Virgin had to do something, and I don't feel John's "game changer" program was the wrong thing to do. What they did not do well was estimate the time it would take to return positive results. That took a few years longer than anticipated. Virgin is very lucky it was saved by the capital raising it did. Very lucky.
Any close examination of the Low Fare Model highlights the predicament Mr Borghetti found himself in.
Low cost airlines only survive by continued growth in order to take advantages of economies of scale and market share. If you stop growing, your margins are eaten up by cost rises e.g. cogs, fuel, labour etc.
The litany of failures in Europe is testament to the problems with a high volume low yield model, that as the cost base begins to migrate to mid cost (after the start-up) phase ends. Debt is recycled most often at higher charges and pressure on cash flow is something to watch with Low Fare Airlines very closely. Margins are then squeezed and with Qantas operating as a monopoly with respect to pricing and route structures the delicate balancing act required was to try to maintain the Operating margin as the cost base rose. Coincidentally, little Napoleon's obsession with JQ, meant that literally that the way to do this was left unguarded: Domestic J class.
Many will recall in 2013 when little Napoleon ran to the government looking for $3billion 'as the market was distorted' VAH had exploited the breech and as Qantas was too busy growing JQ it took along time for the opponent to notice, for once VAH had backing Qantas could not afford the distraction of JQ, a low yield high volume business...
No battle plan survives contact with the enemy.
Perhaps it was executed imperfectly, but the strategy was correct. The idea was to lose money at a decreasing rate until the J class position was solidified, thereby ensuring the business could absorb the migration of the cost base. The move scared Qantas.
The Australian market actually is better served by two robust participants.