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Two Virgins will work together to attract more custom

September 16, 2019 Headline News No Comments Email Email

The Australian Competition and Consumer Commission (ACCC) has issued a draft determination proposing to let Virgin Australia cooperate more closely with Virgin Atlantic on flights between Australia and the UK and Ireland, via Hong Kong, Los Angeles and any other future mutual connecting points.

The deal should work for both Virgins.

“Virgin Australia and Virgin Atlantic have asked to be authorised to cooperate more closely to improve their services between Australia and the UK and Ireland and attract more passengers,” ACCC Commissioner Stephen Ridgeway said.

“In authorising this cooperation, we expect to see improvements to the carriers’ schedules and services to passengers.”

Virgin Australia considers that this will increase passenger numbers, enabling it to more sustainably operate its Hong Kong service.

Virgin Australia and Virgin Atlantic are separate businesses that do not operate overlapping services on any routes and are unlikely to do so in the future. They already have a codeshare arrangement, which allows each to market flights on planes flown by the other.

Authorisation will allow the two airlines to coordinate on a wide range of matters, such as jointly managing prices, inventory, and marketing strategies, which are not currently permitted in their existing arm’s length commercial codeshare and loyalty arrangements.

Virgin Australia B777-300ER at Los Angeles Airport

The ACCC granted Virgin Australia and Virgin Atlantic interim authorisation on 4 July 2019 and this will remain in effect until a final authorisation decision is announced.

In granting that interim authorisation, the ACCC noted that while the two airlines remained separate businesses, they already had a codeshare arrangement which allowed them to market flights on planes flown by the other.

Virgin Atlantic Boeing 787-9, on approach to London Heathrow Airport

The ACCC said authorisation would allow the two airlines to coordinate on a wide range of matters such as jointly managing prices, inventory, and marketing strategies, which would not currently be permitted in the previous arm’s length commercial codeshare and loyalty arrangements.

Background

Authorisation provides statutory protection from court action for conduct that might otherwise raise concerns under the competition provisions of the Competition and Consumer Act 2010. Broadly, the ACCC may grant an authorisation when it is satisfied that the public benefit from the conduct outweighs any public detriment.

Edited by Peter Needham

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