Virgin eyes QantasLink’s Queensland contracts

Virgin Australia Holdings (ASX: VAH) has reportedly threatened to pull its 1200 staff out of its Brisbane headquarters.

The company is unhappy with its access to regional airports in Queensland, according to The Courier Mail. It has also been suggested that Virgin will look at speeding up growth in other regions, rather than Brisbane.

Qantas Airways (ASX: QAN) subsidiary, QantasLink has several routes that are either subsidised or regulated by the state government.  Some of those contracts are due for expiry next year, but Virgin said that the Department of Transport had informed them the contracts were going to be rolled over until 2014.

Related: Virgin gets approval for Skywest

Queensland Deputy Premier Jeff Seeney has told ABC Radio that the government would do everything it can to keep Virgin’s Australian headquarters in Brisbane, and it was possible that some of the routes could be opened up for competition.

That will be music to the ears of John Borghetti, Virgin’s chief executive. After spending 36 years working for the Flying Kangaroo, Mr Borghetti took the reins of Virgin in 2008, and has been taking the fight to Qantas ever since.

From targeting business travellers, frequent flyers, corporate customers, to inking a deal with budget airline Tiger Airways, and a takeover of Skywest Airlines (ASX: SXR), Virgin has been trying to take a big chunk of Qantas’ dominant market share. It’s estimated that Qantas has around 65% of the domestic air travel market.

In another blow for Qantas following the company severing its ties with Tourism Australia, Virgin and Tourism Australia have announced a doubling of their marketing partnership, from $6 million to $12 million.

Virgin’s 60% stake in Tiger has yet to be approved by the Australian Consumer and Competition Commission (ACCC), but will essentially mean that Australia returns to an airline duopoly and should allow both Virgin and Qantas to return to more sustainable capacity and pricing. In other words, prices are likely to go up, and the number of seats available to go down, as the need for the airlines to heavily discount tickets abates.

If you only invest in one company this year, make it our “Top Stock for 2012-13.” Operating in two hot markets — one set to double by 2012, the other predicted to grow 5x over the next five years — this stock is a solid growth play that also boasts strong recurring revenue, zero debt, and lots of cash. Get its name and full research case in this brand-new FREE report.

More reading

Motley Fool writer/analyst Mike King doesn’t own shares in any companies mentioned.  The Motley Fool ’s purpose is to help the world invest, better.  Take Stock  is The Motley Fool’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead.  Click here now  to request your free subscription, whilst it’s still available. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

Top 3 ASX Blue Chips To Buy For 2019

For many, blue chip stocks mean stability, profitability and regular dividends, often fully franked…

But knowing which blue chips to buy, and when, can be fraught with danger.

The Motley Fool’s in-house analyst team has poured over thousands of hours worth of proprietary research to bring you the names of The Motley Fool’s Top 3 Blue Chip Stocks for 2019.

Each one pays a fully franked dividend. The names of these Top 3 ASX Blue Chips are included in a specially prepared FREE report. But you will have to hurry. Depending on demand – and how quickly the share prices of these companies moves – we may be forced to remove this report.

See the 3 blue chip stocks

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss a very important event! Chief Investment Advisor Scott Phillips and his team at Motley Fool Share Advisor are about to reveal their latest official stock recommendation. The premium “buy alert” will be unveiled to members and you can be among the first to act on the tip.

Don’t let this opportunity pass you by – this is your chance to get in early!

Simply enter your email now to find out how you can get instant access.

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our Financial Services Guide (FSG) for more information.