Virgin calls for cost control
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Virgin calls for cost control
Sat "Melbourne Age"
Virgin calls for airport cost control
By Rod Myer
November 20, 2004
Airport charges could become more onerous for airlines than fuel costs unless the Australian Competition and Consumer Commission is given power to regulate them, according to Virgin Blue chief Brett Godfrey. Since airport costs were deregulated in the past two years, airport charges had risen "on average 80 to 110 per cent", Mr Godfrey said.
Virgin Blue, along with Qantas, has applied to the Australian Competition Tribunal to have the ACCC regulate airport prices following the Federal Government's move to allow airports to control their own prices for five years.
"There should be some sense in the situation," Mr Godfrey said. "It's an impediment to economic growth. The only people who are winning are the airports, which are legalised monopolies, and casinos, where the house always wins. Our airport costs have gone from 5 per cent to 15 per cent, and are costing us as much as aircraft ownership. But the value of our planes is over $3.5 billion."
The airport terminals Virgin paid to use were worth about $220 million following the Ansett collapse, he said.
Virgin Blue was not about to be taken over either by its major shareholder Patrick Corp or by Irish budget airline RyanAir, Mr Godfrey said. "I'd be very surprised," he said in response to rumours Patrick was about to offer $2.50 a share for the 50 per cent of Virgin Blue it does not own. He also denied speculation of a tie-up with RyanAir. (Wirraways bold)
The Competition Tribunal was now deliberating on the airlines' bid to get airports re-regulated. However, this might take six to 12 months, and airlines could not afford to wait that long, Mr Godfrey said. He called on Transport Minister John Anderson to exercise his powers to call the ACCC back to regulate airports, on the basis that price rises were not reasonable.
The only people who are winning are the airports, which are legalised monopolies, and casinos. BRETT GODFREY, Virgin BlueVirgin faced an uncertain second half but there had been some factors mitigating the bad news caused by high oil prices. Oil prices had weakened a little and the dollar had strengthened. "Thirty-five per cent of our costs - oil, aircraft and half of our maintenance - is priced in US dollars," Mr Godfrey said.
The airline had increased prices on some routes, especially those Qantas had dropped out of following the entry of low-cost operator Jetstar.
Virgin's increase in aircraft capacity had reduced margins in the last half. "We've raised our capacity 60 per cent and you can't go into any market and raise capacity by 60 per cent and expect nothing else to give," he said. However, "if we hadn't done it now we never would have been able to do it. We took a big punt to double the size of our business two years ago.
"Now we have one-third of the market.
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Virgin calls for airport cost control
By Rod Myer
November 20, 2004
Airport charges could become more onerous for airlines than fuel costs unless the Australian Competition and Consumer Commission is given power to regulate them, according to Virgin Blue chief Brett Godfrey. Since airport costs were deregulated in the past two years, airport charges had risen "on average 80 to 110 per cent", Mr Godfrey said.
Virgin Blue, along with Qantas, has applied to the Australian Competition Tribunal to have the ACCC regulate airport prices following the Federal Government's move to allow airports to control their own prices for five years.
"There should be some sense in the situation," Mr Godfrey said. "It's an impediment to economic growth. The only people who are winning are the airports, which are legalised monopolies, and casinos, where the house always wins. Our airport costs have gone from 5 per cent to 15 per cent, and are costing us as much as aircraft ownership. But the value of our planes is over $3.5 billion."
The airport terminals Virgin paid to use were worth about $220 million following the Ansett collapse, he said.
Virgin Blue was not about to be taken over either by its major shareholder Patrick Corp or by Irish budget airline RyanAir, Mr Godfrey said. "I'd be very surprised," he said in response to rumours Patrick was about to offer $2.50 a share for the 50 per cent of Virgin Blue it does not own. He also denied speculation of a tie-up with RyanAir. (Wirraways bold)
The Competition Tribunal was now deliberating on the airlines' bid to get airports re-regulated. However, this might take six to 12 months, and airlines could not afford to wait that long, Mr Godfrey said. He called on Transport Minister John Anderson to exercise his powers to call the ACCC back to regulate airports, on the basis that price rises were not reasonable.
The only people who are winning are the airports, which are legalised monopolies, and casinos. BRETT GODFREY, Virgin BlueVirgin faced an uncertain second half but there had been some factors mitigating the bad news caused by high oil prices. Oil prices had weakened a little and the dollar had strengthened. "Thirty-five per cent of our costs - oil, aircraft and half of our maintenance - is priced in US dollars," Mr Godfrey said.
The airline had increased prices on some routes, especially those Qantas had dropped out of following the entry of low-cost operator Jetstar.
Virgin's increase in aircraft capacity had reduced margins in the last half. "We've raised our capacity 60 per cent and you can't go into any market and raise capacity by 60 per cent and expect nothing else to give," he said. However, "if we hadn't done it now we never would have been able to do it. We took a big punt to double the size of our business two years ago.
"Now we have one-third of the market.
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