Virgin Australia’s real challenge is market share

Photo courtesy Bloomberg

Photo courtesy Bloomberg

FROM the lacklustre performance of Virgin Atlantic to the loss-making results of Virgin Australia, Singapore Airlines (SIA) must be questioning its investment luck.

Virgin Australia, in which SIA has a 19.9-per-cent stake, is cutting its forecast for the year for the second time since May. It is predicting a loss of A$110 million (US$98 million).

Virgin Australia chief executive John Borghetti attributed the expected poor performance to weak economic conditions, so what’s new? He said: “Aviation’s a tough game.”

So it is. As Australia’s second carrier, it still lags behind rival Qantas which has a 65-per-cent share of the domestic market – a market that it aims to improve its share of, teaming up with Tigerair. Mr Borghetti said the market, in particular, the leisure segment, “needed a lot of stimulating to get people to put their hands in their pocket.” While that may increase the pie, the real challenge to Virgin Australia is still one of getting a bigger slice of the pie.

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About David Leo
David Leo has more than 30 years of aviation experience, having served in senior management in one of the world's best airlines and airports. He continues to maintain a keen interest in the business, writes freelance and provides consultancy services in the field.

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