But that group will all go on cheap fares with EK or transit via PIA/AI perhaps BA but not a minimally advertised new start route with VS unless offering loss making fares.
You presume
that group to be a single homogenous mass who will default to similar travel choices en bloc. The reality is that we're referring to a very large pool of individual family groups which will each make the decision which best suits themselves. Provided that Virgin offers tariffs pitched to compete effectively with the alternatives on offer, there is no reason to presume they can't prosper. If their price point is pitched too high to attract customers, they will lose out. But Virgin executives have plenty of experience in competitive markets and they know the score. They are aware of the criteria required to succeed, and their introductory fares look fine to me.