High house prices and negative media coverage of the economy are among factors making people think twice about booking a holiday, Virgin Australia chief executive John Borghetti says.
Mr Borghetti told shareholders at the airline's annual general meeting in Brisbane on Wednesday that trading conditions remained challenging.
Speaking after the AGM, the Virgin boss told reporters that weak consumer and business sentiment in Australia were behind soft consumer spending.
The media's focus on economic gloom spreads "negativity through the community" and, along with rising house prices, makes people hesitant to spend, he said.
"Just think about house prices - the way prices have gone up: it means that if you're a young couple who were going to take a holiday and buy a house, now they are saying 'we can't afford to take that holiday because the house is going to be more expensive and we have to save more money to put on the deposit'," he said.
"Situations like that, along with everything else that is happening, is causing a soft market."
He said Virgin is actively managing its domestic and international capacity with a focus on growth markets amid the tough conditions.
"America and Asia, for us internationally, is our future," he said.
Donald Trump's surprise US presidential victory has not affected Virgin's passengers numbers to America, and it is unclear if it will because 'no one really knows what he's going to do," Mr Borghetti said.
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