Business class fares in Australia have dropped by 25 percent in an airline price war and might drop further, Virgin Australia's chief executive John Borghetti says.
Already competing for domestic economy class capacity, Mr Borghetti has declared plans to target Qantas's business class travellers and capture at least 20 percent of the corporate travel market.
He said prices had remained very high in business class, increasing at the top end as economy fares dropped by more than half in the past decade.
However, he would not be drawn on whether the reduced business fares had stopped that part of the company being profitable.
"There was no competition at the top end since Ansett stopped flying," Mr Borghetti told ABC TV's Inside Business, adding that it was right there was a price war.
"So we deliberately entered that market and we know that the fares were very high and we could bring competition at lower fares with better service and that's exactly what we have done.
"We're comfortable with that level, but we'll be competitive and if the fares drop further, we'll be competitive in that market."
Mr Borghetti is targeting corporate travellers because he says Virgin is currently too exposed to discretionary spending by leisure customers.
When asked whether the business was still profitable at a 25 percent discount, he said people had to look at the profitability of the business as a whole.
"People forget that there is the halo effect of the product and the brand that brings profitability as well, but I'm not going to talk about profitability with our results coming up in two or three weeks," Mr Borghetti said.
Qantas does have the advantage of its Chairman's Lounge, but Mr Borghetti — who worked at Qantas for 35 years — would also not be drawn on whether he would do that at Virgin.
The airline is believed to be planning a club for VIP travellers, as a companion to its frequent flyer membership club, The Lounge.
Meanwhile, Mr Borghetti said Etihad Airways' approval to lift its stake in Virgin Australia to 10 percent from a current 4.9 percent last week would not alter their alliance partnership.
"Since we formed this alliance and it's not just Etihad, it's Singapore airlines, it's Air New Zealand, and it's Delta, the amount of money we are getting on our domestic network has more than doubled, in fact it's almost trebled," he said.