ACCC okays Virgin Australia/Alliance Airlines tie-up

The Australian Competition and Consumer Commission (ACCC) has approved, with no restrictions, a proposed partnership between Virgin Australia (VA, Brisbane Int’l) and Alliance Airlines (QQ, Brisbane Int’l) covering 41 domestic and international routes. The ACCC ruled that any potential adverse effects on competition in Australia were limited due to the lack of overlap of Virgin Australia’s and Alliance Airlines’ operations. In particular, the latter operates a small scheduled network. The ACCC also said that other carriers, primarily Qantas together with subsidiary Jetstar Airways, will continue to provide sufficient competition. “The ACCC considers that any potential impact of the Proposed Conduct on existing operators on the limited number of routes is likely to be outweighed by the broader pro-competitive effects likely to result from the Proposed Conduct,” the regulator said. Unless there are appeals, the authorisation will enter into force on April 30, 2021, and will be valid initially through the end of March 2023. The ACCC will review its public benefits by that time to decide whether to allow the cooperation to continue. The ACCC said the period of authorisation would permit a review once the post-COVID market development is more predictable. Virgin Australia welcomed the ruling, underlining that it would allow it to outsource thinner routes to Alliance Airlines, which operates Fokker Aircraft and E190s, and redeploy in-house B737 narrowbodies to higher-density routes “The partnership gives us the flexibility to coordinate and determine pricing, capacity and scheduling with Alliance, as well as the ability to better manage demand and ensure we’re flying the right aircraft on the right route,” General Manager (Network and Alliances) Jim Fuoco said. The cooperation will cover two international routes from Brisbane Int’l (to Honiara and Port Moresby) and 39 domestic services: 15 from Brisbane, three from Cairns, one from Canberra, two from Alice Springs, four from Melbourne Tullamarine, three from Adelaide, six from Sydney Kingsford Smith, six from Perth Int’l, and one from Cloncurry, QL. Rex – Regional Express submitted critical feedback during the consultations but its objections were largely dismissed by the ACCC. Qantas Group owns a 19.9% stake in Alliance Airlines and did not comment on the proposed cooperation. The ACCC is conducting a separate inquiry into the flag carrier’s acquisition of the stake.