Virgin Australia freezes consulting spend amid Coronavirus
Virgin Australia has put a stop on all its consulting spend for 2020, as the carrier grapples with the financial hit from the Coronavirus pandemic.
The outbreak of the Coronavirus has thrown the aviation industry in what is arguably the largest crisis in its history. According to Alex Cruz, the chief executive officer of British Airways – one of the world’s larger airlines – the industry is currently facing a “crisis of global proportions” worse than that caused by the SARS virus or 9/11.
With demand for tickets plummeting worldwide, in part due to travel restrictions, airlines across the world are grounding flights like never before, in order to avoid operating near-empty flights as Virgin Atlantic encountered last week.
Yesterday, Prime Minister Scott Morrison further dented demand for flights into Australia after he announced that all travellers arriving from overseas will have to self-isolate for 14 days after arriving in Australia, leaving Qantas and Virgin scrambling for measures to mitigate their rapidly deteriorating financial situation.
Virgin Australia has responded quickly, rolling out a set of packages aimed at serving customers and safeguarding profitability. One of the measures is retiring a number of routes for an indefinite period, including the flights from Auckland to Tonga and Rarotonga, and reducing the frequency of flights from and to Los Angeles and Tokyo.
According to a spokesperson of the company, which has a fleet size of around 100 aircraft, all travellers that have been impacted by the measures will be contacted soon and offered alternative travel arrangements including refunds for any routes that the group is no longer servicing.
Virgin Australia expects to reduce international capacity by 8% in the second half of 2020, and by 10% in the first half of 2021. The good news for the carrier is that it is less impacted from the international travel bans than major cross-border operators – domestic operations account for 88% of passengers and 78% of flight revenue.
Other measures include freezing the bonuses of its management teams and slashing the salaries of top executives by 15%. In addition, a full stop has been placed on the hiring of external consultants, as a range of large programmes including strategic digital projects and a large HR transformation have been put on hold. Similarly, external recruitment has been frozen.
Meanwhile, Virgin Australia has opened discussions with government officials as the carrier seeks to secure relief for damages.
