The Australian Competition Consumer Commission (ACCC) has granted interim authorisation for Virgin and Alliance to collaborate on 41 regional routes despite strong opposition from Rex.
Australia’s competition commission said sharing capacity and pricing information would result in a “public benefit” by helping Virgin to re-establish its network as borders open.
Two weeks ago, Virgin applied to the ACCC to share information on cost, capacity, and flight schedules with Alliance in order to help serve smaller towns with its post-administration, stripped back fleet.
It also said ceding market share to Qantas could result in more expensive fares for passengers.
In its initial ruling published on Thursday, the ACCC said, “The co-operation 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.
The co-operation will mean that Virgin Australia and Alliance Airlines will not compete with each other on the routes covered by the agreement.
“We acknowledge there is some urgency to this matter. 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.
“Our preliminary view is that any public detriment resulting from reduced competition between Alliance Airlines and Virgin Australia is likely to be limited, given Alliance Airlines’ limited number of scheduled regular passenger services. We will consider this issue further in the course of our review of the substantive application.
“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.”
The decision is likely to anger Rex, which said the ‘temporary’ authorisation would cause irreversible, long-term damage to competition.
The regional airline also warned its two rivals could give each other “highly-sensitive” cost and pricing information “without any transparency or monitoring”.
“Allowing competitors to share such sensitive information under an interim authorisation carries significant risk as knowledge is not reversible; the parties simply cannot stop knowing what they know if final authorisation is denied,” Rex said in its submission to the ACCC. “Put simply, the egg cannot be unscrambled.”
Virgin had requested an interim authorisation from the ACCC to start operating new routes as soon as possible, which includes services to regional towns from Brisbane, Alice Springs, Perth and Cairns.
The recently relaunched airline said in a statement it recognises its role in providing “heartland communities and businesses in regional Australia with choice and convenience.”
“We look forward to continuing our long-standing relationship with Alliance Airlines,” it said.
The full list is below.
In August, Virgin Australia announced plans to cut 3,000 jobs and significantly downsize its fleet.
The new network will operate a 737 mainline fleet for domestic services but removing ATR, Boeing 777, Airbus A330 and Tigerair Airbus A320s. Its regional and charter fleet will also be maintained.
Alliance, meanwhile, recently received the first of 14 new Embraer E190s to add to its existing collection of 24 Fokker F100, 13 Fokker 70LRs and five Fokker 50 turboprops.
VIRGIN AND ALLIANCE COLLABORATION
Brisbane to
- Proserpine
- Mackay
- Emerald
- Mount Isa
- Cloncurry
- Port Moresby
- Rockhampton
- Moranbah
- Newcastle
- Gladstone
- Port Macquarie
- Bundaberg
- Weipa
- Tamworth
- Honiara
- Alice Springs
- Ayers Rock
Alice Springs to
- Darwin
- Ayers Rock
Perth to
- Newman
- Karratha
- Onslow
- Kalgoorlie – Boulder
- Kununurra
- Port Hedland
Cairns to
- Darwin
- Maroochydore
- Ayers Rock
Cloncurry to
- Mt Isa
Canberra to
- Maroochydore
Sydney to
- Canberra
- Coffs Harbour
- Port Macquarie
- Albury
- Tamworth
- Ayers Rock
Adelaide to
- Canberra
- Olympic Dam
- Alice Springs
Melbourne to
- Canberra
- Kununurra
- Newcastle
- Mildura