Virgin bid may slash fares to the US

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Yada Yada

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theage.com.au said:
Virgin bid may slash fares
Jason Koutsoukis, Political Correspondent Canberra
September 24, 2006

Air fares to the United States could be slashed by up to a third, with the discount airline Virgin Blue expected to announce flights across the Pacific within the next two months.

Virgin Blue executives are finalising details of the plan, which would spark head-to-head competition with Qantas on one of its most profitable routes.

Qantas has a virtual monopoly on the busy route between Australia and the US West Coast, now carrying about 75 per cent of passengers. Its only competitor is the financially stricken US-based United Airlines.

Financial analysts estimate that the US route contributes about 15 per cent of Qantas' net profit.

Virgin Blue's chief executive, Brett Godfrey, wants the option of at least seven flights a week into the US, which it believes it would need to compete effectively with Qantas and United.

Flying to the US would require big capital investment from Virgin Blue, which would need several long-range aircraft that it does not have at the moment.

Virgin Blue is controlled by the Australian transport giant Toll Holdings, and the company's founder, British entrepreneur Sir Richard Branson, owns a 25 per cent stake through his Virgin Group.

"The package is not yet finalised," said one senior Virgin Blue source. "There are one or two sticking points we have to still work through, but we expect to be able to make an announcement within the next two months. We are very encouraged with the way this deal has gone so far, and when we do get up and running this will be very good news for travellers," the source said.

Prime Minister John Howard and federal Transport Minister Warren Truss are both actively supporting Virgin Blue's push across the Pacific.


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Very encouraging news! :cool:
 
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