Virgin Australia adds to full year costs, increases fuel surcharges



Competition, higher fuel prices and acquisitions raise costs.


Virgin Australia has updated its full year costs for FY2013 to approximately AU$100 million, as well as an increase to fares and international fuel surcharges.

The additional costs come as the consequence of Virgin Australia’s transition to the new Sabre booking and check-in platform, transaction costs relating to acquisition of Skywest Airlines and 60 percent of Tiger Airways up to 30 June 2013.

The added AU$64 million includes the original first-half cost estimations of AU$36 million and equates to approximately 2.4 percent of the airline’s total operating expenditure for FY2013.

Pre-tax costs of the carbon tax for FY2013 are estimated to be between AU$45 million and AU$50 million and were unable to be recovered due to weak economic conditions and the competitive environment.

Virgin Australia expects a statutory loss after tax of between AU$95 million and AU$110 million.

The airline also announced increases to fares and international fuel surcharges in response to higher fuel costs and the fall of the Australian dollar.

Virgin Australia’s fuel costs have risen by 13 percent over the past two months.

“In making these changes, we have been very conscious of balancing our commitment to providing competitive fares with the operational costs of our business,” Virgin Australia chief commercial officer Judith Crompton said.

“We will continue to closely monitor fuel prices and consider increases or decreases to our fuel surcharges and fares in line with changes in market conditions.”

For long-haul international flights each way to the United States, Europe and the Middle East; economy base fares will rise by AU$25 and premium economy by AU$35.

Business class fuel surcharges and base fares will increase by AU$50 each way to the United States, while a AU$65 rise will be imposed upon business class base fares each way to Europe and the Middle East.

The majority of short-haul international flights will incur a 3 percent increase in base fares, while domestic and regional base fares will also rise by an average of 3 percent.

The afore-mentioned changes will apply to tickets sold from 22 August 2013.

Source = ETB News: P.T.
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