The Australian Competition & Consumer Commission (ACCC) has granted authorisation to enable Virgin Australia and Alliance Airlines to cooperate on 41 regional routes and two short-haul international routes.
Virgin and Alliance proposed to coordinate their operations in October last year to better manage capacity and respond to changes in demand over the next two years as the aviation industry recovers from the COVID-19 pandemic.
The ACCC already granted interim authorisation for the proposed cooperation by the two airlines in November last year.
In its final determination issued last week, the ACCC said these arrangements were likely to benefit the public by promoting competition on certain regional and short-haul international routes.
Specifically, the ACCC said the proposed conduct was likely to result in a more efficient and sustainable operation of services by Virgin and Alliance, including maximising aircraft utilisation, accessing a broader range of aircraft and fleet types, and appropriately managing capacity on regional routes to meet the nature and volume of demand.
The competition watchdog said the planned cooperation by the two airlines would also likely support regional air services and regional communities, and facilitate increased competition through Virgin being a more “effective and vigorous” competitor.
“The ACCC considers that the proposed conduct may result in some public detriment by removing competition between Virgin Australia and Alliance in providing services on the relevant routes,” it said.
“However, the ACCC considers the public detriment resulting from a lessening of competition is likely to be limited.
“Alliance’s regular passenger transport network is limited, Virgin Australia and Alliance have not historically both operated flights on the same routes and if the proposed coordination does not proceed, they are unlikely to compete with each other to any significant extent on most of these routes over the two-year period for which authorisation is sought.
“Other airlines, primarily Qantas/Jetstar, are likely to provide a strong competitive constraint on Virgin Australia and Alliance on many of these routes.”
The ACCC has granted authorisation for the cooperation until 31 March 2023.
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