Qantas chief executive Alan Joyce says he will maintain his strategy of holding 65 per cent of Australia’s domestic air travel market despite criticism the capacity war is damaging the airline.

Mr Joyce blamed rival Virgin Australia for the glut of cheap seats in Australia, saying that in absolute seat terms Virgin had added more and that it was wrong to simplify his strategy as adding two aircraft for every one added by his competitor.

“The reality that we’ve had is that our competitor has added, in the last two and a half years, 18 percent capacity growth and Qantas has added half that,” Mr Joyce said at an Australia-Israel Chamber of Commerce lunch in Sydney.

“And they are losing money. Proportionally they are losing more money than Qantas is.”

Analysts have pointed to the damaging capacity war, which has forced airfares down, as a reason for Qantas’s financial woes.

Mr Joyce said he would not change his strategy because premium business customers wanted the regularity of flights now on offer and could switch airlines if any aspect of Qantas’s offering was beaten.

“We have to make sure that we are competitive in every single space,” he said.

“If we pulled back 10 per cent do you think our competitor, seeing that, wouldn’t add 10 percent in?” Mr Joyce, who was questioned by journalist Ross Greenwood during the lunchtime interview, also said he had the full support of the Qantas board and that he enjoyed a good relationship with the federal government.

He insisted he was not surprised by the federal government’s decision to refuse a debt guarantee for Qantas.

Mr Joyce also said Qantas staff understood the tough decisions he had to make to make Qantas viable, including plans to sack 5,000 workers.

“I’ve been getting lots of emails from staff saying they understand this is not easy, it’s tough, they understand that 5,000 jobs is a lot and it’s hard to do,” he said.