Business Travelers Lift VA's Performance
EyeforTravel | Jun. 26, 2006
Virgin Atlantic has managed a pretax profit of 41.6 million pounds ($76.1 million) on record annual sales of 1.91 billion. (6/26/2006)
The carrier shared that a rise in business class travel helped more than double its pretax, pre-exceptional performance, which stood at 20.1 million pounds for the year ago period. Sales were up 17 percent for its financial year, which ended on February 28.
Carrying a record 4.9 million passengers, Virgin had a 2005-06 pre-tax, pre-exceptional items profit of ?1.6m ?more than double the figure for 2004-05.
Virgin's results announcement comes after reports that it was Virgin that blew the whistle?on British Airways which is now being investigated by the UK's Office of Fair Trading (OFT) and the US Department of Justice over alleged cartel activity involving BA and other airlines. Virgin has said that it is helping the OFT and the justice department with their inquiries.
Chief executive Steve Ridgway reportedly said the strong performance came on the back of a 10 percent increase in the number of passengers using its Upper Class cabin and the grabbing of market share on the North Atlantic.
According to media, Ridgway denied, however, that Virgin had used the fuel surcharge - like BA's, ?0 on a round-trip ticket - to bolster revenues. The fuel surcharge has not kept pace with the increased cost of fuel,?he reportedly said. It has only enabled us to recover around half of our fuel costs. Whereas fuel used to be around 15-16 percent of our costs it is now nearer 30 percent.?
Ridgway declined to comment in detail on why Virgin had blown the whistle on alleged conversations between it and BA, which prompted an OFT probe into alleged fuel surcharge price-fixing.
According to a report: BA and VA impose the same surcharge of pound stg. 35 ($87) per individual long-haul flight (pound stg. 70 for a return trip). While BA had often been among the leaders in raising the fuel surcharge, on some occasions Virgin Atlantic, its main long-haul competitor at Heathrow, had also taken the lead. On most occasions the other airlines quickly followed the lead of the first mover. Last September, VA raised the long-haul surcharge from pound stg. 24 to pound stg. 30. It was followed in the same week by BA with the same increase. Virgin lowered the surcharge again in November to pound stg. 25, but BA did not follow suit and in January Virgin returned to pound stg. 30. In March, VA raised the levy to pound stg. 35. BA followed to pound stg. 35 in April. The Office of Fair Trading said last week that the investigation was at a very early stage and that there should be no assumption that there had been any wrongdoing.?