Virgin expands regional footprint amid IPO uncertainty

Virgin Australia has expanded its regional network through partnering with Link Airways in a bid to increase the profile of its loyalty division ahead of a potential initial public offering this year.

Virgin’s new code share agreement with Link will mean its 12 million frequent flyers will be able to claim points on 17 additional routes, including from Brisbane to Coffs Harbour and Melbourne to Dubbo, which also increases its regional footprint by 45 per cent.

Virgin Australia has expanded its codeshare with Link Airways while Qantas has appointed a new loyalty boss.
Virgin Australia has expanded its codeshare with Link Airways while Qantas has appointed a new loyalty boss.Credit: Boeing

Virgin already has a wet lease with Link on its Canberra routes, which allows Virgin’s Sydney to Canberra services to be flown by Link Airways crew and aircraft.

Virgin is the second-biggest airline in Australia and controls about 40 per cent of the domestic airline market but the remaining 60 per cent is held by Qantas Airways and its budget arm Jetstar.

The head of the airline’s strategy and transformation arm, Alistair Hartley, said the partnership would increase the level of choice for travellers in areas including Inverell, Wollongong and Bilolea, which are not served by any major airline.

“Today’s announcement in partnership with Link Airways underscores our commitment to delivering great value, flexibility and choice to Australians, and boosting connections for customers living in regional Australia,” he said.

Virgin has consolidated its operations since it was reborn after Bain Capital’s takeover, which followed a brief stint in administration in 2020. It’s banking on this strategy buoying its long-awaited initial public offering. Since then, Virgin has sought out code shares and launched services on less populated or underutilised routes from hubs such as Cairns as vehicles for expansion.

The private equity giant abandoned hopes of a 2023 listing in the hope market conditions would improve this year.

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Qantas announced to the market on Thursday it had promoted Andrew Glance to succeed Olivia Wirth when she steps down from running the group’s lucrative loyalty program in February.

Glance has worked at Qantas for more than 20 years and will take over from Wirth at a pivotal time for the airline which is in the midst of a brand overhaul. Qantas’ frequent flyer program delivered record earnings before interest, tax, depreciation and amortisation last year and $1 billion in free cash flows.

Qantas Loyalty now expects to record $1 billion in earnings before 2030. Although 2023 was a horror year for the airline, which experienced serious reputation decline following a series of scandals, the airline says the number of forward bookings have remained unaffected. Some of the customer frustration with the airline is centred around the devaluation of frequent flyer points and lack of rewards seats, which have become harder to use as the program has grown.

Chief executive Vanessa Hudson, who succeeded Alan Joyce after he stepped down from the business in the heat of the turmoil last September, said Qantas was preparing to unveil improvements to the program.

“We’re working on some more improvements that we expect to announce in coming months, which we think will be very well received by our millions of members,” Hudson said.

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Source: Thanks smh.com