Aviation
Virgin Australia Shows Price War’s Costs
SYDNEY — When John Borghetti took the reins of Virgin Australia Holdings Ltd. in 2010 after being passed over for the top job at Qantas Airways Ltd., one of his first moves was to launch a price war to lure travelers away from its bigger rival.
The casualties from that price war are mounting—and not just at Qantas, which is cutting jobs and might sell assets to protect profits. On Thursday, Virgin Australia forecast a loss before tax of around 49 million Australian dollars (US$44 million) for the six months through December, after its shares recently fell to a two-year low.
Airlines often experience turbulence because of factors such as high jet-fuel costs and tepid demand, but investors are now questioning whether Virgin Australia’s woes have been self-inflicted. Its move to boost capacity and cut ticket prices prompted Qantas to defend its 65% share of the domestic aviation market by responding in kind.
The result was a glut of commercial jets in the skies over Australia, and increasing numbers on routes to farther-flung destinations.
So far, Virgin Australia’s biggest investors are staying on board. Australia’s No. 2 carrier counts Air New Zealand Ltd., Singapore Airlines Ltd., Etihad Airways and Richard Branson’s Virgin Group Ltd. as its main shareholders, which together own more than 70% of the company.
Smaller investors, however, aren’t so sure that Virgin Australia’s strategy is on the right path.
“It’s interesting to note that Virgin has competed more heavily, and to its own financial detriment, over the period that Virgin’s ownership by other airlines has increased,” said Angus Gluskie, Sydney-based managing director at White Funds Management, which holds a small amount of Virgin Australia stock.
“Investors should be questioning whether the longer-term interests of these airlines are becoming more important to Virgin than near-term profits,” he said.
Air New Zealand, Singapore Airlines and Etihad compete with Qantas on international routes. Late last year, all three Virgin Australia investors increased their holdings after the Brisbane-based carrier issued new shares to raise around A$350 million.
“We are fully supportive of Virgin Australia and its strategy and are confident that John Borghetti and his team will continue to attract more share of the travel wallet of both business and leisure customers,” an Air New Zealand spokesman said. A spokeswoman for Singapore Airlines said it continued to support Virgin’s strategy, while an Etihad spokesman wasn’t immediately available for comment.
Virgin Australia’s strategy has involved putting business-class seats on domestic flights and targeting routes that ferry workers in and out of mining towns in more-remote regions of the country. By the end of June, Virgin Australia was making more than 20% of its revenue from higher-margin business and government travelers, up from below 10% when Mr. Borghetti took over as Virgin Australia CEO after leaving as head of operations at Qantas.
Qantas suffered from the domestic competition, warning on Dec. 6 that it expected a pretax loss of up to A$300 million for the six months through December and would lay off a further 1,000 workers.
Virgin Australia investors, however, were concerned about the finances at the company. Several brokerages have downgraded their earnings forecasts for the airline, which reported a pretax profit of A$61 million for the six months through December 2012, following the Qantas announcement.
“When I talk to investors, there are some that raise questions,” said Mark Williams, a Sydney-based analyst at CIMB. “But management has done a pretty remarkable job at repositioning Virgin Australia in such a short period of time. It’s pretty tough out there, but over time we’d expect capacity growth will settle down.”
Thursday’s earnings forecast by Virgin Australia—issued following a request by the stock exchange to explain a recent sharp fall in its share price—excludes one-off losses associated with budget carrier Tigerair and restructuring costs, indicating its bottom-line figure may be even worse. However, shares rose 8% to recover some of the steep losses incurred in the past two weeks.
Matt Spence, an aviation analyst at Bank of America BAC +0.18% Merrill Lynch, said he doesn’t expect a turnaround any time soon. He predicts that Virgin Australia will post a pretax loss of A$120 million for the full year.
Still, Mr. Spence noted that Virgin Australia increased fares in December by as much as 4%, a sign the price war with Qantas may be easing,
Qantas is due to report its first-half earnings Feb. 27, a day earlier than Virgin Australia.
– WALLSTREET JOURNAL
The Airline Operators of Nigeria (AON) has declared that airlines operating in Nigeria have come under financial pressure following a sharp increase in the price of Jet-A1, also known as aviation fuel.
