The issue with administration for an airline is reliability. Business is the market that are repeat travellers and will often pay a premium. They need certainty of travel and as soon as a supplier goes into administration they look elsewhere for certainty. That would not be all of Virgin's market, but it is important. They could of course offer guarantees, but organisations in administration typically shy away from that. They could retain a large part of their leisure market, but that could also be hit by confidence levels. Their strongest tactic would be their Velocity membership. Qantas will work against Virgin. If VAH gets cheaper rents at airports, lower landing costs,etc Qantas will demand the same treatment, and airports won't want that. If unions give VAH favourable conditions then QAN will demand the same conditions.
It is going to take a big effort to restructure debt and make this business a goer, they first job of an administrator will be to see if this is possible, and they will lift the lid on a lot of operational issues. If I were government and I wanted a second Australian airline I would look at Alliance or Rex. If that couldn't scale I would look at limited Air NZ capacity coming into Australia and supplementing Alliance and Rex, maybe creating a network of those three airlines.
I don't think this is a Paul Scurrah issue, and blame will be attributed over time, but there are many sins over many years that have got VAH into this situation. I pity the administrators. They cannot win with the fate of many employees in their hands, and unravelling a complex beast and trying to see what they can make of it.
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