Virgin Blue appeals to travel agents for fare support

David Huttner, Head of Commercial, Virgin Blue, has sent the following open letter to the travel industry in which he accuses Qantas of "predatory activity".

Start of Letter

Dear Travel Industry Colleague,

We note with mixed feelings that we've moved our lowest Fair Fare on Brisbane-Sydney back to $55 OW on certain limited off-peak flights. While we are always in support of affordable fares, we clearly believe that it is difficult for both you and us to make money at these levels. Unfortunately, while Virgin Blue’s (and Ansett's) lowest fare on this route was $66 for the last few weeks, Qantas continued to offer $55 and has recently commissioned billboards to trumpet that fact.

This has all been done despite Qantas C.E.O. Geoff Dixon's comments that this fare level is well below what they have indicated is profitable for them. It is even more unfortunate for many agents that although our lowest fares are available to any travel agency with internet access (and for only $2 more by phone), Qantas does not offer their lowest airfares to agencies who have not been able to afford the latest Penzance booking engine. Additionally, many of you have told us that they are apparently issuing Agency Debit Memos in some scenarios where they are unsure abut how much they truly want to compete with us (despite their initial bluster).

Qantas has recently decided single handedly to lower their standard (non-sale) offer on Brisbane-Melbourne to $88 and on Adelaide-Melbourne to $66, but we won’t let them beat us. Nor do we think they can fool the Australian public into believing that they are suddenly a budget airline. In both cases we matched within 24 hours since Virgin will do what it takes to remain competitive. We have also drawn the ACCC's attention to both these actions as they clearly demonstrate what we believe to be predatory activity by Qantas.

We will be offering the $55 fares from Sydney to both Brisbane and the Gold Coast for purchase until June 30 for limited seats on off peak flight until October 27 at which point we will review the pricing structure further. While you may not earn much commission on these low fares, hopefully you can make it up with hotels, car rentals and other add-ons that can be sold to the increasing number of air travellers that have been flying since real competition entered the Australian skies.

Virgin Blue truly values the support we have received from the travel trade since our launch. We know we made the right decision by choosing to work with you and as Australia's only true blue low fare carrier, we want to continue doing so with sustainable and affordable fares for many years to come.

End of Letter