Virgin committed to low fares, eyes Perth

Virgin Blue says it remains committed to low domestic airfares and is considering extending its services to Perth, despite travel industry criticism that it can’t survive offering fares at current prices.

In answer to Flight Centre Chief Executive Graham Turner’s advice to Virgin Blue to raise its profit margin on fares or it would not survive, Virgin Blue Chief Executive Brett Godfrey said he is happy to keep it “hovering” at current levels, especially after announcing a profit in June.

“Our costs are half that of Qantas or Ansett…and if they are half that, our yield needs to be half that of what they need to get,” Mr Godfrey said.

Virgin is still keeping air fare discounting alive after entering the Melbourne-Sydney market this month with fares as low at $66 one-way, matched by Ansett and Qantas.

There is speculation of Virgin commencing regional routes and taking the air fare war to Perth. Mr Godfrey said Virgin will not make any announcements about these routes until they are about to happen because “as soon as we announce something, Qantas decides it can double the capacity.”

The Australian p33, 27/7/01