Virgin Atlantic scraps its flights to Australia

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Flying to Australia is a painfully difficult way to make money. It was therefore not much of a surprise when Virgin Atlantic announced this week that it was scrapping its Hong Kong to Sydney flight. The company will now just fly to Hong Kong from the UK instead of carrying on to Oz.

It takes 10 seconds to understand the economics of the game.

The cheapest economy flight from London to New York (1-10 March) is £438. The flight time is 8 hours outbound.

The cheapest comparable flight to Sydney is £812. The flight time is 26-30 hours, requiring numerous changes of crew.

There have been rumours over the years that British Airways was also planning to drop Sydney. The breaking of the joint venture with Qantas has actually improved the economics, however. The remaining service now runs with a new Boeing 777 widebody jet which brings substantial fuel economies, and the recent British Airways presentation to institutional investors said that the route economics have improved substantially. Virgin has been stuck with an old Airbus A346.

The real surprise is the short notice, with services to end on 5th May. My gut feeling is that this is Delta Air Lines, Virgin’s new 49% shareholder, flexing its muscles. They do not seem prepared to support an uneconomic route even if it does not go down well.

The real winners here are people who have tickets booked on Virgin Flying Club miles. Passengers are being rebooked onto Cathay Pacific from Hong Kong to Sydney – but only if cheap tickets are available. For Upper Class redemptions, this means that you will be booked into Cathay Pacific business class in the ‘I’ sub class. This earns 1.25 Avios per mile flown and British Airways tier points, which is a result!

However, if ‘I’ class is not available, which is possible at peak periods, Virgin will not rebook you. You will either have to stopover in Hong Kong for a few days until an ‘I’ class is available or accept a refund. It is therefore imperative that anyone holding a Virgin ticket from Hong Kong to Sydney gets on the telephone to Virgin as soon as possible.

Looking forward, Virgin Atlantic is due a delivery of 15 Boeing 787 aircraft – with a further 28 options – which will bring massively improved fuel economy and a new generation of seating. These should bring a major financial benefit to the business, although it is now unlikely that Perth – originally a target destination for the new plane – will materialise.

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oneworld alliance partners, Virgin Atlantic and Flying Club

This article is closed to new posts. Discussion continues in the HfP Forums.

John says:

7 Feb7 February 08:26

It’s sometimes cheaper to go to SYD than to HKG from LHR (in Y)! This doesn’t make sense.

I would love to see LHR-PER direct in the next 10 years but it seems unlikely that BA or QF would do it. I would not take any other airline though.
- flyforfun says:
  
  7 Feb7 February 10:53
  
  Many moons ago, JAL had a £599 fare LHR-BNE, with a stop over in Tokyo if desired. My friend wanted to join me in Tokyo but the fare was £799! He came out to Brisbane for few days and then we went to Tokyo together!
  
  If QF did LHR – PER and you could clear customs in Perth, that would save time. But having to transfer on a domestic flight for 4 hours to SYD/BNE/MEL may be bit of drag. Bit like going from LHR to JFK and transferring to domestic to LAX/SFO etc. I’d rather find a route that got me on an international flight the whole way. I imagine the LHR/PER flight would probably continue onto SYD or maybe MEL. Could be a way for Qantas to win back custom – no Dubai stop and they could serve pork products and meals cooked in alcohol again.
  - John says:
    
    7 Feb7 February 14:36
    
    Well US immigration is painful, Australian not so much (though worse than European). Actually I only say that because I have an Australian passport. Though I recently noticed that UK citizens can now use Smartgate.
    
    There would be no duty free problem, as you can bring liquids on board Australian domestics, and the pork problem would go away as you say
    
    I do remember when you could go to HKG in Y for £150. Well you can still do that if you value Avios at 0p.
- Mark says:
  
  7 Feb7 February 14:09
  
  Direct services are of course the one thing the Middle East/Asian airlines cannot offer, however I think BA would struggle to make it work.
  
