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ACCC conditionally reauthorises Virgin Australia and Air New Zealand trans-Tasman alliance

3-Sep-2013 11:51 AM

Australian Competition and Consumer Commission (ACCC) issued (03-Sep-2013) a final determination granting conditional authorisation until 31-Oct-2018 for Virgin Australia and Air New Zealand Limited to continue their trans-Tasman alliance. ACCC commissioner Jill Walker said: "The ACCC considers that the alliance is likely to result in material public benefits by partnering Virgin Australia’s domestic Australian network and sales presence with Air New Zealand’s domestic New Zealand network and sales presence to contribute to the formation of a second integrated Australasian network. The alliance will allow the two airlines to offer enhanced products and services, such as new frequencies and increased access to loyalty programme benefits and lounges. This is likely to promote competition on trans-Tasman routes, particularly for business travellers”. Mr Walker noted, "The ACCC considers that without the alliance, Virgin Australia’s trans-Tasman operations would be more limited than its key competitors. It also considers that Air New Zealand is likely to be at some competitive disadvantage to the Qantas-Jetstar/Emirates alliance due to its weaker sales presence and more limited access to the domestic market in Australia. Although the ACCC considers that the alliance is unlikely to reduce competition on most of the trans-Tasman routes, it is concerned that the alliance may affect competition on the routes between Christchurch-Melbourne and Christchurch-Brisbane; Wellington-Brisbane; Queenstown-Brisbane; Auckland-Gold Coast; and Dunedin-Brisbane." To address these competition concerns, the ACCC is imposing conditions to require Virgin Australia and Air New Zealand to maintain aggregate base capacity across these routes. Rather than prescribe a minimum growth factor for these routes, the ACCC considers it appropriate to review the airlines’ capacity additions in light of actual demand growth over the next two years.  This review will commence on 01-Sep-2015. The ACCC is also requiring the airlines to provide key performance data at the end of each scheduling season to assist it in assessing whether the alliance is having any adverse effect on competition going forward. The authorisation will commence from 01-Jan-2014. [more - original PR]