Virgin Blue has followed Qantas with air fare increases of its own.
Virgin said yesterday that it will "reluctantly implement a price increase across its network following the continued and unprecedented increase in jet fuel prices.
The airline said it will increase Virgin Blue one-way Australian domestic fares between AUD$5-$10, based upon flight sector length. Pacific Blue Trans-Tasman and short haul international fares will increase between $5-$15. New Zealand domestic fares currently remain under review.
Qantas announced Monday that it was increasing Qantas and Qantaslink domestic fares by 3.5%, international fares by 3%, while overseas solid fares were under review. Jetstar was looking at its pricing structure as well.
Virgin hinted that fares could rise in a statement to the ASX on April 11 after jet fuel prices escalated to in excess of US$135.
The airline said that continuing to absorb excessive fuel costs was an untenable position should fuel prices remain at that level. Jet fuel has since continued to increase and has now reached US$144 per barrel.
Virgin Blue has downgraded 2008 earnings, but Qantas is maintaining its guidance of a 40% rise in pre tax earnings for the year to June. Air New Zealand has also downgraded its earnings forecast.
The new fares will come into effect progressively from Tuesday 6 May 2008 giving travellers time to get in and make bookings at current pricing levels. Qantas fares are due to rise from May 9.
Virgin Blue shares eased 1.5 cents to a new low of 83.5 cents, Qantas shares dropped 8c to $3.33 and Air New Zealand shares in Australia rose half a cent to 98.5 cents.
