Finance Futures Essay
In a tightening domestic environment, Virgin has grabbed a bigger slice of the lucrative corporate and government market while still catering to budget flyers.
But things could be about to get tougher for Virgin, with Singapore's budget carrier Tiger Airways likely to become a new competitor.
More from our Business Editor Peter Ryan.
PETER RYAN: When Virgin Blue filled the void left by the collapse of Ansett, the emphasis was on cheap fares, no frills and bring your own food.
But in late 2005 with the launch of the budget competitor Jetstar, Virgin Blue changed its flight plan.
Chief executive Brett Godfrey was convinced there could be only one winner in a cut-price fare war.
BRETT GODFREY: We certainly never …show more content…
Virgin has raised its full year profit forecast after locking in fuel costs and filling more seats.
But Brett Godfrey warns that in aviation there's always the chance of some turbulence ahead.
BRETT GODFREY: We acknowledge that this airline, nor any airline, will ever be bulletproof, in particular to this market for the reasons I just mentioned earlier.
SARS has brought even the best airlines in the world to its knees, as have a number of other issues surrounding terrorism and whatnot. But we, I think… I believe quite strongly, are as prepared as possible for the future.
PETER RYAN: One potential threat on the horizon is the Singapore cut price carrier Tiger Airways which wants to become Australia's third domestic carrier.
Brett Godfrey doesn't see a threat but Tiger's bold positioning appeared to touch a competitive nerve.
BRETT GODFREY: I mean, spare us… they're coming with five aeroplanes. And they've been talking about $10 fares and $40 fares and the reality is Australia is not Asia, it's a different market, and for people to talk of $10 fares, well, guess what - we gave away 25,000 $1 fares just a few months back, and if they match that, that would basically be about 14 days worth of flying for them.
They're not going to last