Virgin Blue flies high in downturn, records 70 per cent growth in passenger traffic
23 May 2009
Virgin Blue is managing to more than hold its own against its rivals in the economic downturn thanks to the year-on-year rise in the number of passengers it carries although industry watchers continue to express concern about its chances of encouraging people to keep flying.
Figures released yesterday point to the airline gaining market share from its rivals. It carried just over 1.3 million travelers on its domestic network last month which was a 3.1 per cent rise on the figures for the same month a year ago. The number of passengers using the airline's local services rose to 13.6 million for the 10 months period ending April. The total so far for the same period is 5.6 per cent ahead on a year ago, indicating that the airline's offer of cheap fares was at least maintaining its hold on the market despite the recession in the economy.
Revenue also rose on a monthly and a year-on-year basis by more than 5 per cent in both cases. Load factors on average held through at 81 per cent – an indication of the capacity the airline managed to fill per flight.
On the airline's international services which now include its new Virgin Australia route to Los Angeles from Sydney, Virgin recorded a 62 per cent month-on-month rise in the number of passengers it carried, from 128,772 to 209,388. The year-on-year comparison was up 70 per cent to 1.78 million.
Monthly load factors declined from April 2008, dropping 7 per cent to 66.5 per cent as the number of available seats per km flown increased almost three fold in a reflection of the long-haul distances now flown between Australia and the west coast of America.
Virgin Australia's Los Angeles service to Brisbane has been extended, and, from September, it will begin flying out of Melbourne.
According to analysts, the addition of Virgin Australia's services was the main reason for the deterioration in load factors for the international division. However, these had at least helped the group boost the number of passengers it carried and the revenue generated.
Analysts add that the reasonably healthy figures from the domestic services also suggest an increase in corporate travelers trading down because of company expense budget cutbacks. Despite the encouraging results analysts remain skeptical about the airline's ability to maintain load factors and yields given the continued weakness in demand for air travel.
However, Virgin Blue has emerged as a formidable competitor especially for Quantas, analysts say. The reason they attribute for this is that the airline does not offer a tightly packed pseudo discounting fare structure like most low-cost carriers, but falls in the 'middle' market which is where the market seems to be moving.
It has become the airline of choice for Qantas passengers when confronted by the Jetstar-instead-of-Qantas prospect, or when they discover that the airline has an E-jet service on its Canberra routes that makes a Qantaslink turbo-prop seem outdated.
