Alliance and Virgin tender deal knocked back by ACCC
Queensland-based Alliance has been dealt another blow by the ACCC which has knocked back its bid to keep a deal with Virgin to jointly tender for fly-in, fly-out business.
Virgin Australia has been knocked back by the ACCC.(AAP Image/Dan Himbrechts)
It follows a decision by the competition watchdog to oppose Qantas’s bid to takeover Alliance, in which it holds a 19 per cent stake.
“The airlines have not demonstrated to us that there’s sufficient public benefit to outweigh the likely detriment from their proposed co-ordination,” the ACCC chair Gina Cass-Gottlieb said.
The joint bidding was authorised by the ACCC in 2017, but it said today that it was concerned the alliance was likely to redice the number of bidders in tender processes for charter services.
Cass-Gottlieb said this meant the potential incentive to reduce service levels or raise prices would remain.
It found that the charter alliance had not delivered the extent of public benefits that were foreshadowed when it authorised the arrangement.
Submissions to the ACCC on the alliance indicated that there was some support for it but a number of customers did not place significant value on having a combined charter offering and preferred separate bids.
“The agreement to not compete for each other’s customers while not always implemented to date, is also likely to reduce competition and incentives for the airlines to invest and innovate,” Cass-Gottlieb said.
