Delta and Virgin keep the love alive

The Australian Competition and Consumer Commission (ACCC) has proposed to grant authorisation for Virgin Australia and Delta Air Lines to continue their operations between Australia and the US for a further five years.

Submitting a draft proposal this morning, the ACCC has already granted interim authorisation to take effect when the existing authorisation wraps up.

The alliance allows Virgin and Delta to offer a single integrated network, which encompasses their services between Australia and America, and respective domestic routes in both countries.

“The ACCC accepts that this combined network is likely to be valued by travellers between Australia and the US, since the majority of such passengers connect from and/or to destinations behind and beyond the key gateway points,” ACCC commissioner Dr Jill Walker said.

“This is reflected in the growing number of passengers utilising such connecting services.”

“The ACCC has reached the view that the alliance is likely to result in public benefit that would outweigh the detriment to the public through any lessening of competition.”

“The ACCC considers that the alliance has resulted in enhanced products and services including increased and better online connections, access to each other’s frequencies, better schedule spread, loyalty program benefits, and improved lounge access.”

The continued integrated network enabled by the alliance allows both airlines to compete more effectively with other carriers operating on the same routes from the US to down under.

“We welcome the ACCC’s draft approval and we are committed to working with our partner Delta to boost tourism and continue to bring strong competition to trans-Pacific travel,” Virgin Australia’s chief executive officer John Borghetti said.

The ACCC notes that the combined market share of Virgin and Delta on the key overlap route of Sydney to Los Angeles is around 35%.

“This combined market share increases the risk that some passengers may pay higher prices with the alliance, particularly on this direct overlap route. However, this is also the route with the greatest demand and the largest number of competitors,” Walker said.

The applicants sought re-authorisation for a period of 10 years, however the ACCC proposes to allow continuation for five years.

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