REX considers pulling CBR-SYD
AAP
Virgin dumps Canberra service
Date: 24/08/04
Low-cost carrier Virgin Blue will axe its daily Canberra-Sydney service next week, and Regional Express is considering doing the same within weeks as a direct result of the failure of the Federal Government's "best fare of the day" policy.
The Federal Government set up the policy earlier this year as a means of providing the two privately owned commercial carriers with a larger share of Commonwealth Public Service air-travel business, estimated by Virgin Blue to be worth $300million a year.
However, the strategy has failed to generate any significant extra business for either airline, and Virgin Blue has lost patience and withdrawn its outward-bound morning service and inward-bound evening flight from September 4.
And Regional Express, which operates six weekday return flights to Sydney from Canberra, will wait on the results of independent research before making on decision on whether to cease the service, which has been described as "not financially viable".
Rex's chief executive officer, Geoff Breust, said the company should have enough information "to make a call on [whether or not to end the service] by mid- to late September".
Mr Breust said there was some dispute about the number of government travellers on the route, and the survey would "identify those [public-service travellers] once and for all".
Data supplied by the Department of Transport and Regional Services put the annual volume of airline travellers between Sydney and Canberra each year at almost 860,000.
Government departments have told Rex that 150,000 federal public servants a year use the route. But from its own data the airline believes the "pool" of PS travellers could be almost three times higher than the number quoted.
"The departments rely on information that is given to them by their travel managers, and the main travel manager is Qantas Business Travel," Mr Breust said.
Rex had lost "considerable money" on the Canberra-Sydney service "and we continue to make losses on it now".
"Our situation is that we would be well better off taking our aircraft somewhere else." He said that Rex had provided a maximum fare to all government departments and agencies. "That is a very competitive fare; it is actually a lower fare than our competitors on the route.
"We carried 60,000 passengers on the Sydney-Canberra route last year and that, in fact, is a very low load factor for us; only around 50 per cent.
Virgin Blue axed its Canberra-Sydney service after failing to attract any higher than a "low single digit" percentage of Federal Government travellers.
"While we have seen a small increase in our share of the Commonwealth Government market, it is the case that Qantas continues to have 95 per cent of that market, a most unhealthy situation and contrary to sound competition policy," Virgin Blue spokesman David Huttner said.
Mr Huttner hotly disputed the Department of Finance and Administration's claim on Monday that 14 per cent of federal public servants are using domestic airlines other than Qantas on the Sydney-Canberra route.
Copyright AAP 2004
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