Qantas's worst fears of further losing share of the lucrative domestic market were confirmed. Aviation industry reports said that Virgin Australia ferried more domestic passengers in the past 12 months to May compared to Qantas.

The upstart Virgin carried 15.52 million domestic passengers versus Qantas's 15.49 million. For the month of May alone, Virgin also zoomed past the flag carrier with 1.42 million flyers as compared to 1.37 million for Qantas.

The figures, however, excluded the 9.84 million passengers who flew on Jetstar, Qantas's budget carrier. The drop in Qantas's domestic passengers is partly due to the carrier's two-day grounding of its fleet in October 2011.

Despite its losing international operations, Qantas carried a total of 43 million passengers which includes those who flow on its international flights, while Virgin totaled only 17.8 million travelers ferried in its domestic and international trips.

As a result of the nosediving Qantas operations, the airline's profit yields suffered declines for both domestic and international operations.

Virgin Australia, as well as comebacking Tiger Airways, hopes to further increase their market share by adding more capacity. Virgin also entered into code sharing agreements with Virgin America which takes effect July 17.

Qantas, however, disputed the report that it lost to Virgin. The flag carrier said the figure excludes Jetstar and QantasLink which carried 20.25 million passengers.

Qantas Chief Executive Alan Joyce had actually separated the company's operations into four, namely: domestic and international operations, Jetstar and frequent flyer programme.

To worsen Qantas's declining financial situation, more competition is in the horizon following the launch by Emirates of four weekly flights to Adelaide by November 1 using Boeing 777-300ER jets. Beginning Feb 1, 2013, the four trips will become daily flights.

Emirates also plans to grow its capacity to Melbourne with the introduction of daily A380 services in October, plus additions to current double-decker flights into Sydney.

Qantas, however, has battle the growing share of Middle Eastern airlines in the international market by entering into a formal alliance with Qatar Airways in 2013. Qatar Airways executives are set to discuss with Qantas senior officials next week the strategic alliance between the two airlines, said Qatar Airways Chief Executive Officer Akbar Al Baker.

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