Virgin Australia ditches collective bargaining proposal

Airport backlash results in backflip on flagged airport negotiations

Virgin Australia has withdrawn a controversial proposal to enable it and other airlines to collective bargain with airports as part of a wider application before the ACCC.

As exclusively flagged by LATTE last week, Virgin Australia has proposed a short-term response to the coronavirus pandemic travel restrictions on domestic and overseas travel that allows the carrier to, among other conduct, jointly coordinate routes, scheduling, splitting or sharing revenue with other domestic airlines (including Qantas) and discuss/arrange negotiations (including collective bargaining) with airports in regards to infrastructure use and fee relief.

The collective bargaining element received backlash from the Australian Airports Association – and numerous airports – which called the proposal “uncertain, broad, unjustified, opportunistic and deleterious to competition”.

Melbourne Airport, Adelaide Airport and North Queensland Airports were among the first to slam the move. They have been backed up with additional submissions lodged with the Australian Competition and Consumer Commission from Brisbane Airport and Hobart Airports.

Jim Parashos, Executive GM of Aviation Development and Partnerships at Brisbane Airport, said, “Beyond the fact that the application is extraordinarily vague (including apparently allowing for boycotts by the collective bargaining parties), the application fails to identify any public benefits whilst allowing longer-term anticompetitive risks to emerge.”

Hobart Airport’s Acting CEO, Matt Cocker, also suggested the collective bargaining aspect be knocked back.

“If granted, the effect of collective bargaining authorisation will be a further reduction of what little income is derived from the airlines in the current climate, with an immaterial benefit to the airlines,” Cocker said.

In response to the fallout from the airports and the current travel downturn, Virgin Australia has amended its position. Lead Legal Counsel Merridy Woodroffe told the ACCC that given the “change in circumstances” the airline had withdrawn its flagged collective bargaining conduct.

Interestingly, also in its application Virgin sought urgent interim authorisation for the conduct to commence. According to a submission from Qantas received last Friday [24 April 2020], it was not privy to a draft version of the said application to review in advance to lodgement. However, Qantas’ Head of Legal – Competition, Michele Laidlaw, told the competition regulator: “The Qantas Group will continue to consider the proposed conduct but does not have any specific objections to the application”.

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