Better pricing can drive Australian airlines' recovery: Hogan

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Etihad Airways chief executive James Hogan is confident that Australia’s two troubled airlines – Qantas and Virgin Australia – will be able to return to profitability, and expects that to be facilitated through higher pricing.

The Abu Dhabi carrier has a vested interest in the region through its 19.9% share in Virgin Australia. Last month, the Australian airline – with which Etihad also has a codeshare partnership – disclosed a pre-tax loss of A$49.7 million ($44.6 million) for the six months ended 31 December, the first half of its 2014 financial year.

Virgin Australia is locked in a fierce turf war with flag carrier Qantas, which last week unveiled a A$2 billion cost-cutting and restructuring programme after reporting an underlying loss of A$252 million for the first half of its 2014 financial year. Qantas has complained about the amount of foreign ownership its rival benefits from, which amounts to almost 70% from overseas shareholders Etihad, Singapore Airlines and Air New Zealand.

“Both airlines are losing money. We have a view that both airlines should be successful – they’re both great brands in their own right,” says Hogan.

“At some point the market needs to correct – that’s usually in the form of pricing – to ensure that they move back to a profitable level. But that’s in the hands of their respective management teams,” he adds.