VAH - Virgin Australia Holdings

[matty77]

I never understood why Virgin changed so much over the years and got away from a successful model they had previously used...

 

[Smurf1976]

All VA flights in Australia suspended, apart from one Syd-Mel flight a day and occasional OS charter

Just guessing but is there some legal, regulatory etc thing that to be considered as an airline and maintain the relevant licenses and so on they have to actually be running a regular service somewhere?

I'm thinking along the lines of the same sort of concept as large businesses who operate a single shop in some far flung place under a different name to everything else they run just to retain the trademark on that other name or things like insurers insisting that a house can't be unoccupied more than 6 months. Etc. Is there anything like that with aviation that would prompt them to run that single service each day to comply with whatever rule?

It's hard to see how they'd be making any actual money out of it. For one flight a day it would almost be cheaper to just shut the entire operation - hence my thinking that there's some reason they need to keep flying even if only at a token level.

 

[sptrawler]

Just guessing but is there some legal, regulatory etc thing that to be considered as an airline and maintain the relevant licenses and so on they have to actually be running a regular service somewhere?

I'm thinking along the lines of the same sort of concept as large businesses who operate a single shop in some far flung place under a different name to everything else they run just to retain the trademark on that other name or things like insurers insisting that a house can't be unoccupied more than 6 months. Etc. Is there anything like that with aviation that would prompt them to run that single service each day to comply with whatever rule?

It's hard to see how they'd be making any actual money out of it. For one flight a day it would almost be cheaper to just shut the entire operation - hence my thinking that there's some reason they need to keep flying even if only at a token level.

They probaly lose their parking spot at Sydney and Melbourne airports, if they dont use it. Lol

 

[Dona Ferentes]

Just guessing but is there some legal, regulatory etc thing that to be considered as an airline and maintain the relevant licenses and so on they have to actually be running a regular service somewhere?

I'm thinking along the lines of the same sort of concept as large businesses who operate a single shop in some far flung place under a different name to everything else they run just to retain the trademark on that other name or things like insurers insisting that a house can't be unoccupied more than 6 months. Etc. Is there anything like that with aviation that would prompt them to run that single service each day to comply with whatever rule?

It's hard to see how they'd be making any actual money out of it. For one flight a day it would almost be cheaper to just shut the entire operation - hence my thinking that there's some reason they need to keep flying even if only at a token level.

might have a contract with Australia Post.... Or the other thing is landing slots?

 

[Altron57]

Just guessing but is there some legal, regulatory etc thing that to be considered as an airline and maintain the relevant licenses and so on they have to actually be running a regular service somewhere?

Yep, the AOC - Air Operators Certificate - the final one-page approval document from CASA to start operating your airline. They take years of work and millions - even tens of millions - of dollars of setup costs to get.

Only granted after everything else is in place and signed off by the regulator - training systems, ops manuals, safety management systems, approvals of key personnel (CASA have to personally approve the candidates for CEO, head of flight ops, head of maintenance, head of flight training, and some others, to make sure they have the requisite experience and respect for safety), multiple practice operations (trial flights of proposed routes, using real aircraft and crew, but carrying no passengers, with CASA inspectors in the cockpit and on the ground monitoring everything that happens), maintenance training, inspections of spare parts stores, parts record-keeping, dangerous goods, pilot training standards, audits of baggage handlers, refuellers, pushback drivers... it takes years.

Then, finally, one day the boss of the CASA team of 20 people who oversaw your three years of work, and who had to approve thousands of your documents and procedures, walks in and plonks down your shiny new AOC and now you're an airline.

An AOC is one of the most valuable assets an airline has and if they completely stop flying it is at risk. Once it's gone you have to go through the whole multi-year startup process again, so even if an airline is on the point of insolvency they will keep flying enough to keep the AOC valid. Otherwise there is no airline to rescue.

 

[Altron57]

might have a contract with Australia Post.... Or the other thing is landing slots?

Australia Post has a joint venture with Qantas. They fly a number of B737 classic freighters and BAE-146s overnight to move the post.

 

[Smurf1976]

An AOC is one of the most valuable assets an airline has and if they completely stop flying it is at risk. Once it's gone you have to go through the whole multi-year startup process again, so even if an airline is on the point of insolvency they will keep flying enough to keep the AOC valid. Otherwise there is no airline to rescue.

I see - that's the sort of concept I had in mind, some sort of regulatory requirement that requires them to keep that Sydney - Melbourne flight going hence doing so.

 

[qldfrog]

@Altron57 thanks for the technical input in an area most of us do not know much.

 

[Dona Ferentes]

@Altron57 thanks for the technical input in an area most of us do not know much.

Yes. Thanks. I should have rung my Virgin ATR pilot mate and asked him, but it might be a bit insensitive. He was an instructor on the Brisbane simulator and is worried about losing accreditation. Along with all of them.

Any solution and rebuild has to come sooner rather than later because the longer this drags on the harder it's going to be putting the bits back together.

