VIrgin Australia said it will remove free food and drinks from economy class and potentially adopt a ‘buy on board’ model.
This was expected when new owner, Bain Capital, revealed its plans for the rescued and rebooted airline next month
The move is part of a sweeping push to lower Virgin’s cost base and reduce ticket prices – framed around the airline’s new ‘value’ proposition – while also ensuring a solid margin for the company.
Sources inside the airline with knowledge of the plans said that “more unbundling and add-ons” would follow as Bain works to “reset” Virgin from aping Qantas towards a more flexible mid-market position.
“There’s clearly a low-cost carrier element in all of this,” they said, “with Bain stripping out previous inclusions and moving them to the add-on column.”
“But a lot of this is what we have to do to stand a chance in the market and be successful in ‘lowest fare of the day’ contests,” they said, referring to common company travel policies which direct bookings towards the cheapest fare.
However, they said that business class would be “largely firewalled” from this practise to protect its more premium positioning.
Virgin bore the brunt of public ridicule after the cessation of its long-standing catering contract with Gate Gourmet lead to two-minute cup noodles being served in business class, although the airline is rolling out new snack boxes in the short term and moving to a new catering supplier to provide more premium-appropriate meals “without the celebrity chef overhead.”
“Since we entered voluntary administration in April, all contracts and agreements across the Group have been reviewed, renegotiated or repudiated in order to exit administration with a competitive cost base,” a Virgin Australia spokesman said.
The spokesman added that the airline was “re-imagining what our onboard catering offer will be longer-term, and are looking forward to developing a new experience to suit customer needs.”
Virgin Australia has previously considered removing complimentary meals and snacks from economy class, and in mid-2017 developed plans to partner with an airport food and beverage outlet such as Sumo Salad to offer packaged ‘grab and go’ meals purchased from catering carts at the departure gate.
Focus groups held in July 2017 including many of the airline’s Velocity Frequent Flyers also floated higher-grade ‘buy on board’ meals priced at $10-$12 as an alternative to the ‘bring on board’ boxes.
“The grab-and-go boxes were well received in the focus group,” one attendee said: “As long as they were of a reasonable quality without needing to be over the top, there was in-principle support.”
“The idea of picking up pre-ordered boxes at the gate was interesting however, concerns surrounding gate crowding was an issue, hence why we preferred the lounge option.”
“One thing was that everyone was pragmatic about what could be done. We were all businesspeople and understood the commercial demands. We recognised that this is economy and that the offering should be comparable to other airlines doing a good job at the moment; Delta’s name was mentioned a lot.”
“Also a lot of the time in peak flying hours we would have eaten at work or in the lounge, however the grab and go gave extra flexibility.”