ACCC: Authorises Virgin Australia and Alliance Airlines to co-operate on 41 regional routes

The Australian Competition and Consumer Commission has today (19 November 2020) granted interim authorisation for Virgin Australia and Alliance Airlines to cooperate on 41 regional routes and 2 short haul international routes.

“The COVID-19 pandemic has significantly disrupted the aviation industry in Australia. This interim authorisation will help facilitate a more competitive aviation landscape as Australian consumers resume travelling and demand for flights increases.”

Stephen Ridgeway, ACCC Commissioner

The interim authorisation is being granted while the substantive issues of the request are investigated and submissions received from interested parties on the grounds that to delay the authority might negatively affect competition. That’s because Qantas/Jetstar could take advantage of the monopoly situation while Virgin and Alliance waited for permission.

Background

The downsizing of Virgin Australia due to both its voluntary administration and dramatic changes in demand due to COVID-19 has meant its withdrawal from many regional routes. To patch these holes, Virgin approached charter operator Alliance Airlines to help fill the gap. Normally this type of cooperation is viewed as anti-competitive, hence the application to the ACCC for an ‘exemption’.

What the authority covers

The cooperation will allow Virgin Australia and Alliance Airlines to share information, and to agree on service capacity, schedules and potentially revenue sharing on the routes on which they operate, including for new routes not currently serviced by either airline.

Normally such an agreement would be seen as anti-competitive, but in the current circumstances, sacrificing a bit of competition in the short term is seen by the ACCC as providing more competition in the longer term.

“Cooperating to provide services on these regional routes will assist Virgin Australia and Alliance Airlines to efficiently manage capacity and quickly respond to increases in demand as travel restrictions ease.

We acknowledge there is some urgency to this matter. A delay in Virgin Australia fully reestablishing 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,”Stephen Ridgeway, ACCC Commissioner

The Relevant Routes

The submission to the ACCC highlights the following table of routes:

2PAXfly Takeout

This is another timely reminder to wear your seatbelt when seated. Holding you close to your seat will protect you from the sort of injuries sustained on this flight, when unsecured passengers flew to the ceiling of the aircraft, and then came crashing down once the ‘drop’ ceased.

The hope will be that this is an anomaly – a ‘freak accident’ in casual parlance. If it is a systemic error either mechanical or electronic, then this is a larger concern for the airlines that fly Boeing Dreamliner 787 aircraft. Let’s hope it isn’t. If it is, it will pile on the woes to Boeing’s existing stack.

I was intrigued by the submission as to what were the international destinations. I can only find one: Honiara the capital of the Solomon Islands.

Besides the heavy accent on the very regional Queensland destinations out of Brisbane, it is pleasing to know that you might be able to fly directly from Melbourne, Victoria to Kununurra in the North-Eaxt Kimberley of Western Australia.