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CommSec: Virgin Australia Holdings (VAH) Report 2:46
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Virgin Australia (VAH) reported an underlying FY14 loss of $281.0m (incl. costs associated with losses from Tiger), roughly in-line with the markets expectations.
- news.com.au
- 29 Aug 2014
- Business
Price drop ... Virgin Australia passengers will see economy and premium economy fares fall by $40 each way on flights to Los Angeles. Source: News Corp Australia
VIRGIN Australia has become the first airline to react to months of declining jet fuel prices, announcing it will restructure its US airfares to reflect the savings.
Although it will not do away with the fuel surcharge altogether, the airline will incorporate fuel costs into fares the same as other operating expenses.
Flights from Brisbane and Sydney to Los Angeles, are the only routes Virgin Australia operates which attract a fuel surcharge of $680.
Fares revamp ... Virgin Australia CEO John Borghetti. Source: Supplied
As a result of the restructure, passengers will see economy and premium economy fares fall by $40 each way on flights to LA, and business class fares come down by $50.
“These reductions reflect the benefits of the decline in global oil prices along with the negative impact of the depreciating Australian dollar,” said a statement issued by Virgin Australia.
A recent update by the International Air Transport Association (IATA) revealed fuel prices had halved by the end of 2014, and then fallen an additional 17 per cent in January.
“Crude oil prices are now at their lowest level in six years, and jet fuel prices have followed suit,” reported the latest IATA financial monitor.
Qantas has consistently refused to reduce fuel surcharges despite reacting quickly when prices last climbed in July last year.
Today a spokesman said they continued to monitor surcharges but the bottom line for consumers was that Qantas fares in the market were already some of the cheapest in years.
“For instance, the price of a fare to London is about 30 percent lower than it was 10 years ago, adjusted for inflation,” he said.
Price war ... jet fuel charges could be the latest battleground for Qantas and Virgin Australia. Source: News Corp Australia
In response to Virgin’s announcement, Qantas has slashed overseas fares to a number of destinations by as much as $527 (Sydney-London).
However an investigation by the Australian Competition and Consumer Commission could increase pressure on Qantas to do more.
ACCC chairman Rod Sims announced last week the watchdog would investigate what has been “said and done at various times in relation to fuel surcharges”.
“It is not against the law to introduce a surcharge — what is against the law is to mislead customers,” said Mr Sims.
Virgin Australia’s announcement came on the back of new on time performance figures for Australian domestic carriers showing the revamped airline is most punctual in the country.
For the second month in a row, Virgin Australia recorded the best on-time performance for departures and arrivals, ahead of Qantas.
On time ... Virgin Australia is the most punctual in the country, latest data shows. Source: Supplied
Jetstar posted the worst result with one in four departures and arrivals running at least 15-minutes behind schedule.
A Virgin Australia spokesman said they were pleased with the results.
“We know how important on time performance is to our customers and this continues to be a key priority for Virgin Australia,” he said.
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