Fares at 20-year lows as airlines battle for business

FARES for business-class seats on domestic flights are hovering near 20-year lows as Qantas and Virgin slug it out for the most lucrative passengers.

The latest government figures reveal that fares for business seats this month are almost a third cheaper in real terms than in 2003 - the base line for aviation statistics.

The figures, released yesterday, show that business fares this month - when adjusted for inflation - are about 40 per cent cheaper than in October last year, just before Virgin began an assault aimed at breaking Qantas' stranglehold on the corporate travel market.

The Bureau of Infrastructure, Transport and Regional Economics index shows business fares touched their lowest level in July when they were 35.8 per cent below the base line in 2003. They were also the cheapest since the bureau began keeping records on fares in October 1992.

This month they are only a touch above the lows reached in July.

The battle between budget airlines Jetstar and Tiger Airways also remains intense, which is keeping ticket prices down on domestic routes.

So-called ''best discount'' fares this month are almost a third cheaper than they were in 2003, and 9 per cent lower than in October last year. Tiger was still recovering in the latter part of last year from its forced grounding by the aviation watchdog due to safety concerns.

Virgin chief executive John Borghetti has described the discounting for business travellers as the most aggressive it has been since ''way before'' the collapse of Ansett in 2001.

Although Virgin has been able to boost its share of corporate travel, Corporate Travel Management chief executive Jamie Pherous said he believed it would become harder for Australia's second-largest airline after the ''easy market-share moves''.

Qantas has had a vice-like grip on the corporate travel market - estimated to be worth about $3.5 billion a year - since Ansett's collapse.

Mr Pherous said the demand from companies for air travel was steady, and a cut in interest rates this month was likely to give a boost to the sector. ''All in all, activity is very steady,'' he said.

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