Airline War Hots Up With Virgin Plans to Steal Market Share

TRAVELLERS will reap the rewards of an airline war with cheaper fares and more regional routes, Virgin Australia boss John Borghetti said.

The airline chief executive who used to work for rival Qantas has revealed ambitious plans to steal market share from his old employer and expan services to regional areas.

"A lot of these routes have not had competition. All you have to do is look at the airfares that are being charged,'' he said.

He also questioned why Qantas had dramatically dropped prices on certain flights after his airline launched business-class services on the same routes.

Mr Borghetti said Qantas reduced business-class fares between Sydney and Perth by nearly 25 per cent after Virgin introduced the same service.

After Virgin announced launch business class fares on the Sydney to Perth route for $1399, Qantas reduced their fares from $2,013 to $1,519.

"Why haven't they done that in the last ten years?''

As well as returning Australian aviation to the kind of competition not seen since the Ansett days, Mr Borghetti also wants to increase his frequent-flyer membership to three million.

Membership of Virgin's Velocity has increased 10 per cent to 2.75 million members in 3 1/2 months.

Pop star Dannii Minogue helped launch a frequent-flyer partnership with Westfield online last week.

Virgin was also given regulatory approval to form an alliance with Singapore Airlines, allowing passengers who book flights with the airline the chance to fly on Singapore Airlines flights, get lounge access and accumulate frequent flyer points.

In addition to previous alliances with Etihad, Delta and Air New Zealand, it will take the number of destinations it flies to to more than 400 worldwide.

Mr Borghetti said the move would open up emerging markets such as China and India and continue the airline's
expansion into regional Australia.

The airline also recently began flying between Brisbane and Port Macquarie and Brisbane and Gladstone and plans to announce new regional routes soon.

"We will now be able to promote regional Australia through those 400 odd destinations around the world, from Dallas to Port Macquarie,'' he said.

As well as reconfiguring the interiors of its domestic planes this year and will launch business class services across the network on January 18.

At the moment, Qantas boasts 41 per cent capacity share in the domestic market or 65 per cent including its low-cost subidiary Jetstar, while Virgin's is about 30 per cent.

But Mr Borghetti said he had no desire for Virgin to be the biggest airline in the country.

"Whatever market share gives the best return is the market share that I want,'' he said.

"What we do have the desire to do is be the airline of choice.''

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