Source: ATW Daily News Author: 07/21/2008
Subject Concerned: Airlines
Virgin Blue will remove two 737s from its domestic network by October, reducing capacity by an additional 3%, introduce new baggage fees and adjust certain fares in an effort to combat rising fuel costs.
There will be no layoffs associated with the new initiatives.
The airline unveiled a AU$50 million (US$48.8 million) cost-savings package in June that included a 6% capacity cut.
Last week's second round of initiatives also includes "significant" fare reductions on "baggage-heavy leisure routes" and a 5% increase in its Flexible Fares.
"The necessary introduction of baggage fees and the reduction of our lowest fares for our price sensitive Guests is anticipated to yield both improved demand levels and revenue," CEO Brett Godfrey said.
"In addition the airline continues to see encouraging support from the business sector and expects the increase in Flexible Fares to be revenue accretive."
Withdrawn aircraft will operate as maintenance spares and to support disruption recovery.
No destinations will be removed from the network.
The airline will realize an additional 3% in 2008-2009 through the deferral of five E-190 deliveries in 2009, lifting the overall capacity cut to 12%.
The new baggage policy will apply to Virgin Blue and Pacific Blue passengers buying Discount Fares on domestic flights beginning Sep. 1.
A fee of AU$8 will be charged for the first 23 kg. of luggage when pre-purchased online and will rise to AU$20 at airport check-in. Certain passengers and types of baggage are exempt. Each extra kg. will cost AU$8.
A new "Go Fare" will be introduced on Aug. 18, reducing lowest lead-in fares by up to AU$20 and allowing "price-sensitive travelers to offset the new baggage fees and to stimulate support for leisure markets."