Saving Virgins

22 April 2020
Ansett Airlines collapsed in 2002 and nearly took Air NZ, its owner with it. It had 40% of the market at that time. It had had subsidies, but continued to lose money. Virgin Blue, a cheap carrier had just come into the market and may have gone broke had Ansett not collapsed first. Ansett’s 4 regional airlines survived, two merging to form Rex- Regional Express.

It was interesting to me as a safety person to watch as Ansett collapsed; CASA found that all its maintenance was way behind schedules, but did not inspect and was very slow to act. It seemed that some of its final owners merely lapped up the subsidies without a serious effort to save it. It might be noted that airfares fell after the restructuring, largely due to the efforts of Virgin Blue and Qantas countering with Jetstar. It seems that Virgin abandoned its low cost local strategy and this led to its demise.

Virgin has been in trouble for some time, and we note that the government is reluctant either to buy a stake or to give a loan. Perhaps they are not as silly as they seem. The article below gives some idea of the problems.

www.smh.com.au/business/companies/no-reasonable-person-could-argue-for-a-taxpayer-bailout-of-virgin-20200421-p54lqm.html