We won't chase market share, Virgin vows

We won't chase market share, Virgin vows
By admin


Virgin Australia has insisted it will not battle rival Qantas for domestic market share, as it pointed to signs that the “tremendous” capacity growth that has flooded the market over the last year is now easing.

Chief operating officer Sean Donohue told delegates at the Australia Pacific Aviation Summit that the airline has spent the last two years addressing various opportunities available on the golden triangle routes of Sydney, Melbourne and Brisbane along with other key business markets.

“But that’s not just about capacity – it’s about improving product and earning that business,” he insisted.

“There was a tremendous amount of capacity growth particularly in Sydney and Melbourne by a competitor but we did not grow nearly at that rate because we did not think it was necessary or the right decision.”

“We are not an airline that is chasing market share. We’re going to make decisions in order to become the airline of choice and deliver the best results for all our stakeholders and we don’t think chasing market share is necessarily the way to do that.”

Instead, the airline will focus on investing in its staff which it considers a major part in its strategy to win consumers loyalty, with Donohue welcoming signs the capacity frenzy has started to calm.

Continued capacity growth would place pressure on Virgin’s yields and negatively impact its strategy to improve cost efficiencies, he said.

Meanwhile, Donohue dismissed concerns over Virgin’s profit warning issued earlier this week, which forecast a loss of between $95 million and $110 million, stressing the result is down to one-off expenses.

He pointed to a decline in costs in the first half of the year as a sign of its underlying efficiency.

“It’s important to note that there is a distinction between one-time cost and your overall cost efficiency,” he said. “We continue to have a good cost efficiency platform and we continue to be very focused on that.”

Along with acquisition costs of Skywest and Tigerair along with the carbon tax, the airline’s transition to the Sabre platform earlier this year has accounted for much of those “one-time” costs.

While Donohue admitted the switch had been a considerable task, he highlighted its benefits as a three-fold increase in “high-yielding” GDS bookings and increased access to travel management companies to fuel its corporate growth.

He insisted Virgin is "delighted" with its new hosting platform, despite a two hour malfunction earlier this week which saw its passengers faced with delays and cancellations.

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