Webjet CEO flags ‘challenging’ environment as Virgin cuts commissions

Travellers looking for cheap flights on Webjet may find fewer airfare deals in the future after Virgin Australia slashed the commissions it pays the online travel agent to cut out the middleman and send consumers directly to the airline site to maximise sales.

The move is compounding headwinds for Webjet, which warned investors on Wednesday that operating conditions will remain “fluid and challenging” amid the ongoing war in the Middle East, inflation pressures and low consumer sentiment. The company posted a 20 per cent earnings slump, is scrambling to keep up with technology and is battling upheaval in its management ranks.

Underlying pretax earnings fell to $28.1 million in the year ended March 31, down from $35 million in the previous year, due to “a challenging macro environment and softer trading conditions”, the company said in a statement to the ASX.

The Iran war and the resulting oil price shock have markedly affected bookings, CEO Katrina Barry said.

“We continue to see leisure travel in Australia constrained by elevated airfares and low consumer confidence and leisure travel internationally flowing towards shorter-haul Asia and Pacific destinations,” she said. “The macro environment remains really challenging, and we’ve had some internal challenges as well.”

Barry said that while Virgin remained a valuable partner, if the airline had already cut its commissions in fiscal year 2026, it would have cost Webjet $3 million in revenue, she said.

Across the entire group – which also including Trip Ninja, business travel – bookings were down to 1.4 million in 2026 from 1.5 million the previous year. The total transaction value slipped to $1.46 billion from $1.5 billion.

Within its online travel agency sector, revenue was flat at $115.3 million, essentially unchanged from the previous year.

Domestic flight bookings were down 10 per cent, “impacted by elevated fares and pressures”, while international flight bookings rose 1 per cent, “with growth skewed to short-haul”, the airline said.

Webjet, one of the pioneers of online travel agencies, has seen its shares fall 44 per cent since the start of the year, on concerns for its outlook.

The company has been at the centre of speculation both over its leadership and future ownership.

In March, Barry resigned less than two years after taking the role, as a lawsuit from the online travel agent’s former legal boss was heating up and suitors continued to circle the company as a takeover target.

Ariadne Australia and BGH Capital were vying for control of Webjet against Helloworld. Shares in the company dived in February after Webjet fended offers from the two groups, which have since backed away from any combined plans for ownership.

The travel industry itself is dealing with the fallout of continued disruption by new marketing technology and shifts in consumer preference.

While Webjet pioneered the OTA model in Australia, its model has risked being outmoded by larger competitors with more scale, like Flight Centre, or the airlines themselves marketing vacations, such as Qantas and now Virgin.

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