Virgin Australia's profit falls despite reaping the benefits of its global alliance network

Virgin Australia is reaping the benefits of its global network of alliances, with a strong increase in interline and codeshare revenue in the six months to 31-Dec-2012, but lower yields in the embattled Australian domestic market meant the carrier posted a sharply reduced tax-paid profit of AUD23 million (USD23.6 million).

The carrier blames most of the AUD28.8 million (USD29.6 million) profit reduction on the introduction of the carbon tax levied on domestic flying. Lower domestic yields in a market suffering from over-capacity meant Virgin Australia was not able to recoup the AUD24.4 million of carbon tax through fares. The first half of FY2012 was also inflated by a one-off approximately AUD6 million gain from the Qantas grounding in Oct-2011.

Revenue growth slowed to 5.4% in the first half in FY2012 to AUD2.1 billion (USD2.16 billion), from 18% growth in the first half of FY2011, despite a flood of capacity entering the market as Virgin Australia and Qantas battled for government and corporate market share.