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 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.
(Want to earn more Virgin Flying Club miles? Click here to see recent articles on Virgin Atlantic, Little Red and Flying Club, and click here for the latest news on earning and spending other airline and hotel points.)