Branson promises travellers new price war on London to Sydney air route

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The Independent Online

Virgin Atlantic is to launch a price war on the "Kangaroo route" between London and Sydney, pledging to cut fares by up to one-third.

Speaking as the airline began services to Australia via Hong Kong, the chairman of Virgin, Sir Richard Branson, said the three other carriers on the route, British Airways, Qantas and Cathay Pacific, had kept fares artificially high. He said: "Having a fourth carrier on the route will mean a lot more competition and prices will definitely come down. There could be reductions of 30 per cent at some times of the year, or perhaps even more. In the corporate market, the price of fares will come down quite dramatically."

Virgin is aiming to carry about 300,000 passengers a year but could double that if it gets permission to move to two flights a day and add an extra leg to Melbourne.

At peak times an economy return flight to Sydney will cost £1,121, which will be reduced to £805 during off-peak periods. Virgin's upper-class fare will be £5,242 at peak periods and £3,361 during off-peak times.

The airline is aiming to make the new service the springboard for a massive expansion of the Virgin brand in South-east Asia. Virgin is thought to be in talks about the possibility of launching a low-cost airline, modelled on Virgin Blue, in partnership with the regional carrier Air Macau. Sir Richard also said Virgin Mobile planned to enter the Chinese market next year and was in talks with a number of potential joint venture partners.

He said the size of the Virgin Atlantic fleet could increase more than threefold to 100 aircraft over the next five years to cater for the airline's ambitious growth plan, which will see it expand by 10 to 15 per cent a year. The airline has 29 aircraft in service with a further 24 on order, including seven Airbus A380 superjumbos, and would like to increase its 29-strong route network to include Dubai Bangkok, Chicago, Toronto, Jamaica and Nairobi.

In addition to launching a national airline in Nigeria, which will be 49 per cent-owned by Virgin, Sir Richard is in talks to enter the Indian market, either by starting an airline or partnering with an existing carrier. In addition, Virgin America, its new low-cost US airline, will begin services late next year.

The airline's longer-term goal is to launch transatlantic services from European cities such as Paris, Amsterdam, Rome and Frankfurt when an "open skies" pact is agreed between the European Union and the US. Sir Richard said he believed a breakthrough was possible in the "near future". However, he cautioned that Brussels did not allow itself to be "bullied" into signing an agreement that favoured US carriers. He said: "There is an enormous amount of will on the part of the European Commission to see open skies come about, but what we don't want to see it do is sell out to America."