ACCC, Tourism Australia get behind Virgin’s bid for Brisbane-to-Japan flights

Tokyo, Japan - October 1, 2018: People at the international terminal building of the Tokyo International Airport (Haneda Airport) in Ota Ward, Tokyo, Japan.

Virgin Australia’s bid to the International Air Services Commission (IASC) to use one of two lucrative Japan slots for flights from Brisbane to Haneda airport has garnered the support of multiple government agencies.

Qantas maintains its application is the only “no risk” option to utilise the Australia–Japan slots, but the ACCC, Tourism Australia, the Queensland Government and Brisbane Airport are all in favour of Virgin.

This comes after the airline told the International Air Services Commission (IASC) that a new route between Brisbane and Haneda has the potential to “deliver significant and sustained benefits for travellers and Australian exporters, boosting tourism and trade flows between the two countries.”

“The Japan market represents an excellent strategic fit for Virgin Australia, as a destination with a strong growth outlook for both inbound and outbound travel, and which appeals to our leisure and corporate customers alike,” the airline added.

Both Tourism Australia and the ACCC wrote to the IASC to express their support for Virgin’s proposal for non-stop flights direct from Brisbane Airport to Tokyo Haneda airport.

“Tourism Australia supports Virgin Australia’s application to access Haneda from Brisbane. TA understands this opportunity will enable a fourth airline to enter the Japan route, bringing a new source of competition which would deliver significant benefits for travellers, boosting tourism flows between the two countries.

“Our country and tourism industry stand to benefit in many ways from the approval of the proposal, which should increase capacity, add new flight and route options, enhance codeshare connectivity and lower airfares,” Tourism Australia wrote.

Virgin Australia’s application for allocation between Brisbane and Haneda is likely to be delivered through the deployment of an Airbus A330-300 – the same aircraft that Qantas is proposing to use “wherever possible” – if it gains additional daily frequencies between Australia and Japan.

But Qantas believes any claims by Virgin Australia of using capacity more efficiently are unfounded. Qantas currently operates a service from Sydney to Haneda airport but is seeking both new Japan slots for an additional service between Sydney-Haneda and a new Melbourne-Haneda service.

The ACCC noted in its submission that, in its experience, “introducing more players generally leads to greater competition and better outcomes for consumers”.

“[We anticipate that] Virgin Australia’s entry would stimulate competition for flights between Australia and Japan, as Virgin Australia would be incentivised to compete on price and/or services to win customers from other airlines and attract new customers,” the ACCC said.

“Virgin Australia’s behaviour would likely elicit a competitive response from the other airlines operating between Australia and Japan, to the benefit of consumers through lower prices and improved service.

“The ACCC further notes that Virgin Australia is applying for only one of the two available frequencies between Australia and Haneda.

“We assume it would be open to the IASC to allocate the other additional frequency between Australia and Haneda to Qantas, which already has unlimited capacity to operate flights between Australia and Tokyo’s Narita Airport, thereby leaving scope for Qantas to introduce additional flights in response to Virgin Australia’s entry on the route,” the ACCC said.

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