13-Sep-2010 9:53 AM

Branson criticises decision against Virgin Blue/Air New Zealand tie-up

Virgin Blue founder and President, Sir Richard Branson, criticised the Australian Competition and Consumer Commission’s (ACCC) draft determination proposing to deny authorisation for an alliance between Virgin Blue and Air New Zealand on trans-Tasman services (AAP/Sydney Morning Herald/Business Spectator, 13-Sep-2010). Sir Richard stated the move blocked Virgin from competing on a level playing field and that the expansion of Virgin Blue depends on the regulator's cooperation, warning that without alliances, the carrier may be forced to change its strategy and suspend some unprofitable routes. However, he admitted the “couple of setbacks” the carrier has had over the past week are “nothing that we won't be able to overcome”. Virgin Blue CEO, John Borghetti, also stated the airline plans to fight the draft ruling. Sir Richard denied reports the carrier is planning to remove the Virgin name from its Australian operations, stating the current rebranding exercise is likely to initially result in the group’s number of brands being reduced to two (The Australian, 13-Sep-2010). He also commented that while Singapore Airlines plans to keep an agreement in place that blocks Virgin Blue from using the Virgin name on international services, Sir Richard is sure he will be able to readdress the issue “one day”.

Virgin Blue: “We're astounded that we've been knocked back. We will fight to get this decision reversed … It's in the travelling public's interest that a small carrier like Virgin Blue is competitive, is powerful, so that we can develop new routes on all the routes that Qantas fly. By developing new routes, and staying on the routes we're currently on, that will keep Qantas honest. By tying our legs and arms together behind our backs, letting Qantas have alliances with British Airways and South African Airlines and many other airlines, but not allowing Virgin Blue to do something similar, is just patently unfair … All we're saying to the regulator is: do to Virgin as you do to Qantas and be fair. We're hopeful they'll change their mind and we'll put our arguments forward as strongly as possible … The Virgin name will stay forever. I think Pacific Blue and the other (airlines) they will be rebranded. There's a whole rebranding exercise which is going to be unveiled, maybe even in a month or so, which looks great. I've seen it and I think it's very, very powerful,” Sir Richard Branson, President. Source: Sydney Morning Herald/AAP, 13-Sep-2010.

Virgin Blue: “This is not a final knock back. This is about another Australian carrier trying to create an international network to compete with the incumbent, another Australian carrier … to provide an international network that's, frankly, very much needed,” John Borghetti, CEO. Source: Sydney Morning Herald, 13-Sep-2010.

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