According to the group, the price of aviation fuel, has surged to about N1,800 per litre in many parts of the country, from about N1,000 per litre two weeks ago. This amounts to almost an 80 per cent increase within a short period.
Aviation fuel remains the largest cost component in airline operations, accounting for about 30 to 35 per cent of total operating expenses.
Industry stakeholders have linked the latest spike to the ongoing conflict in the Middle East, which has pushed up global energy prices.
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Speaking on Channels Television on Friday, the spokesperson for the Airline Operators of Nigeria, Prof Obiora Okonkwo, said the surge had placed airlines under severe financial strain.
According to him, most carriers have so far refrained from immediately transferring the additional cost burden to passengers, despite the pressure on their operations.
“Two weeks ago, we were getting Jet-A1 at about N1,000 per litre, which today is about N1,800, and even more in some stations. We have experienced an increase of about 80 per cent. That’s quite a spike,” Okonkwo said.
He explained that airlines were currently absorbing the losses in order to avoid worsening the economic burden on the travellers.
“We are not in a business where you can easily adjust your ticket price. Right now what we are doing is that we are bleeding. We are taking the blow. We are selling tickets at very non-profitable prices. We are losing a lot of money,” he said.
Okonkwo warned that the situation might not be sustainable if fuel prices continue to rise without government intervention.
“Obviously, adjustments will be expected anytime soon. But again, we are very sensitive to the economic situation of Nigerians and our travellers,” he added.
He noted that developments in the global oil market, particularly the recent release of reserve crude oil, could influence fuel prices in the coming weeks.
Okonkwo also urged the Federal Government to explore engagement with the Dangote Refinery as part of efforts to stabilise aviation fuel supply locally.
“We were more hopeless in a situation where there was no refinery in Nigeria in the last two years. Now that we have a refinery, we are hopeful that we can find a solution around it,” he said.
According to him, if the spike persists, some airlines may struggle to continue absorbing the losses associated with the rising cost of aviation fuel.
Meanwhile, the AON spokesperson also reacted to the decision by the Federal Competition and Consumer Protection Commission to sanction about five airlines over alleged price fixing.
Okonkwo said while the commission has regulatory powers, the aviation sector remains deregulated, making coordinated price fixing unlikely.
“There is no meeting of airlines where they agree to fix prices. Fixing prices would mean operating as a cartel, and that is not the case,” he said.
He explained that airline ticket pricing varies widely because different aircraft types attract different operating costs.
“Each airline determines its fares based on its own operational costs,” he said.
Okonkwo added that airlines must also demonstrate financial viability to regulators as part of the conditions for maintaining their operating licences.
“At every point in time, you must prove to the regulators that you are financially viable and capable of sustaining operations,” he said.
He urged regulators to take into account the fragile nature of the aviation industry when making policy decisions affecting airlines.
An Air Peace flight from Lagos to Port Harcourt has suffered a disruption, after the aircraft was affected by a bird strike on arrival at the Port Harcourt International Airport.
The airline made the disclosure on Thursday in a statement signed by its spokesperson, Osifo-Whiskey Efe.
He added that the incident necessitated safety checks on the affected aircraft and the deployment of another aircraft to convey passengers on subsequent flights.
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“We deeply empathise with passengers affected by this unforeseen incident and are working diligently to minimise disruptions,” Efe said.
The latest incident adds to the growing challenge of bird strikes faced by local airlines.
In December 2025, Air Peace disclosed that it recorded 49 bird strikes across Nigeria between January and September, stressing that even a single strike could ground an aircraft for weeks.
Chairman and Chief Executive Officer of the airline, Allen Onyema, had said on Arise TV that bird strikes constituted a major operational challenge, often leading to costly repairs and serious disruptions to flight schedules.
“One bird strike could cripple your aircraft for the next month. At that moment, there is no two ways about it. These bird strikes often lead to costly delays and serious disruptions in flight schedules,” he said.
He added that losses from such incidents compound other challenges facing Nigerian airlines, including heavy taxation and operational constraints.
With the firm belief that it is both sadistic and absolutely despicable, the recently announced outrageous hike in airfares to South East from Abuja to Lagos for Yuletide of 2025 by over 131 percent by Air Peace and United Nigeria Airlines, the owners have been asked to immediately have a rethink and review backward these harsh, toxic and unfriendly airfares targeting Igbo passengers exclusively.
