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Tuesday, October 13, 1998 Published at 09:58 GMT 10:58 UK

Business: The Company File

Virgin slashes air fares in BA price war

Richard Branson has thrown down the gauntlet to British Airways

Richard Branson has launched a price war with arch-rival British Airways by cutting fares on Virgin Atlantic in half.

The move will see the pre-tax price of return flights to New York cut to £140 from £310 and flights to Hong Kong slashed to £279 from £569.

Real Video: Robin Aitken reports
The cuts are a direct response to British Airways' own cut price offers.

BA is offering reduced price flights from October 28 but this involves collecting tokens before potential passengers can qualify for the discounted flights.

[ image: BA says it can offer more destinations]
BA says it can offer more destinations
The initiatives will cost airlines millions of pounds but bring long-haul travel prices to locations such as Hong Kong, Tokyo and Johannesburg within the easy reach of many holidaymakers for the first time.

Virgin's air fares have been deliberately set to undercut BA's discount offer by a few pounds and the offer will run from today until October 28.

Mr Branson said: "We will never be beaten by BA on price and will always offer better quality."

He added: "This is another war between Virgin and BA which proves that competition works and that the consumer is the ultimate victor."

A spokesman for BA echoed Mr Branson's comments.

[ image: Richard Branson: The consumer will be the victor]
Richard Branson: The consumer will be the victor
"We've always said, whether it's Richard Branson or anyone else, competition is healthy and it's the consumer who wins," he said.

But that was the end of any agreement between the two airlines and the BA spokesman pointed out that BA's offer through the newspapers covered 150 destinations and was "truly worldwide" while Virgin could only offer a handful of flights.

"Clearly Richard Branson will only be able to fly to 12 places just because Virgin is much smaller than BA," he said.

But Mr Branson had his own criticism to make of BA's scheme of offering the fares through a newspaper promotion.

"Virgin's new fares are the cheapest across the Atlantic and to take advantage of them you don't have to collect tokens you just need to call Virgin and book."

The BA spokesman also argued that the battle was not a true trans-Atlantic price war because Virgin had flights to far fewer US destinations than BA.

The price war will put immediate pressure on other airlines like American Airlines and Continental Air to try to match the BA and Virgin discounts.

Mr Branson admitted the offer was going to cost Virgin "a fortune" but a spokesman for the airline said the flights would still be profitable for Virgin.

Virgin - BA Price war

Return fares excluding taxes:

  • New York

    BA - £143 Virgin - £140

  • Hong Kong

    BA - £279 Virgin - £285

  • Boston

    BA - £143 Virgin - £140

  • Los Angeles

    BA - £168 Virgin - £167

  • Athens

    BA - £103 Virgin - £100

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