Interim approval for Virgin airline alliance

Regulator says the early conduct is unlikely to lessen competition

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The Australian Competition and Consumer Commission (ACCC) has given Virgin Australia a favourable response for its planned tie-up with Virgin Atlantic. The partnership aspires to provide the Australian carrier with a competitive edge over its rivals on flights to Hong Kong, Qantas and Cathay Pacific.

Virgin Australia and Virgin Atlantic are seeking a five-year authorisation on a long-term cooperation agreement relating to flights between Australia and the UK and Ireland via Hong Kong and Los Angeles. The pact would cover elements such as joint pricing, inventory management, scheduling, network planning, marketing, sales representation and potentially new services.

Last month, the carriers called on the ACCC to provide interim authorisation to the joint venture, enabling the commission to engage in the proposed conduct. Interim approval protects the arrangements from legal action while the competition regulator evaluates its decision. Virgin Australia said it “will suffer potential detriment if it is delayed” without interim approval, explaining that its flights between Sydney and Melbourne to Hong Kong were struggling to compete with oneworld carriers, Qantas and Cathay Pacific.

The competition regulator said it was unlikely that the market dynamics in any of the relevant areas of competition would change by providing interim approval and the venture with Virgin Atlantic was “unlikely to substantially lessen competition while due consideration is given”.

The ACCC expects to make a Draft Determination on the proposed alliance in September and a final decision by November of this year.

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