The widely-anticipated announcement comes as Virgin Australia completes a review of its fleet and route network, following seven consecutive loss-making years. Virgin Australia’s load factors to Hong Kong have been poor for some time, despite Virgin’s partnership with Hong Kong Airlines.
Virgin Australia CEO Paul Scurrah told shareholders at today’s AGM that the suspension of unprofitable Melbourne-Hong Kong services is necessary given the current political landscape which has weakened demand to Hong Kong. Virgin will continue to fly daily from Sydney to Hong Kong.
The airline will replace the Melbourne-Hong Kong route with a new Brisbane-Tokyo service, commencing in late March 2020, which Virgin hopes will be more profitable. Virgin Australia recently won approval to operate daily to Tokyo’s Haneda Airport in partnership with All Nippon Airways.
While the loss of Melbourne-Hong Kong service is sad news – and could result in higher airfares on the route as competition is reduced – it does mean that Virgin won’t need to remove any more Airbus A330s from its Melbourne-Perth and Sydney-Perth schedules to accommodate the new Tokyo route.
Virgin Australia recently received approval to partner closely with Virgin Atlantic on services between Australia and London, via Hong Kong and Los Angeles.
Virgin Australia began flying from Melbourne to Hong Kong in 2017, before adding Sydney-Hong Kong services in 2018. The airline initially commenced flights from Melbourne, rather than Sydney, due to the curfew at Sydney Airport. As Virgin initially acquired an early morning landing slot in Hong Kong, this necessitated a midnight departure from Australia – something not possible from Sydney Airport. Virgin’s flights to Hong Kong now depart mid-morning.
Further Virgin Australia Group capacity reductions
Virgin Australia also announced today that it will cut domestic capacity across the Virgin Australia Group by 2% in the first half of 2020. The changes are aimed to reduce overlapping Virgin Australia and Tigerair schedules, and focus Tigerair more on holiday destinations.
Five older aircraft will also be removed from the group’s fleet; two Tigerair A320s and three Fokker 100s.
As part of the changes, Virgin Australia will also axe flights from Canberra to Perth, Gold Coast-Perth and Sydney-Christchurch. Meanwhile, Tigerair will cease Brisbane-Darwin, Sydney-Proserpine and Adelaide-Brisbane flights next year.
Virgin has, however, applied for rights to add additional Boeing 737-800 flights from Australia to Bali from 29 March 2020.
Join the discussion on the Australian Frequent Flyer forum: Virgin Australia Financials 2019/20