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Business fares remain subdued after Virgin price drop

written by Hannah Dowling | May 16, 2022

Virgin Australia 737-8FE VH-YIV
A Virgin Australia 737-8FE lands at Melbourne YMML. (Victor Pody)

The average cost of business class tickets has continued to trend downwards after Virgin Australia dropped its cheapest business fares to just $299.

According to data released by the Bureau of Infrastructure and Transport Research Economics (BITRE), its monthly airfare index for business class fares in May sits at 46.6, down 28 per cent from May 2021, and down 14 per cent since January. The index has been consistently trending downwards since February.

The price index measures the lowest available fare in each fare class, weighted over selected routes, and has been compiled using flight booking data since 1992. Data from June 2003 represents the base index value of 100.0.

It comes after Virgin announced in April that it would lower its entry-point for business class fares to $299 one-way on selected routes, such as Melbourne-Sydney, Sydney-Brisbane and Melbourne-Gold Coast, while reducing business class fares across its wider network.

In August, Australian Aviation reported that business class fares hit a record low, however this trend continued throughout the rest of 2021 and into 2022.

Business class tickets hit a new all-time low in December, reaching just 39.6 on the BITRE index, before rising in both January and February, and then falling every month since.

Meanwhile, economy fares have appeared to remain largely stable, despite COVID disruptions and global fuel price hikes.

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The news comes as Virgin continues to make bullish moves in its attempt to secure business travellers off of full-service rival Qantas.

Last month, Virgin Australia unveiled its newest Business Flyer program, which offers a competitive alternative to Qantas, again upping the ante in the post-pandemic domestic aviation battle.

With no minimum spend to sign on and start earning points, it marks a significant deviation from Virgin’s previous “Business Accelerate” program, and places it more on par with Qantas’ recently overhauled Business Rewards program.

Offering up to 6 per cent off business class seats for Business Flyer program participants, it matches Qantas’ entry-level Business Rewards service.

While, unlike Qantas, it doesn’t offer steeper discounts to its most frequent of flyers, Virgin does have its rival beat by not requiring any sign-on or ongoing membership fees, and annual lounge memberships for just $379 – as opposed to Qantas’ $89 sign-on fee and $400 annual lounge membership plus $99 lounge sign-up fee.

Later in the month, the airline reopened its exclusive invite-only lounges in Sydney, Melbourne and Brisbane, catering hand-and-foot to Virgin’s high-rolling frequent flyers.

Previously dubbed The Club, the Beyond program is an exclusive, invite-only program reserved for Virgin’s high-status VIPs alongside its biggest corporate spenders.

The Club program was put on pause when Virgin entered administration in April 2020, and has since seen a major facelift, according to Virgin. However, two previous Club lounges in Canberra and Perth will not be reopened.

Lounges are accessed via an unmarked door, often hidden near Virgin’s domestic lounges, which can be opened using their Beyond program membership card.

Virgin CEO Jayne Hrdlicka said key aspects of the new lounge and its facilities were shaped in consultation with its most loyal guests and members.

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