Qantas chief executive Alan Joyce has predicted Virgin’s new scaled-back strategy will see his airline’s domestic market share increase from 60 to 70 per cent.
Speaking at the business’ AGM, Joyce also said border closures had cost the company $100 million and flights to the US and the UK are unlikely until the end of next year.
Joyce’s comments come just a week after Virgin’s current CEO, Paul Scurrah, apparently resigned to be replaced by former Jetstar boss Jayne Hrdlicka.
His departure is significant because he was synonymous with the airline’s plan to operate as a mid-market ‘hybrid’ rather than reverting back to being a low-cost carrier like predecessor Virgin Blue.
“Over time, our domestic market share is likely to increase organically from around 60 per cent to around 70 per cent, as our main competitor changes its strategy,” said Joyce referring to Virgin.
He also told shareholders that the “unexpected” closure of several domestic borders “delayed” the airline’s recovery.
“We had expected Group Domestic to be operating at about 60 per cent of pre-COVID levels by now. Instead, the continued border closures mean capacity is now below 30 per cent,” said Joyce.
“This delay resulted in a $100 million negative impact on earnings for the first quarter of FY21, and will have an impact on Q2 as well.
“Assuming Queensland opens to New South Wales in coming weeks, we expect Group Domestic capacity to reach up to 50 per cent by Christmas.
“We know that latent travel demand is strong. We saw that with our ‘scenic flight’ earlier this month, which sold out in 10 minutes. And we saw it when South Australia opened to New South Wales, with 20,000 seats selling across Qantas and Jetstar in just 36 hours.
“With most international travel off limits for a while, we’re expecting to see a boom in domestic tourism once more borders open up. The group is very well positioned to make the most of that opportunity.”
Chairman Richard Goyder added that WA and Queensland’s border closures don’t “seem to be based on the actual health risk” and “ignore the broader economic and social risk involved with staying shut”.
Earlier this month, Australian Aviation revealed how Queensland’s decision to reshut its border to NSW has bizarrely caused Brisbane to surge past Sydney and handle more than twice as many passengers per month as its larger rival.
The knock-on effect of Premier Annastacia Palaszczuk’s restrictions meant Brisbane clocked up 324,188 total passengers in August versus Sydney’s 129,000.
Significantly, the Queensland capital’s numbers were down only slightly from July (358,537) whereas the NSW capital’s collapsed 60 per cent (from 317,000). The next month, Sydney’s traffic continued to flatline.
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