New Virgin Australia strategy spells end of business travel arms race

SYDNEY - Virgin Australia looks set to cut basic fares and start charging fees for items like checked baggage and food under new chief executive Jayne Hrdlicka, prompting a wider industry shake-up as the country’s airlines reawaken from the coronavirus crisis.

Unusually for airlines globally, both carriers include free checked baggage allowances, free Wi-Fi and complimentary food and drinks even in the cheapest economy class tickets on domestic flights. Unbundling, or charging fees for previously included services like checked baggage, seat selection, Wi-Fi, food and in-flight entertainment is a strategy that helps airlines attract price conscious travellers with a low base fare while allowing them to pay extra for chosen add-ons.

“I think at least it allows the optionality for Qantas to go downmarket,” said John Thomas, a Boston-based former senior executive at Virgin who helped introduce baggage fees in the United States more than a decade ago as an airline consultant.

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