Allied Journal


Virgin Blue increases oil levy and drops route
23 Aug 2004

Virgin Blue Holdings on Monday followed Qantas Airways and raised the fuel surcharge on its tickets as a result of sky high oil prices.

The low cost airline, 25 per cent owned by Sir Richard Branson's Virgin group, also took aim at Qantas saying it had an uncompetitive stranglehold over the lucrative Sydney-Canberra government market.

It said it regretted the surcharge rises, effective from August 26.

The domestic flight surcharge will rise to $10, from $6 per sector, to be in line with the Qantas surcharge.

The levy on international flights will increase to $20 from $10, $2 less than Qantas' fee.

Virgin Blue and Qantas initially introduced the charges in May as airlines around the world imposed similar levies when oil rose to around $US40 a barrel.

Oil is now around $US48 while the cost of jet fuel has soared to more than $US55 a barrel, almost double what it was two years ago.

"Like many airlines globally, Virgin Blue's low fare mantra is being challenged by sky high fuel prices," head of communications and strategy David Huttner said. "We regret having to pass the cost on to the travelling public but, as a low fare airline, it is not viable for us to absorb such exorbitant increases in our costs."

Virgin Blue said the surcharges may be scrapped or cut if fuel prices return to lower levels.

Meanwhile, Virgin Blue will suspend services between Sydney and Canberra on September 4 due to the slow take up by the Commonwealth public servant sector.

Rival Qantas holds an "unhealthy" 95 per cent of the government market, it said.

"Our major competitor continues to have a stranglehold on the $300 million spent each year on air travel by Commonwealth officers," Mr Huttner said.

While there had been a small increase in Virgin Blue's share of the Commonwealth government market, it was not enough.

"While we apologise to our numerous cost conscious loyal supporters on the Sydney-Canberra service, we will not sustain a service where the dominant customer isn't giving all suppliers a fair go," Mr Huttner said.

"If solid improvement occurs then we will be able to review today's decision in the not too distant future."

The Sydney-Canberra aircraft will be redirected to Tasmania.

The airline has accumulated 1.127 million customers, increasing its momentum since June when passenger numbers rose 41.5 per cent and passed the one million mark for the first time.

The airline also reported a 52 per cent rise in revenue passenger kilometres - the number of paying passengers multiplied by kilometres flown - and a 61.3 per cent rise in capacity.

Virgin Blue Holdings on Monday followed Qantas Airways and raised the fuel surcharge on its tickets as a result of sky high oil prices.

The low cost airline, 25 per cent owned by Sir Richard Branson's Virgin group, also took aim at Qantas saying it had an uncompetitive stranglehold over the lucrative Sydney-Canberra government market.

It said it regretted the surcharge rises, effective from August 26.

The domestic flight surcharge will rise to $10, from $6 per sector, to be in line with the Qantas surcharge.

The levy on international flights will increase to $20 from $10, $2 less than Qantas' fee.

Virgin Blue and Qantas initially introduced the charges in May as airlines around the world imposed similar levies when oil rose to around $US40 a barrel.

Oil is now around $US48 while the cost of jet fuel has soared to more than $US55 a barrel, almost double what it was two years ago.

"Like many airlines globally, Virgin Blue's low fare mantra is being challenged by sky high fuel prices," head of communications and strategy David Huttner said. "We regret having to pass the cost on to the travelling public but, as a low fare airline, it is not viable for us to absorb such exorbitant increases in our costs."

Virgin Blue said the surcharges may be scrapped or cut if fuel prices return to lower levels.

Meanwhile, Virgin Blue will suspend services between Sydney and Canberra on September 4 due to the slow take up by the Commonwealth public servant sector.

Rival Qantas holds an "unhealthy" 95 per cent of the government market, it said.

"Our major competitor continues to have a stranglehold on the $300 million spent each year on air travel by Commonwealth officers," Mr Huttner said.

While there had been a small increase in Virgin Blue's share of the Commonwealth government market, it was not enough.

"While we apologise to our numerous cost conscious loyal supporters on the Sydney-Canberra service, we will not sustain a service where the dominant customer isn't giving all suppliers a fair go," Mr Huttner said.

"If solid improvement occurs then we will be able to review today's decision in the not too distant future."

The Sydney-Canberra aircraft will be redirected to Tasmania.

The airline has accumulated 1.127 million customers, increasing its momentum since June when passenger numbers rose 41.5 per cent and passed the one million mark for the first time.

The airline also reported a 52 per cent rise in revenue passenger kilometres - the number of paying passengers multiplied by kilometres flown - and a 61.3 per cent rise in capacity.

Features and Related Information
Virgin Blue
Qantas

 

 


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