(And won't Qantas have a field day, if holding a monopoly. At least for a few months)

 

[Smurf1976]

And won't Qantas have a field day, if holding a monopoly. At least for a few months

Based on the process Altron57 described, the only options to avoid a Qantas monopoly lasting quite some time would be:

1. Virgin survives and keeps operating

2. Someone buys Virgin as a going concern. Buys literally the whole show so there's no issue about key people etc, it's just a takeover in terms of ownership. The same pilots keep flying the same planes, etc.

3. If it turns out that someone else just happens to be in the process of setting up an airline in Australia and is just about ready to go with their licenses etc.

Other than that, Qantas would seem to be able to charge right up to the point where it encourages people to drive or catch a bus / train / ship interstate as appropriate.

 

[Dona Ferentes]

In Trading Halt

.... "continues to consider ongoing issues with respect to financial assistance and restructuring alternatives"

 

[sptrawler]

In Trading Halt

.... "continues to consider ongoing issues with respect to financial assistance and restructuring alternatives"

As some said today, "if Virgin was a coal mine, it would be already shut down", pretty good analogy.
The owners are going to have to find some money, from somewhere.

 

[matty77]

They could offer Australia Post first class seats for each of its packages?
On a serious note though, what are the options from the Government to save them? Can they put money into the business and take some form of ownership? Obviously Qantas wouldnt allow that I would assume...

 

[sptrawler]

On a serious note though, what are the options from the Government to save them? Can they put money into the business and take some form of ownership? Obviously Qantas wouldnt allow that I would assume...

The Government could be forced to open domestic routes to international carriers, it may be a case that Australia doesn't have enough domestic air travelers to support two full service carriers, it is a big country with a relatively small population.
It wouldn't be the first industry, that has struggled because of Australia's demographics, it wouldn't be the first airline failure in Australia either.

 

[Smurf1976]

Another option government has is that they let Virgin go bust and then implement price controls on Qantas.

We're in a new world now so I wouldn't rule that sort of thing out. I'm cautious about QAN for that reason, government probably won't hand them a blank cheque.

Banks, energy and aviation are sectors which are always at least somewhat prone to government regulation either directly to limit profit or which otherwise has that consequence and in recent times aviation is the only one of the three to have not had that actually occur. Don't assume it won't.

 

[Garpal Gumnut]

Telecommunications will come in to their own and abolish much of the travel associated with non-coalface work in resources, health and other industries.

Tourism is a dead parrot for the foreseeable 12-24 mo. period.

I cannot see other than a limited capacity for bums on seats for QAN.

And as for VAH.....

Most of the VAH stock is in Chinese and other overseas hands, a limited amount is held by and traded by Australians on the ASX. Small numbers in volume.

Then they could be taken over after a stiff dilution.

gg

 

[jbocker]

Heard some chat that if the govt bails VAH out then why not govt get some ownership in the form of shares. When VAH gets on its feet again and is in profit the govt can sell it off (not to foreign ownership). Currently what stops a foreign interest buying it up now at a bargain anyway. Keeps VAH in the air and QANTAS to be competitive and not a monopolised airline.

 

[jbocker]

Tourism is a dead parrot for the foreseeable 12-24 mo. period.

Question is, do we see this as an opportunity. Will potential tourists from overseas view Australia to be a 'safe' place explore. Also will we spend more of our own holidays within our own country.
If we really desire this to be the case we will need to start to do something about it.
Would letting VAH fall over be in our best interests if we want tourism, isn't this an opportunity the govt should is screaming for. Is it an opportunity to have cheaper inter and intra state travel for tourism? ? ?
Assumption: we do make Australia safe and we can manage 'safe' Co-vid free tourists.

 

[Country Lad]

Most of the VAH stock is in Chinese and other overseas hands, a limited amount is held by and traded by Australians on the ASX. Small numbers in volume.
gg

Most is correct - 91.3%

EAG Investment Holding Company Limited (Etihad Airways) 20.94%
Singapore Airlines Limited 20.09%
Nanshan Capital Holdings Limited (Chinese conglomerate) 19.98%
HNA Tourism Group Co., Limited (Chinese conglomerate) 19.82%
Corvina Holdings Limited (Virgin) 10.47%

I suppose part of the government's quandry is why bail out this lot, they can afford to keep it afloat themselves. Effectively an overseas owned airline

 

[Dona Ferentes]

EAG Investment Holding Company Limited (Etihad Airways) 20.94%
Singapore Airlines Limited 20.09%
Nanshan Capital Holdings Limited (Chinese conglomerate) 19.98%
HNA Tourism Group Co., Limited (Chinese conglomerate) 19.82%
Corvina Holdings Limited (Virgin) 10.47%

Effectively an overseas owned airline

and letting Singapore take it over? another state owned entity. Capitalism with Chinese characteristics

The hard bit is, we don't know how long this will last. And any rebound will be spluttering, tentative. I don't like the idea of socialising losses and privatising profits. Domestic travel is air-based and our island status means international flights are the only option, hence at least two players is the very minimum.