Australia’s competition watchdog has temporarily approved collaboration between Virgin Australia and Alliance Airlines to create more regional services.
The Australian Competition and Consumer Commission has temporarily approved an agreement between Virgin Australia Holdings and Alliance Aviation Services to create more regional routes.
It comes a day after Virgin became the first Australian airline to exit from voluntary administration and appointed a new managing director, Jayne Hrdlicka, to lead the business.
Ms Hrdlicka said, following a business review, the airline would retain and restructure its regional services to become a more sustainable and profitable business.
Virgin, which currently operates 37 domestic routes from 28 ports, has also reopened its lounges.
“Virgin Australia will be a mid-market carrier appealing to customers who are after a great value airfare and better service,” Ms Hrdlicka said yesterday.
“We will continue to evolve our offering for our customers based on data and feedback, but the Virgin Australia experience millions of travelers know and love is here to stay.”
Virgin has partnered with Brisbane-headquartered Alliance on 41 regional routes and two short-haul international routes.
It means Virgin and Alliance will not compete on routes covered under the arrangement.
The ACCC has granted interim authorisation to Virgin and Alliance to avoid delays while it considers the application.
“We acknowledge there is some urgency to this matter,” ACCC commissioner Stephen Ridgeway said.
“A delay in Virgin Australia fully re-establishing its network, while other airlines are increasing services in response to greater demand as travel restrictions ease, is likely to result in less competitive markets.
“This is why we have given this arrangement interim authorisation while we consider the substantive application.”
Mr Ridgeway said any public detriment resulted from reduced competition between the two airlines would likely be limited, given Alliance’s small number of regular services.
He said the arrangement would facilitate a more competitive aviation landscape, as consumers resume travelling and demand for flights increase.
“We consider that other airlines, including Qantas Airways and Qantas-owned Jetstar, are likely to compete strongly with Alliance Airlines and Virgin Australia on many of the routes covered by the agreement,” Mr Ridgeway said.
The ACCC is seeking feedback on the application for authorisation.
The watchdog also has an ongoing investigation into Qantas’ shareholding in ASX-listed Alliance Airlines, following its 19.9 per cent acquisition in February last year.
