The chief executive of Air Vanuatu has accused Virgin's Pacific Blue airline of using "predatory pricing" to increase its market share at the expense of the airline.
Terry Kerr says that with load factors down, and Melbourne having a seasonal flow to Vanuatu, it appears Pacific Blue is now trying to increase its load by flying passengers to Melbourne and Brisbane to join flights to Port Vila via Sydney at very low fares.
He says when Pacific Blue first started operating in Vanuatu it indicated it would only operate two services a week out of Melbourne.
Mr Kerr questions why after only five and half months Pacific Blue changed its plans when it's clearly not making a profit.
"Air Vanuatu's not adverse to competition but we do like a level playing field. However when it becomes obvious that we're dealing with predatory tactics, that's what we feel, and there's some intent on eroding our market share without significantly increasing the market, then of course we become concerned."
Air Vanuatu chief executive Terry Kerr