Making the charge to the chairmen of Air Peace and United Nigeria airlines, Mr. Allen Ugochukwu and Mr. Obiora Okonkwo, the prominent civil rights advocacy group, Human Rights Writers Association of Nigeria (HURIWA) expressed anger that these businesses whose proprietors are Igbo by birth are fond of making it so difficult for hundreds of thousands of Igbo passengers residing outside of the South-East to travel home on Christmas festivities.
The rights group say that for many years now, because Air Peace and United Nigeria Airlines are monopolies and then Igbos have the tradition exclusively in Nigeria of going home to South East from all over the globe during Yuletides, these few airlines have decidedly fixed toxic ticketing airfares for Igbos whereas northerners who also travel during their religious festivities of salah are not subjected to such exploitative treatments.
The HURIWA accused the two airlines of price fixing, which is anti-competition just as the Rights group said it is giving these two Igbo-hating airlines to review backward their toxic and discriminatory airfares within ten working days from today or it will petition the federal government publicly funding consumer rights body[Federal Competition and Consumer Rights Commission) in Abuja.
The HURIWA wonders if these Igbo owners of private airlines known for making their planes available to government for free during emergencies are in a conspiratorial plots with haters of Igbo land who are unhappy at the convivial and happy atmospheres in the South East during Yuletide, just as the rights group has appealed to Igbo governors to immediately intervene and urge Mr. Allen Ugochukwu and Mr Obiora Okonkwo to treat the Igbo just as they treat for instance northern Muslims who also migrate home to northern Nigeria from around the globe during their Muslim festivities because what is good for the goose, is good for the gander.
The HURIWA said that if Air Peace Airlines have gotten involved in many humanitarian efforts of airlifting Nigerians from outside of our shores for free, it becomes of the Airline ought not to maltreat their clients of Igbo extraction.
The HURIWA quoted from the business official website of Air Peace in which it described its latest humanitarian effort to be an addition to a growing list of interventions by Dr. Allen Onyema and Air Peace.
Quoting Air Peace website, HURIWA stated that Air Peace said thus: “In 2019, the airline airlifted 503 Nigerians free of charge from South Africa amidst xenophobic attacks. During the COVID-19 pandemic in 2020, Air Peace conducted multiple repatriation flights. In 2022, the airline flew Nigerian evacuees out of war-torn Ukraine. In May 2023, Dr. Onyema again deployed Air Peace aircraft to evacuate 277 stranded Nigerians from Sudan.
As the rescued women prepare to begin a new chapter, supported by medical care and reintegration efforts, one truth stands out: Air Peace is more than just an airline — it is a bridge of hope for Nigerians in crisis, and a national symbol of empathy, courage and service,” HURIWA conclusively quoted Air Peace.
The HURIWA therefore strongly condemns the two airlines for hiking and fixing unaffordable airfares indiscriminately against Igbo passengers, even as the festive season draws near, Air Peace and United Nigeria Airlines have raised their return ticket fares to N677,000, a move that could add financial strain on travellers. The rise in airfares reflects the high demand expected during the holiday rush.
Key Points
Air Peace and United Nigeria increase return ticket fares to N677,000 for the yuletide season.
Airfares on routes to the South-East, including Enugu and Anambra, experience the highest surge.
Ibom Air offers comparatively cheaper tickets, with return fares at N381,600.
Air Peace’s one-way fare for December to January peaks at N350,500.
United Nigeria will also charge N350,500 for select routes between December 11 and the end of the year.
Northern routes, including Lagos-Kano, face smaller increases, with fares starting from N106,900.
Experts predict even higher airfares, with one-way tickets possibly reaching N500,000.
The rise in flight prices signals the start of a challenging holiday travel season, with airfares higher than usual due to increased demand. Travelers must be prepared for the surge, with some routes seeing even higher fare projections.
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The HURIWA is hereby warning the two airlines to withdraw their price fixing malpractices against Igbos or else the Rights group would seek justice and redress for the millions of Igbos who would return home for the 2025 Yuletide from the Federal Competition and Consumer Rights Commission and the National Human Rights Commission of Nigeria. The HURIWA threatened to drag the two airlines to the Nigerian President through the Honourable Minister of Aviation and Transportation.
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