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ACCC reveals a plan to shield Virgin from Qantas dominance of the skies

Business

In a bid to increase competition and help Virgin back into the market,  the ACCC will allow Virgin Australia and Alliance Airlines to cooperate on 41 regional routes and two short-haul international routes.

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ACCC Commissioner Stephen Ridgeway said the agreement would mean that Virgin Australia and Alliance Airlines would not compete with each other on the routes covered by the agreement.

More than half the routes include a Queensland location.

He said the ACCC’s preliminary view was that these arrangements were likely to result in a public benefit by assisting in the re-establishment of Virgin Australia’s national network of routes, thereby promoting competition in airline services.

“Our preliminary view is that any public detriment resulting from reduced competition between Alliance Airlines and Virgin Australia is likely to be limited, given Alliance Airlines’ limited number of scheduled regular passenger services.

“We consider that other airlines, including Qantas Airways and Qantas-owned Jetstar, are likely to compete strongly with Alliance Airlines and Virgin Australia on many of the routes covered by the agreement.”

The agreement will cover 17 routes from Brisbane, including the major ones of Mackay, Emerald, Rockhampton, Mt Isa and Moranbah. Two international routes to Honiara and Port Moresby will also be covered. The Cairns to Darwin route and the Maroochydore flights to Cairns and Canberra are included.

Ridgeway said the COVID-19 pandemic had significantly disrupted the aviation industry in Australia and the interim authorisation would help initiate a more competitive aviation landscape as Australian consumers resume travelling and demand for flights increases.

The cooperation would allow Virgin and Alliance to share information as well as agree on service capacity, schedules and potentially revenue sharing on the routes on which they operate, including for new routes not currently serviced by either airline.

“Cooperating to provide services on these regional routes will assist Virgin Australia and Alliance Airlines to efficiently manage capacity and quickly respond to increases in demand as travel restrictions ease,” Ridgeway said.

“We acknowledge there is some urgency to this matter. A delay in Virgin Australia fully re-establishing its network, while other airlines are increasing services in response to greater demand as travel restrictions ease, is likely to result in less competitive markets.

“This is why we have given this arrangement interim authorisation while we consider the substantive application.”

 

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