Virgin Australia: Please sir, can I have some more?

Moooooore!

Virgin Australia – well really its administrators have asked for some more government funding during the pandemic.

The reason is the border closures around Victoria, and New South Wales (NSW) – the economic workhorses of the country.

Back in April the Australian government agreed to fund Virgin Australia and Qantas to maintain certain essential flights, so that those who had to travel, could, even though many planes have been largely empty – with some exceptions.

Recent request

In a request dated 31 July, the administrators asked for some of Virgin’s Sydney-Brisbane flights be incorporated into the ‘guaranteed schedule’, so they could continue to operate with government underwriting. If not, then the airline commented that it would ‘…need to reduce costs, so there are not significant losses on these flights.’

Some state borders closed for the rest of 2020

With Queensland indicating that it may hold the border with NSW closed until the end of the year, both Qantas and Virgin will need to reduce or cancel flights, or receive some kind of subsidy.

It’s not like they are running multiple flights per day either. Virgin is currently only running 5 services per week between Brisbane and Sydney.

The ‘DANS’ program

The Australian government introduced the Domestic Aviation Network Support (DANS) scheme in mid-April for an initial 8 weeks to support the operation of important domestic routes during the pandemic. The intent was to make these loss-making routes economic for the 2 airlines. The DANS scheme was extended in June, with a slightly altered set of routes.

2PAXfly Takeout

The aviation industry has a difficult road ahead when it comes to sustainability. It’s going to require a relative revolution in technology, with ‘electric planes’ or hydrogen planes, or some form of jet engine that doesn’t require a carbon based fuel. And that is going to require the development of an alternative to jet engines probably.

It’s a big ask. It will take time to develop.

This move to home grown and manufactured SAF is a first step – maybe even a baby step in a very long road of innovation. In the long run, US$200 million won’t even touch the sides.

Given that all states have now closed their borders to the countries most financially important states, and that the border between Victoria and NSW has also been closed, this request to extend the DANS program, and to alter the routes covered, seems perfectly reasonable.

The fact the request has come from Virgin Australia is noteworthy only because it is under administration, with a sale to be approved by creditors. I suspect that Qantas would also support the move.