ACCC demands could scupper Virgin’s Tiger raid
Virgin Australia will walk away from its plans to buy 60% of Tiger Australia rather than be ordered by competition regulators to expand the fleet.
Chief executive John Borghetti said it would not accept conditions to grow the carrier at a predetermined rate. Any such edict from the Australian Competition and Consumer Commission is likely to see the deal collapse.
The warning came as Flight Centre threw its support of the Virgin-Tiger deal.
Chief executive John Borghetti told a media briefing yesterday that expansion of the 11-strong Tiger fleet to "up to" 35 aircraft was still on the cards.
But he stressed it would be "unrealistic" to give a definite undertaking in "such a volatile market".
"I don't know any responsible CEO of an airline who would ever give an undertaking on a firm commitment five years out on capacity," he said.
The competition regulator has said the planned "significant increase" in capacity would help alleviate its concerns regarding "coordinated conduct" in the market as it continues to ponder the deal.
However, Borghetti remained optimistic both its Tiger acquisition and its Skywest acquisition would receive final approval in the coming month, significantly boosting competition in the Australian aviation market and improving its own competitive position.
"It is clear that we are a lower cost operator to Qantas in the business end, with Tiger being a lower cost operator than Jetstar, and we believe that Skywest will certainly be a lower cost operator than QantasLink," he said. "So that puts us in a very strong position going forward."
Flight Centre yesterday backed Virgin's takeover bid, arguing it would be a positive move to have an alternative to Jetstar in the form of Tiger. Virgin, it said, has all-but "moved out" of the low cost space.
"I can only see it being good for consumers and good for more product in the marketplace," chief operating officer Melanie Waters-Ryan said.
Email the Travel Weekly team at traveldesk@travelweekly.com.au
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