Virgin Blue says can fend off Jetstar threat
Reuters
Posted 4/23/2004
Virgin Blue says can fend off Jetstar threat
BRISBANE (Reuters) — Richard Branson's budget Australian airline Virgin Blue says it can outlast any threat from rival Qantas Airways's domestic start-up Jetstar and expects to boost market share.
The discount carrier also flagged plans to add Noumea, the capital of New Caledonia, to its network.
Virgin Blue, which has snagged a third of the domestic market from incumbent Qantas in four years, said it did not expect Jetstar to chip away at its 33% domestic market share when the rival start-up takes to the skies in May.
"I'd be surprised if at Christmas we're not north of where we are today," Virgin Blue Chief Executive Brett Godfrey told Reuters in an interview.
Godfrey said in the event of a drawn-out domestic fare price war, Virgin was in a stronger position than Qantas because of its lower costs.
"If we stop taking a penny today, we can last about 150 days, whereas I think Qantas is somewhere around 70. So if there is going to be a fight then we have the staying power to outlast them," Godfrey said.
Ready for battle
Qantas launched its cut-price Jetstar in February by offering 100,000 seats at A$29 each. Virgin Blue responded the same day by releasing 200,000 seats at the same price.
Virgin's Godfrey added that he expected the airline to grow more than Qantas in percentage terms over the next three years.
Virgin listed in December and is 45% owned by Chris Corrigan's Patrick Corp Ltd transport group.
The airline launched its Pacific Blue international network with flights to Christchurch in New Zealand and hopes to begin flying to Fiji by September and on New Zealand domestic routes within 12 months.
"We've got a team in Noumea today talking to ministers and airport officials and I think there's every likelihood that we will end up doing something there," Godfrey said.
The company said last month it was on track to meet its A$150 million earnings target for the year to March 31. The airline is due to report its results on May 17.
"We put in our forecast and we've always met our targets," said Godfrey.
He denied rumors Virgin Blue was looking at buying into Malaysian budget carrier AirAsia, but said the company was eyeing Asia as a potential growth market.
Earlier this month, Qantas unveiled plans to enter the Asian budget air market with a 49.9% stake in a US$60 million Singapore-based carrier.
"There's 3.5 billion people within the range of an aeroplane from Singapore, Malaysia, Hong Kong or Bangkok and we have 20 million in our Australian market. So it would be irresponsible to not look at those opportunities in Asia," said Godfrey.
"But we're not in any specific discussions today that would suggest an announcement is imminent."
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