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So much for that fare war?

written by australianaviation.com.au | October 11, 2012

Cancellations have spiked as Qantas and Virgin Australia back away from a fare war.

Despite months of heated rhetoric and duelling plans to bolster domestic capacity, Qantas and Virgin Australia have apparently thought better of a fare war as they seek to preserve their bottom lines.

The Australian Financial Review reports that flight cancellations at both carriers spiked during August and September as they sought to bolster load factors. The two rivals had flagged plans to increase capacity on their busiest east coast routes by around 10 per cent this year in what analysts had described as a burgeoning fare war likely to drive down ticket prices and the airlines’ margine. In the end, neither carrier carriers appears to have had the stomach for the fight.

Qantas CEO Alan Joyce confirmed this week that his airline had begun backing away from the capacity increases.

“We will not reduce capacity to ensure the Qantas Group retains around 65 per cent of domestic market share, which is the profit maximising level for us,” he said.

Qantas is expected to replace 747 jumbo jets with refurbished 767s on its routes between the east coast and Perth, The Financial Review said.

Virgin cancellations spiked in August and continued through September, the newspaper said.

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