Virgin Boss Challenges Qantas

Virgin’s chief operating officer Sean Donohue has challenged rival Qantas, saying Birgin can cut costs faster than its competition. If the competition for the corporate travelers market gets ugly, Virgin is more than willing to wage a price war.

Shares of Qantas dropped five percent yesterday to 98.5 cents. Just a month ago, the airline hit a record low of 97 cents before it rebounded to $1.005. In a stark contract, Virgin rose to 39 cents from 1.5 cents.

According to Donohue, Virgin would implement changes to ensure better operation efficiencies. It also affirmed its commitment to turn around planes in its Melbourne and Sydney flights in just 35 minutes. This is much faster than Qantas’ average of 55 minutes.

Qantas, however, refuted Virgin’s claims of a 35-minute turnaround. Qantas said this only applies to Virgin’s single-aisle planes but the 767 aircrafts take 40 minutes.

Qantas also said that the company remains confident with what it is offering to public.

Donohue said that while Virgin is not yet interested in engaging in price or capacity wars, the company is ready to wage these wars if needed. He added that he is confident that Virgin has a lower cost base than its rival and that the company can exploit other opportunities to widen that gap even further.

The airline industry is stepping up its game to get more the lucrative corporate accounts market. It is also facing challenges to lower its operational costs.

Donohue also said that the annual salary increases for Virgin employees would be at par with the manufacturing sector.