  I very much doubt there is anything like a market of sufficient size to Perth, and Sydney would require aircraft of far longer range than they have or need to operate anywhere else. Such a route would be unlikely to attract much economy traffic as (price competition aside) a stop is likely to be preferable to being stuck in a Y seat for 20 hours+ non-stop, so they’d be looking at a small subfleet of small, long range, premium heavy aircraft that wouldn’t be particularly well suited to other routes.
  
  QF might stand a bit more chance if making it work but given their financial woes that seems equally unlikely anytime soon.
  
  I rather suspect the talk of VS to Perth was more hype than actual intent…..
Mark says:

7 Feb7 February 13:49

Not a surprise as you say. If that is Virgin’s only flight to HKG I rather suspect it has been flying the onward sector with a lot of empty seats since a good proportion of people flying from London will only be travelling as far as HKG and are rather less likely to think Virgin Atlantic for flights between HKG and SYD.

Good to hear that the economics on the BA service have improved. That probably puts them in a good position to take advantage of this, particularly for business travellers who still want to collect miles/status with a British airline….
- Rob says:
  
  7 Feb7 February 14:14
  
  A friend in HK told me that Virgin was dumping seats on the HKG SYD leg very cheaply. Ironically it was a good Flying Club redemption due to the lack of UK tax.
  - Mark says:
    
    7 Feb7 February 14:52
    
    Really not at all surprising then, especially if it possible to buy tickets to Sydney for not much more (or even less) than Hong Kong.
    
    The onward sector must be heavily loss making, and ditching it will free up an aircraft that could operate an additional daily flight to, say, New York.
- John says:
  
  7 Feb7 February 14:41
  
  In general HK people travelling in Y would choose CX first, and only VS when it’s cheaper, so I suspect they weren’t selling many money-making seats. CX has 4x the seats to SYD and if happy to connect, 10x
  
  Also they can’t collect Asia Miles on VS. Although AM is a very lousy program(me) for the occasional traveller esp in disc-Y where CX fares earn 0, there is even less use for VS miles for an HK resident
Tim says:

7 Feb7 February 17:01

I was one of those affect by the cancellation of the HKG to SYD flights as I held 3 upperclass award redemptions for august. When I first phoned I was told that I would be rebooked in economy “as per the flying club terms and conditions”. I was very surprised by this, but buried in the t&cs is this clause:
4.2.3 In the event that any of VAA’s flight Programme or operations are altered, suspended, cut-back or cancelled, we are unable to guarantee that any affected Reward flights booked will be honoured. Miles for such Reward flights booked but not honoured will be reinstated to the Member’s account. If we are able to transfer the Reward flight to another airline, travel will be for economy/coach class only, subject to availability. Post departure the members must claim the difference in Miles by submitting their boarding pass to Flying Club.

I’m not aware of other mileage programmes having this clause and it was a shock to me.

However, a day latter Virgin changed their mind and rebooked me on Cathay Pacific in business class. The cherry on the top, as raffles points out, is I earn tier points and 3 * 5729 avios into our household account !!!
The Other Steve says:

8 Feb8 February 02:28

I wonder if this will allow/prompt BA/CX to increase their prices to take advantage? I’m sure both being OW members they will arrange something between them?
- Mark says:
  
  8 Feb8 February 04:16
  
  On the basis that there is so much competition on one stop Australia flights from carriers based across Asia I doubt it will have much effect on prices. Even between Hong Kong and Sydney there are other options aside from CX, albeit OneWorld carriers in CX and QF plus subsidiaries have the Lion’s share.
  - flyforfun says:
    
    8 Feb8 February 15:29
    
    But QF seem to be ignoring the Far East options. Their website only shows (for a BNE route I looked at) connections via Dubai. BA’s site give you connections in SIN with the now mistimed connection or via HKG. There’s also a Tokyo option, but that means another transfer via SIN.
    
    One market QF/EK miss out on in the Premium Economy traveller to destinations other than SYD/MEL (which has to be QF only). It doesn’t seem likely that EK would ever offer that cabin.