The battle between Qantas Airways and Virgin Australia for corporate accounts has shifted to a new front: exclusive premium lounges in Melbourne.
The Australian Financial Review understands Qantas has closed its invitation-only Chairman’s Lounge in Melbourne for up to three months as it improves the facility to bring it in line with superior offerings in Sydney and Canberra.
It comes as Virgin is understood to be planning to open a branch of its own top-tier, invitation-only lounge, “The Club” at Melbourne Airport within the next six months. Branches of The Club have already opened in Sydney, Brisbane and Canberra as Virgin looks to lure away lucrative corporate travel accounts from Qantas.
The Chairman’s Lounge is an invitation-only product with all 7000 memberships personally approved by Qantas chairman Leigh Clifford for a two-year period. High-profile executives, board members and politicians are among the members of the discreet club which includes food offerings designed by Rockpool’s Neil Perry.
The product is designed to help convince decision-makers to keep their company’s corporate travel account with Qantas. Alternative arrangements will be made for members in Melbourne while the lounge is renovated.
Andrew Kelly, the Australasian regional director for the Association of Corporate Travel Executives said the Chairman’s Lounge had traditionally proven a powerful lure for corporate business, even at times when companies are focused on cutting costs.
“Captains can mix with other captains of corporate Australia in the lounges,” he said. “[A change in airline accounts] can be overridden by the executive level based on those memberships alone. I definitely see why Qantas leverages it hard.”
Qantas and Virgin have been battling to secure corporate travel accounts since Virgin chief executive John Borghetti launched his “Game Change” strategy of taking his airline upmarket in 2010. Mr Borghetti used to oversee the Chairman’s Lounge in a previous executive role at Qantas.
“Virgin knows the power of the Chairman’s Lounge within an organisation,” Mr Kelly said.
Qantas chief executive Alan Joyce last week said his airline had maintained 84 per cent revenue share in the corporate market. He said Qantas had last year signed 84 new accounts, renewed 111, won back eight and lost only seven to Virgin.
“We’re winning accounts back,” he said. “People are trying the opposition and coming back to Qantas.”
Mr Borghetti said ”way north” of 20 per cent of Virgin’s revenue now came from the corporate market, up from 10 per cent before he launched the Game Change strategy.
Roy Morgan last week said Virgin had beaten Qantas for customer satisfaction among business travellers in its latest survey with a score of 86 per cent versus Qantas at 82 per cent.
Virgin operates its own lounges. Qantas will shift the management of most of its larger domestic lounges, including the Chairman’s Lounges, to hotel group Accor in November.
Accor has already been operating Qantas’s first class and business class international lounges in Sydney and Melbourne and its new lounge in Singapore through its Sofitel brand.