The ACCC has issued a draft determination proposing to grant authorisation for Virgin Australia to enter into codeshare pricing arrangements with its international airline partners for five years.
Under the arrangements, Virgin Australia’s international airline partners will set the fares for international long-haul flights that Virgin Australia may market and resell to consumers.
The ACCC invites submissions on the draft determination by 29 July 2022.
“The ACCC’s preliminary assessment is that these arrangements are likely to result in more choice and greater convenience for consumers looking to book international trips that include connecting flights operated by Virgin Australia,” ACCC Deputy Chair Mick Keogh said.
“There will be no competitive overlap between the parties on any route under these proposed arrangements, and other airlines, including Qantas, will provide competition to Virgin Australia and its partners on those particular long-haul international routes.”
The ACCC has also decided to grant interim authorisation to allow Virgin Australia to engage in the proposed conduct with United Airlines, Qatar Airways and Singapore Airlines, while the ACCC continues to consider the substantive application for authorisation.
“These arrangements are likely to promote competition in long-haul international services, by assisting Virgin Australia to re-establish its international operation in the longer term,” Keogh said.
Further information on how to make a submission is available at Virgin Australia Airlines Pty Ltd.
ACCC authorisation provides statutory protection from court action for conduct that might otherwise raise concerns under the competition provisions of the Competition and Consumer Act (CCA).
Section 91 of the CCA allows the ACCC to grant interim authorisation when it considers it is appropriate. This allows the parties to engage in the proposed conduct while the ACCC is considering the merits of the substantive application.
The ACCC may review a decision on interim authorisation at any time, including in response to feedback raised following interim authorisation.
Broadly, the ACCC may grant an authorisation when it is satisfied that the public benefit from the conduct outweighs any public detriment.
Background
Virgin Australia commenced operations in Australia in 2000. It currently operates a network of domestic flight services and short-haul international flight services including to Nadi, Fiji and to Bali, Indonesia.
Virgin Australia does not currently operate any long-haul international services and is unlikely to do so in the short to medium term, as it does not have access to the widebody aircraft necessary to operate such services.
On 12 May 2022, the ACCC granted interim authorisation to allow Virgin Australia to enter into a proposed codeshare pricing arrangement with United Airlines.
Subsequently, Virgin Australia requested the ACCC grant interim authorisation to allow it to enter into proposed codeshare pricing arrangements with Qatar Airways and Singapore Airlines. Virgin Australia also stated that it is considering similar arrangements with other airlines, such as All Nippon Airways, Air Canada and Hawaiian Airlines.
The routes operated by these partner international airlines identified by Virgin Australia to date include long-haul international routes between Australia and the following regions: the USA, Europe, various parts of Asia, the Middle East and Africa.
Posted by Peter Needham
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