Virgin Australia sees challenging profit outlook on key routes with Rex entry

Virgin Australia expects the profit outlook for the Sydney-Melbourne-Brisbane triangle will be challenging for a long time as Regional Express Holdings Ltd (Rex) enters the market, Virgin's CE said Wednesday. Rex plans to launch Sydney-Melbourne flights in March in a challenge to Qantas Airways Ltd and Virgin and has begun selling seats for as little as A$79 ($58.70) each way to gain customers by undercutting its rivals. The so-called "golden triangle" of the Sydney-Melbourne, Sydney-Brisbane and Brisbane-Melbourne routes normally accounts for 40% of domestic aviation traffic. "It is a challenging outlook for the profit pool on the triangle for a long period of time because Virgin Australia has no intent of backing off that market share either," Virgin CE Jayne Hrdlicka said. "I think they (Rex) should expect it is going to be super-competitive since we are all rebuilding the market." As states re-open borders closed due to the pandemic, Virgin and Qantas are ramping up capacity on key routes. Virgin expects to reach 60% of its pre-coronavirus domestic capacity in January, while Qantas will reach 68% by the end of December.<br/>