Virgin defends Tiger approach

Virgin Australia chief executive John Borghetti insists his airline's bid to take control of Tiger Australia will prevent Jetstar from creating a monopoly at the leisure end of the country's air travel market.

Virgin Australia chief executive John Borghetti insists his airline's bid to take control of Tiger Australia will prevent Jetstar from creating a monopoly at the leisure end of the country's air travel market.

As he faces a longer wait than expected for a decision from the regulator on the deal, Mr Borghetti also made it clear that Tiger's Singaporean parent was serious about its threat to pull out of Australia if Virgin was prevented from taking a 60 per cent stake in the budget airline.

The competition regulator delayed making a decision last week on Virgin's bid because it wanted more information on the deal from Australia's second-largest airline.

Mr Borghetti said Jetstar had been focused on an "enormous expansion" in the domestic market, and the Tiger deal would "stop the budget market becoming a monopoly".

"It allows us to go back and compete, and do what we did so well when we were Virgin Blue at the bottom end of the market," he said.

"It is good for us, it is good for the market, it stops a monopoly - that is pretty compelling."

The regulator has raised reservations about the deal because it will effectively return the country to an airline duopoly between Qantas and Virgin. But Mr Borghetti has threatened to walk away from the proposed bid if the regulator forces the airline to commit to increasing Tiger's fleet over the next five years.

Virgin's $100 million bid for West Australian regional airline Skywest cleared a further hurdle on Wednesday when its shareholders voted overwhelmingly in favour of the deal.

As Virgin reinvents itself as a full-fledged premium airline, its bids for Skywest and Tiger are aimed at ensuring it competes against Qantas and its offshoots in other segments of the market.

Virgin took another step towards upping the ante on Qantas in the lucrative corporate travel market by opening its first lounge at Canberra Airport on Wednesday. It also has its own version of the invitation-only Qantas Chairman's Lounge at the airport, which is known as The Club. On Wednesday, Canberra Airport opened the west wing of its terminal, as part of a $480 million redevelopment. The west wing houses the operations of Virgin and regional airlines.

Mr Borghetti said the new lounge and the expansion of others around the country, including in Melbourne and Sydney, would help Virgin "turbo-charge" its assault on the corporate and government travel market.

Virgin's growth in the higher-yielding segment of the market had accelerated since November, Mr Borghetti said, citing the switch by four companies, including Origin Energy, of their entire air travel accounts from Qantas to its rival.

An important front in the battle between Qantas and Virgin in the domestic market has been the transcontinental route between the east coast and Perth.

Qantas is upgrading its fleet of A330 aircraft that are used on the route.

* The reporter travelled to Canberra courtesy of Virgin.

Related Articles