Home tech Live Virgin Australia latest airline to announce trans-Tasman reductions as coronavirus takes toll

Virgin Australia latest airline to announce trans-Tasman reductions as coronavirus takes toll

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Virgin Australia will reduce capacity on the Tasman by 3 per cent.

RICKY WILSON/STUFF

Virgin Australia will reduce capacity on the Tasman by 3 per cent.

Virgin Australia has made sweeping changes to its network including reducing trans-Tasman capacity from April in response to falling demand in international travel due to coronavirus.

It follows similar moves by Qantas and Air New Zealand, which have both cut capacity domestically, on the Tasman and to Asia.

As part of its interim result announcement on Wednesday, in which it posted an A$89 million (NZ$93m) loss in the six months to December 31, Virgin Australia said it would reduce capacity on the Tasman by three per cent between April and June.

Virgin Australia chief executive Paul Scurrah said coronavirus was having a significant impact on the travel industry.

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“There’s no doubt we are operating in a tough market, and we need to make sure our capacity deployment is disciplined to ensure our routes are profitable for our business,” Scurrah said.

Coronavirus (COVID-19) started as an outbreak in the Chinese city of Wuhan in late 2019. The World Health Organisation says since then the pneumonia-like virus, believed to have originated at a live animal market, has killed nearly 3000 people and infected more than 80,000.

Virgin Australia, which flies to 400 destinations, said it would reduce group capacity by 3 per cent in the second half of the 2020 financial year and reduce it further by 5 per cent in the 2021 financial year.

It was also bringing forward the exit of seven Airbus A320 aircraft from its subsidiary Tigerair Australia’s fleet and axing five of the low cost carrier’s loss-making routes by May.

In 2010 Virgin Australia entered into an alliance with Air New Zealand with the two airlines co-operating on trans-Tasman services and Air New Zealand owning 25.9 per cent of the company. But that relationship ended in 2018 when Air New Zealand announced it was entering a codeshare agreement with old rival Qantas.

On Monday, ahead of reporting its interim financial results on Thursday, Air New Zealand warned that its revenue outlook for the remainder of the 2020 financial year was expected to be adversely impacted by softer demand for travel to and from Asian destinations as a result of coronavirus.

Air New Zealand has reduced its capacity to Hong Kong and Shanghai. Its Seoul route would also be temporarily suspended from March 8 until June 30 and total Asia capacity would reduce by 17 per cent for February through to June.

Tasman capacity would reduce by 3 per cent from March through May and domestic capacity would reduce by 2 per cent across March and April, focused on Christchurch and Queenstown services to and from Auckland.

On Thursday Qantas said it would implement a hiring freeze as it looked to reduce capacity to Asia by 15 per cent until at least the end of May.

It was also reducing flights to New Zealand by 6 per cent with cancellations on three New Zealand routes while its subsidiary Jetstar will reduce trans-Tasman flights by 5 per cent.

An Auckland International Airport spokesman said, on average, there are more than 250 trans-Tasman flights each direction per week between Auckland Airport and nine Australian airports; Sydney, Brisbane, Melbourne, Perth, Adelaide, Cairns, Gold Coast, Newcastle and Maroochydoore/Sunshine Coast.

Flights are operated by six airlines; Air New Zealand, Qantas, Jetstar, Virgin Australia, China Airlines and LATAM.

Market share, based on seat capacity, was typically; Air New Zealand with 43 per cent, Qantas with 35 per cent, Virgin Australia with 16 per cent and LATAM and China Airlines making up 6 per cent combined.

Christchurch Airport has around 70 return services per week scheduled for the upcoming winter from airlines including Air New Zealand, Qantas, Jetstar, Virgin Australia and Emirates.

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