Virgin Takes on Airline War

Virgin Australia has announced that it is discounting fares for business travelers. The airline company said this is Virgin’s most aggressive plan by far.

The price war means competition in the airline industry is becoming more intense. The discounted fares may also affect Virgin’s earnings in the first half of the financial year. Virgin has continued to focus on key corporate accounts, which rival Qantas dominates.

According to Virgin, this segment should help boost domestic market capacity by about 11 percent in the next few months.

Virgin’s annual profit was posted at $22.8 million. Its second half earnings, however, were posted at about $29 million loss.

John Borghetti said discounting fares for corporate travelers is the most aggressive program the company has implemented in many decades. He said the last time this happened was when Ansett was still flying.

Borghetti said that aggressive competition has led them to this decision to become compete head-on with its rivals. He expressed confidence, adding that the company has a cost advantage to its side.

Borghetti is the chief executive of Virgin.

The discounted fare is expected to boost capacity by about nine percent in the first semester of the financial year. Borghetti also said that about four-fifths of its growth would come from Perth and the east coast.

Borghetti also said that he is optimistic that the reduced fares won’t be a threat to the company’s earnings. He emphasized that Virgin is here to stay regardless of what its competitors would do.