travel.

Hrdllicki thinks the decision should be re-opened and reconsidered, taking to account all the facts.

Helping Virgin instead of Qantas

As a partner with Qatar Virgin Australia stands to benefit from a decision to grant the extra flights to Qatar. Hrdlicka refused to quantify that, though. However, she did admit that it would benefit Virgin’s domestic operation and that partners also give Virgin customers more choices.

Calls for a re-opening of the decision

The Virgin CEO is fairly generous in suggesting that the government maybe did not allow enough time to see all the required information, deciding after Qantas had briefed the government on their view. She calls for the decision to be re-opened now that contrary opinion, tourism, state government, small business and airport industry information is available.

She also points out that travel within Australia is quite affordable (presumably due to the low value of the Australian dollar), but it is the cost of getting here that is prohibitive.

Hrdlicka makes the valid point that things will not go back to how they were pre-COVID. Things are different, so different policy decisions must be made.

Virgin slot hoarding and travel credits

In July, 10.9% of virgin fights to Melbourne were cancelled. Hrdlicka points out that weather, air traffic control and Virgin staffing issues come into play in the cancellation of flights. On travel credits, the CEO points out that there are three types of flight credits at Virgin Australia:

1. Credits for travel booked pre-COVID – incurred pre-administration, so they are creditors of the company. About AU$ 700 million (pre-COVID), now at under AU$ 300 million. Expire at the end of December 2023. Can’t be refunded under terms of the administration.
2. Credits for travel booked during COVID-19 – when borders were opening and closing. These Credits are now 11% of the total, so roughly AU$100 million. She is confident they will be ‘worked out’ by the end of the year.
3. Credits – part of normal operations – some are eligible for refund and/or credits, with different expiry dates under terms and conditions

2PAXfly Takeout

Jayne Hrdlicka is just as much a hard-arse for Virgin Australia as Alan Joyce is for Qantas. On the Qatar expansion decision, however, she does have the views of state governments, industry, airports and others on her side, whereas Qantas, just has Qantas, and apparently the Federal Government.

On the travel credits question, I think Virgin Australia has a bit of a free pass, or maybe it is because they have had a lesser volume, better call centre responses, and fewer complaints to the ACCC.

Tell me about your experiences of dealing with airlines over cancellations, delays and travel credits