Regional deregulation delay causes angst

VIRGIN AUSTRALIA has threatened to speed up its growth in other parts of Australia after expressing frustration that a decision to open up routes to regional airports in Queensland was being delayed.

The airline wanted to tender for several regulated and subsidised routes in regional Queensland when contracts with QantasLink, Rex and Skytrans expire next year, but said it was told the Department of Transport was rolling over the agreements for two years.

Virgin said that contrary to some reports, it had no intention of pulling its 1200 staff out of Brisbane.

"Competition brought about by deregulating markets will no doubt bring lower fares and deliver better access to regional communities, reduce costs to business and boost tourism," said Virgin's head of corporate affairs, Danielle Keighery. "If regulation is to continue on certain routes, they need to be put out to tender in a transparent process."

The Queensland Premier, Campbell Newman, said the government was not favouring Virgin's rivals.

"The point is that we are a government that believes in deregulation of air routes and that's what's going to happen," he said.

The Deputy Premier, Jeff Seeney, said Virgin had a legitimate claim, as some regional routes such as Cairns to Weipa and Brisbane to Roma had become commercially viable. The Brisbane to Roma route served about 150,000 passengers last year, with a return fare of about $730.

Virgin's chief executive, John Borghetti, is to meet Mr Newman to discuss the matter.

Meanwhile, Virgin has stepped in to help fill a void in funding for Tourism Australia's marketing campaigns, sealing a $12 million, three-year deal with the tourism body after Qantas's surprise decision to cut financial ties.

Qantas severed its 40-year partnership with the tourism agency in November, saying its chairman, Geoff Dixon, who ran the airline from 2001 to 2008, was in a position of "untenable potential conflict" in being linked to a rebel group agitating for a change of direction at the national carrier.