Virgin Atlantic launches a price war
01/13/2009|10:53:00 AM|Eyefortravel
Published: 12 Jan 2009: Virgin Atlantic has reduced the cost of flights in its business class cabin by up to 40 percent.

In an attempt to secure bookings as the economic downturn deepens, Virgin has decided to slash Upper Class fares.

Return flights to New York in business class are expected to be reduced by 40 percent to £1,099, while services to Boston will be available from £1,199, representing a price cut of 38 percent. BA is expected to follow suit by reducing its business class prices, despite stating in the past that it is opposed to cut-price premium services, according to Reuters.

Andrew Fitchie, an aviation analyst at Collins Stewart, the broker, reportedly said: "It is a bit unnerving to see this level of discounting going on because they wouldn´t be doing it without reason. Most of this cut is marketing and advertising driven, but if it feeds through to real price disruption, then that will start to affect margins."

Recently, British Airways witnessed a fall in premium passenger traffic in December. Traffic comprised a 12.1 percent decrease in premium traffic and a 1.7 percent fall in non-premium traffic. The airline´s premium traffic volumes have been falling heavily for four months but the pace of the decline accelerated in December with a drop of 12.1 percent year-on year.