CARBON PRICE IMPACT

Commencing from July 2012 a fixed carbon price of $23 / tonne has been proposed impacting domestic airlines through an increase in the aviation fuel excise.

Based on Virgin Australia’s current domestic fuel consumption, the estimated cost impact in FY13 is around $45 million.

Virgin Australia will not be able to absorb the additional costs of the price on carbon and consequently these costs will be passed in full to consumers. Initial modelling indicates an average domestic fare increase per flight sector of approximately $3 which will vary depending on sector length.

It is too early for us to accurately forecast the impact of passenger demand as a consequence of the carbon price regime. Any change in fares as a result of the proposed price on carbon will be communicated to customers.