Virgin chief executive John Borghetti warns they might reconsider recent multi-million dollar expansion into Northern Territory

VIRGIN chief executive John Borghetti has warned that they might reconsider their recent multi-million dollar expansion into the Northern Territory.

Deputy Premier Troy Grant welcomes Virgin CEO John Borghetti to Tamworth Airport, where the airline will now go in competition with Qantas. Picture by Peter Lorimer.

CONTROVERSIAL proposed changes to federal aviation regulations could have profound and unpredictable consequences in the Top End, with domestic airline bosses lobbying to block the changes.

The changes, flagged in the Harper competition review in May, would allow international airlines to land in Australia, picking up domestic passengers and continue on to a second domestic airport.

Virgin Australia CEO John Borghetti. Picture: Anthony Weate

The practice, known as cabotage, is currently banned in Australia, but has been proposed as a way of introducing more competition to domestic routes.

At a conference in Sydney late last week, News Corp Australia reported Virgin chief executive John Borghetti warned that, if the changes were approved, the company would be forced to reconsider its recent multimillion-dollar expansion into the NT.

“You have existing players who have invested tens of millions of dollars into these secondary (regional) places and in some cases are operating at a loss, but they provide good frequency and are sustainable,” Mr Borghetti said.

“To put that in jeopardy is an interesting proposition and not one I am sure I agree with.”

Qantas chief executive Alan Joyce has also been lobbying against the proposed changes, which could threaten Qantas and Virgin’s virtual duopoly on domestic routes.

Northern Territory Airport director of commercial and aviation development Jim Parashos said there would be undoubted consequences for several airlines’ business models.

“Those consequences will be passed on to our business as well,” he said, adding that the impacts were yet to be fully explored, and came as airlines and airports were lobbying the Federal Government on a wide range of reforms.

“I can’t think of one market where this makes complete sense,” he said, noting that carriers taking advantage of a Darwin stopover on the way to an international destination would be less appealing to customers wanting to fly direct.

Mr Parashos said there were other pieces of Federal Government reform that could boost tourism in the Top End, which have been the subject of recent lobbying efforts, including dropping visa fees and outgoing passenger charges.

“(Visa fees are) a huge disincentive for tourists and makes it very hard to sell Australia as a destination,” he said.

“The (Federal) Government also collects a $55 departure charge, no matter if you’re on a $2000 flight to London or a $120 flight to Bali.

“These are basic things which would be a real boost to tourism, particularly in the north.”