Conditions imposed on Tasman alliance
Virgin Australia and Air New Zealand have been given the all clear to continue their trans-Tasman alliance – but for a shorter period than requested and with capacity conditions attached.
The Australian Competition and Consumer Commission (ACCC) said in a draft ruling it will review the alliance in three years’ time. Virgin and Air NZ had wanted authorisation for five years.
The ACCC also imposed conditions that will require capacity to be maintained on eight routes: Christchurch to Melbourne and Brisbane, Wellington and Queenstown to Brisbane, Auckland to the Gold Coast and Dunedin to Sydney, Melbourne and Brisbane.
Air New Zealand reacted with surprise, arguing that in the current market structure “capacity conditions are not necessary to maintain strong competition in the trans-Tasman market”.
“We will work with the ACCC to understand its rationale for requiring such conditions and the limited three year authorisation period,” the airline said in a statement.
Virgin Australia said it would review the time period and conditions “and respond to the ACCC as soon as possible”.
The competition regulator said given the “dynamic nature of the aviation industry” it was unable to grant five-year clearance.
The conditions, meanwhile, follow concern that the alliance may reduce competition on some routes.
While it is unlikely to reduce competition on most trans-Tasman routes, including Sydney/Melbourne and Auckland, Sydney/Melbourne and Wellington and Sydney-Christchurch, other routes may be adversely impacted, the ACCC said.
“In order to address this concern, the ACCC proposes to impose conditions which require Virgin Australia and Air New Zealand to maintain capacity on these routes,” it said.
Overall, the regulator ruled the alliance would create a “second integrated Australasian network” which would benefit the public.
Without the alliance, Virgin Australia’s Tasman operations would be limited while Air NZ would be muscled out by Qantas and Emirates, the ACCC said.
Further submissions are invited from interested parties, with a deadline of July 24, ahead of a final ruling.
Email the Travel Weekly team at traveldesk@travelweekly.com.au
air new zealand airlines aviation trans-tasman alliance virgin australiaLatest News
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