Virgin Australia pulls pin on national aviation pact

Airline cites "changed conditions" for withdrawal of proposed conduct

Virgin Australia has scratched a recently proposed partnership with other Australian-based airlines, telling the competition regulator it was unlikely to assist it or its customers due to changed market conditions.

The proposed conduct that Virgin Australia had sought approval for included the ability to coordinate flight schedules and share revenue with domestic airlines, such as Qantas, on routes wholly within Australia, to New Zealand and to the South Pacific.

Virgin submitted its plans to the Australian Competition and Consumer Commission in early April in response to the COVID-19 pandemic, at the time seeking expedited interim authorisation to fast-track the initiative.

After a period of consideration, the ACCC informed Virgin Australia this month that it had not been “persuaded about the urgency of granting interim authorisation at this time”. The watchdog didn’t dismiss the proposed conduct and was proceeding with its “substantive assessment”.

However, on Monday [22 May 2020], Virgin Australia’s Lead Legal Counsel, Merridy Woodroffe, informed the ACCC it would be withdrawing the application, noting that market conditions since the beginning of April have “changed significantly” and that the airline had been placed into voluntary administration on 21 April.

“We are optimistic that this process will enable the VA group to continue to operate under new ownership and recommence its broader services once the COVID crisis passes,” she said.

“VA is currently operating a limited RPT schedule underwritten by the Federal Government and a number of private and government-funded repatriation services. In general, passenger demand for air travel remains low, primarily as a function of the various state and territory border closures and quarantine restrictions and is unlikely to return to pre-COVID levels for some time,” Woodroffe said.

“Given the current market environment and VA’s position, we advise that VA is withdrawing its application for authorisation.”

Woodroffe added that it is likely the carrier will require regulatory assistance to enable it to rebuild its services “and sustainably compete once the sales process has completed and during the post-COVID recovery period.”

Image courtesy of Virgin Australia

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